There’s No Winning the Coronavirus Recovery

There’s No Winning the Coronavirus Recovery

  • Strict lockdowns, accommodative central banks, fancy tracing apps. Even for countries that did a lot of things right, it’s going to be a long road.

Many of the governments once lauded for their textbook Covid-19 responses, replete with strict lockdowns, sophisticated contact-tracing apps and clearly articulated policies, got tripped up by something in the end. In Singapore, it was an outbreak in foreign worker dorms. In South Korea, it was the premature reopening of nightclubs. Then there were other countries that did nothing glaringly wrong and still suffered. It only goes to show that there’s no winning the coronavirus recovery.

Malaysia is a good example from column B. Despite doing a lot of things right, it has seen the steepest collapse of major East Asian economies, with a decline in gross domestic product of 17.1% from a year earlier. Malaysia moved quickly to implement tough movement control orders, while policy makers made big interest rate cuts and introduced supplementary budgets, in addition to loan moratoriums. A fairly well-developed health system managed to suppress infections: Cases numbered 9,240 as of Thursday, lower than many in the region, and there have been 125 deaths. Yet the country stands out for the depth and breadth of its contraction. Not only were exports and consumer spending holed, but the government’s ability to put a floor under activity was barely noticeable.

Bank Negara Governor Nor Shamsiah Mohd Yunus is right not to embellish the rebound that she says is under way. Her Aug. 14 press conference discussing the second-quarter fiasco was cluttered with qualifiers and caveats describing activity now: Words like “gradual” and “cautious” were deployed liberally.

Malaysians might reasonably ask: Where is the dividend for doing the right thing? For a nation that aggressively curtailed social and commercial life, the economy looks pretty grim on this side of lockdown. The contraction will still be significant this year, between 3.5% and 5.5%, the central bank reckons. Quite the contrast to the prior forecast that held out hope of at least minimal growth.