Countries world over, were slow to acknowledge COVID-19 as a global pandemic. That is why, in beginning, Central Asian states too appeared to be zero-virus islands without confirmed corona infected cases. Kazakhstan disclosed its early confirmed cases on March 13, Uzbekistan on March 15, Kyrgyzstan on 18 and Tajikistan on April 30. Turkmenistan has not officially reported COVID-19 cases in the country, so far.
Obviously, the world will never be the same, once the pandemic ends. ‘Old normal’ is not likely to be restored. Social norms, human communications and lifestyles are transforming. ‘New normal’ would feature more digitization and less physical interaction in everyday routine of life including education, medicare, entertainment and business. Global politics and economy would also be subject to priority adjustments. Consequently, Central Asian states would also be part of these global shifts in post-pandemic phase. Let us analyze this scenario.
Medical care system of Central Asian states was first to come under pressure on the advent of COVID-19 menace. Despite varying degrees of health facilities, no country of Central Asia scores above 50 on the Global Health Security Index (GHSI). Seventy three percent world population lives in countries which score less than 50 on scale between 0 (absolutely un-prepared) and 100 (well-prepared). Massive scale pandemic even has exposed the health care capacity of the countries scoring 100 on GHSI. This is here lies opportunity for the CARs to re-vamp and capacitate their health care system.
Before the outbreak of the global pandemic, GDP growth forecast-2020 of IMF in October 2019 was 3.9% for Kazakhstan, 3.4% for Kyrgyzstan. 4.5% for Tajikistan, 6% for Turkmenistan and 6% for Uzbekistan. Now, the same has been revised by IMF to -2.5% for Kazakhstan, -4% for Kyrgyzstan, -2% for Tajikistan, +1.8% for Turkmenistan and 1.8% for Uzbekistan. This is how Central Asian economy is being hard hit by corona virus.
The situation was complicated by fall in oil price from average USD 50-55 per barrel to USD 25 in May 2020. Then Chinese gas imports from CARs also declined abnormally. Countries like Kazakhstan, Turkmenistan and Uzbekistan suffered very badly due to decreased oil and gas exports.
World Bank has predicted 28% decline of home remittances to the region from workers in Kazakhstan and Russia. Fall in these remittances during COVID-19 crisis, would bring more people below poverty line. Large informal economies in Central Asian states do not pay taxes and are deprived of government financial support.
As recommended by World Health Organization (WHO), quarantine measures were adopted in Central Asia but a balance between saving life and maintaining some economic activity has been found very difficult to achieve. Central Asian regimes relied to some extent on fiscal measures rather than monetary instruments to support the local business. But, the corona crisis brought to fore that Central Asian economy must address structural problems like heavy dependence of foreign trade, home remittances, concentrated sectors and external debt of many states etc.
However, the misery of pandemic crisis, has also introduced many opportunities that unfold new horizons during post COVID-19 era, as under:
A. Humanitarian assistance from Uzbekistan to Kyrgyzstan and Tajikistan, and then from Kazakhstan to Kyrgyzstan, has promoted regional cooperation and its benefits. This would evolve more rapid regional integration.
B. Corona crisis highlighted significance of the digitization of economies with investments in science, technology, and improvement in internet connectivity. Allocation of resources can be economized with digital tools, besides the much needed financial inclusion.
C. Disaster management institutions already exist in Central Asian states, but capacity building steps must be taken to cope with the real calamities.
D. SMEs are the backbone of every economy. This sector must be promoted for diversification.
E. Structural changes should be made in the healthcare and social security systems in order to face challenges identical to corona virus.
F. Infrastructural development activity must be expedited to connect landlocked Central Asia to the warm waters of Gowadar port in Pakistan that would give huge boost to commerce and trade with South Asia, Middle East and Africa.
The global corona virus epidemic has exposed a number of socio-economic weaknesses of the Central Asian Republics. But, still exponential growth of virus in the region has been contained. Challenges faced by CARs during the pandemic times have also introduced opportunities that could serve as effective reform agenda during post COVID-19 phase.
The writer is Country Manager of a Pakistani bank in Kazakhstan, with interest in Central Asian studies. He can be reached out at [email protected]