Exit strategy

Amidst the gloom of rising death toll owing to coronavirus pandemic, it is striking that stock markets in America and Europe have been rallying lately. Well, it isn’t about investors being insensitive; rather, equities seem to be taking solace in the fact that major countries in Europe, the hardest-hit continent, are now planning to ease restrictions and gradually restart their economies. The change of course is explained partly by plateauing infections and partly by concerns about long-term economic devastation.

Here in Pakistan, the provincial lockdowns, which went into effect around March 23, have been extended. As per latest reports, Punjab and Sindh have both extended their restrictions until April 14, in line with federal government policy. While Khyber Pakhtunkhwa’s extension hasn’t been announced yet, Balochistan has prolonged the curbs until April 21, and DC Islamabad is suggesting that the lockdown might remain in place until May 4. Visiting Chinese experts have suggested following a 4-week lockdown.

It may be a bit premature to be talking about easing in Pakistan, as it isn’t clear when the country’s infections will peak and how much time will they remain there. But it is still worthwhile to pay attention to how early countries are approaching “reopening”. The exit strategy is evolving, and Pakistan will have the benefit of learning from European countries’ experience as they go first later this month.

Reopening the economies, however slowly, is critical to making the fight against coronavirus a sustainable one over the next several months. But how should a country go about it? Findings from latest research on the subject, mainly by the Munich-based Ifo Institute for Economic Research and the Washington DC-based American Enterprise Institute, recommend that following a “risk-based” and phased approach can help a country gradually loosen the restrictions without risking further spread.

Mindless easing can provoke more infections and hence more lockdowns, so the authorities need to assign risks to geographies that can be opened up, demographics that can be allowed out and industries that can be operated on over time. The risk-based approach creates a queue, so some sectors or regions will have to wait longer than others depending on relative risk and urgency. Question still is: how far can easing go until such time that preventive vaccines or medical treatments/cures become available?

In the interim, the supply of workers in manufacturing and services sectors can be gradually increased by only allowing unaffected or immune people to work, after they have been assigned a sort of “permit” after testing negative. Rapid testing of workforce will be crucial, as will be the safety SOPs followed by firms and workers who are allowed to toil. Whereas the physiologically vulnerable, such as the elderly and the children, will need to stay at home at least until the curve has come down to the government’s level of comfort.

While the talk of easing lockdown gives people hope, there is need to be honest. European health experts have been arguing that instead of giving the public a timeline for reopening, it is better to articulate to the people how easing will look like, what order it might take and what will happen if infections started growing again. In short, expectation management is the key. Pakistan’s coronavirus czars need to keep an eye on Europe, for a massive natural experiment will soon get underway in that continent.