Given the positive progress of the epidemic in Spain, Prime Minister Pedro Sánchez announced recently that the sector should prepare for the summer season, and overseas tourists would be welcomed into the country under safety conditions from July. He also encouraged Spaniards to start planning domestic vacations from as early as June. A country worse hit by the current COVID-19 pandemic has managed to move swiftly towards a planned phased transition. Spain is regarded as the third most impacted country in Europe behind Italy and the UK. More than 24,200 people have died from the virus in the country.
Furthermore, Spain’s GDP contracted by 5.2 percent quarter on quarter and 4.1 percent year on year in Q1, according Spain’s statistics office. Covid-19 has drastically ended almost seven years of growth. Domestic demand subtracted 5 percentage points of quarterly GDP growth and external demand 0.2 percentage points. Imports and exports both contracted by 8.4 percent quarter on quarter. Tourism services export even contracted by 19 percent quarter on quarter. Meanwhile, the sectoral breakdown shows that activity in all sectors contracted, with construction (-8.1 percent) and services (-5.6 percent) faring the worst.
The majority of the country will be soon in Phase 2 of the government’s de-escalation plan, which runs from Phase 0 to Phase 3. After Phase 3, regions and other territorial units will enter what the government considers “the new normality,” where social distancing will still be required but full freedom of movement will return. The Spanish Health Ministry announced that the use of face masks in Spain will be obligatory in closed spaces and on the street where two-meter safe distances cannot be respected.
The de-escalation plan for Spain could be categorized into four Phases (0-3). The Preparatory Phase 0 (May 4-11) allowed some limited economic activity with precautionary measures in place such as hairdressers and other businesses that offer service by appointment could reopen. Restaurants could offer take-away services. Professional sports leagues could go back to training. Also short walks and individual sporting activities were allowed starting on May 2.
During Phase 1 (about two weeks from May 11) all provinces that meet the requirements moved to Phase 1 on May 11. Small businesses were allowed to reopen under strict safety conditions. Restaurants could reopen their terraces with no more than 50% occupation. Places of worship were allowed to be reopened, limiting the capacity to one third. During the next Phase 2 (about two weeks from late May) theatres and cultural activities could open with one third capacities. Some schools could reopen, though most will stay closed until September. During the last Phase 3 (around the end of June) further shops will be allowed to open at half capacity with distancing of 2 meters along with opening of beaches and other restrictions will also be loosened.
However, faced with this public health crisis, the priority area for action is to strengthen the healthcare system in order to enhance its capacity and find scientific solutions to cope with the pandemic, both indispensable to enable countries to resume life where it was before the arrival of the COVID-19 as soon as possible.
However, faced with this public health crisis, the priority area for action is to strengthen the healthcare system in order to enhance its capacity and find scientific solutions to cope with the pandemic, both indispensable to enable countries to resume life where it was before the arrival of the COVID-19 as soon as possible
The Spanish government has also presented a battery of measures aimed at reducing the impact of the crisis on households, workers and firms. The direct aid approved to date amounts to 21 billion euros (1.7% of GDP). To protect households in a particularly vulnerable situation, the government has made it imperative that essential supplies will be guaranteed (electricity, water, gas and telecommunications). In order to combat the economic impact of the health crisis the government has presented the packages such as: a support package worth EUR 18 billion; a EUR 100 billion line of guarantees on bank loans for companies in distress due to the virus and; a moratorium on mortgages, social benefit payments and tax liabilities for hard-hit households, self-employed and companies at an estimated cost of EUR 26.3 billion.
The set of measures adopted by the Spanish government represents a robust response to the economic impact of the COVID-19 epidemic and lays the foundations for ensuring that the negative effects on employment and economic activity are temporary, and that economic activity bounces back once the epidemic has been overcome. Providing support for all affected sectors of society is necessary for economic recovery and preventing a temporary shock from leaving more permanent scars. The ultimate goal is to safeguard the population’s economic well-being and the country’s productive capacity as much as possible.
The government in Pakistan will also be needing a comprehensive and collaborative long term plan to effectively manage the crisis situation in the country with rising Corona patients and a dwindling economy. According to the emerging new consensus globally, more government intervention will be required to stimulate domestic demand by pumping finances into various sectors of the economy, protecting workers, expanding healthcare and tackling climate change. There can be no one size fits all approach among or even within provinces. Since, extremes of state control and decentralization can both be problematic, a middle ground approach is recommended. A fast, cheap, reliable testing system might help in solving the issue. However, there needs to be a bias towards decentralization especially in context of health emergencies following the principle of subsidiarity, whereby powers are delegated to the lowest-possible administrative level.
In a carefully winnowed decentralization not only members of smaller political entities tend to face similar challenges but also typically demonstrate greater social and political solidarity, which makes it easier to engage, coordinate and find solutions to common problems. Moreover, people arguably feel a greater sense of ownership over decisions taken by their locally elected or appointed bodies. This empowerment can help them devise policies to benefit from national and global markets, rather than being at their mercy or gripped by despair.
People in Pakistan need to be apprised about the dangers of not complying with safety measures for citizens and professionals not only through social media, but television, newspapers, NGOs, volunteers and public and private awareness campaigns. Also free provision of soaps, sanitizers and masks must be ensured at public spaces for people who cannot afford these facilities on a daily basis. Community mobilization within districts and towns to combat the pandemic could be really helpful in controlling the steady rise in cases.
Hence, just like Spain the government in Pakistan needs a well-coordinated, consensual “long term plan” to deal with the COVID 19 crisis and the aftermath. The piecemeal approach towards type and nature of government controls can deeply damage the compliance and reap minimal results as we have seen a steady rise in COVID 19 cases up till now laying bare the inadequacy of policies. In order to bring down the number of affected patients and health care professionals we urgently need to align and coordinate efforts towards a comprehensive strategy that targets fixing the dysfunctional health care system and protection of people i.e. supplies of personal protective equipment to front liners.
Prime Minister Imran recently announced to reopen the tourism sector with almost 75,000 Covid19 cases and around 1600 deaths. The government needs to exercise caution while announcing and countenancing such measures as Pakistan may not be able to loosen so many restrictions just like Spain as complete lockdown was not imposed in the initial stages. The government in Pakistan must develop its compliance capacity through disseminating adequate information particularly to the less educated people. It must come up with a clear line of action while planning to ease down gradually and reopen the economy safely. The effective plan must underscore successful practices, however policies must be grounded in the local context.
The writer is an economic analyst and a columnist based in Lahore