COVID-19: Into the abyss as global recession looms (video)

• Analysis

COVID-19: Into the abyss as global recession looms (video)

The declaration of COVID-19 as a pandemic by the World Health Organisation (WHO) represents nothing short of a total failure by the top global body that nations rely on to formulate public health policies and protect citizens to do its job.

The tardiness of Chinese officials in notifying the WHO of the Wuhan novel coronavirus outbreak, and the delay in implementing a citywide lock-down is equally damning.

Now, humankind is entering what will be its most challenging period — ever. No segment of society will go untouched.

Many countries remain unprepared despite a steady stream of increasingly alarming videos and reports from inside China over the last two months.

Significant decreases in nitrogen dioxide (NO2) over Wuhan, China have been detected year-on-year illustrating the effect COVID-19 ha had on manufacturing there
Significant decreases in nitrogen dioxide (NO2) over Wuhan, China have been detected year-on-year illustrating the effect COVID-19 ha had on manufacturing there NASA Earth Observatory

These clips showed mayhem, confusion, and fear that pushed public health systems and supply chains to teeter on the brink of collapse.

Only two months after the name “Wuhan” became a subject of global dialogue, the virus that causes COVID-19, known as SARS-CoV-2, has infected more than than 145,000 people in 127 countries.

More than 5,000 people have died, while about 9 per cent of the more than 69,000 active cases are currently classified as serious or critical.

For those of us who have watched the SARS-CoV-2 outbreak spread, and seen our early predictions become reality, the experience has been surreal. It’s been like watching a slow-moving train wreck with the entire world on board, with opportunity after opportunity to mitigate the impending destruction ignored over and over again.

Death in 7% of completed COVID-19 cases

Virus research biohazard level 2
not a single researcher working on a SARS-CoV-2 vaccine has said why success is more likely for this virus than its better known and researched sibling CDC/ James Gathany

While some observers continue to cite a low case mortality rate (CMR) of between 1 to 3 per cent, simply dividing the total number of confirmed cases by the number of deaths is a flawed assessment of the potential danger of COVID-19 .

Patients can remain incapacitated for almost three weeks or longer, more than two and a half times the time period for seasonal influenza, before recovering or succumbing to the disease.

A more accurate indicator is to base the CMR on completed cases, meaning those who survived plus those who died. This method currently delivers a CMR of 7 per cent, and is increasing daily.

Whether the true CMR is 1 per cent or 7 per cent is irrelevant. From being considered a “China problem” in January, the COVID-19 epidemic has grown into a global emergency that threatens to wreak greater global havoc over the next 12 months than the climate crisis threatened over the next 10 years.

This is a direct result of the WHO’s unwillingness to recommend an international travel ban that would have upset Chinese sensitivities.

Vaccine trial: come fund me

Although scientists around the world are hastily announcing trials of potential vaccine candidates, it needs to be remembered that no vaccine currently exists for any zoonotic coronavirus, including the closely related Severe Acute Respiratory Syndrome (SARS), despite more than 15 years of research.

Previous vaccine candidates for SARS have resulted in a cytokine storm, defined as an overreaction of the body’s immune system, causing death in the vaccine recipient.

It must also be remembered that any laboratory able to demonstrate any level of advanced vaccine development is likely to attract significantly increased funding by those hoping to share in the billions of dollars a medical cure will generate.

News in mainstream media of individual labs progressing to animal trials should be viewed as the scientific community’s equivalent of a “Go Fund Me” page update. Perhaps these reports are designed to instil calm and hope in a public largely ignorant of the many steps required in getting a vaccine to market.

There’s a reason a vaccine takes an average of 15 to 20 years to develop, and it is not because laboratories like spending more money on trials than necessary.

To date, not a single researcher working on a SARS-CoV-2 vaccine has said why success was more likely for this virus than its better known and researched sibling, SARS.

Risk of quarantine increasing

While authorities throughout Asean have to date managed to restrict the spread of SARS-CoV-2, it has come at the cost of increasingly stringent and often disjointed efforts to isolate and protect individual countries.

Thailand now requires medical clearance certificates for travellers from four COVID-19 affected countries before boarding flights. Some embassies have posted advisories that clearance certificates are also required for visa applications.

Other countries across the region are imposing similarly harsh requirements, or simply banning entry for non-citizens and longterm visa holders from COVID-19 affected countries.

Since a ban on Chinese tour groups in January, the Asean inbound tourism sector has been decimated. Now, the risk that people will find themselves on a flight that becomes subject to restricted entry or quarantine requirements upon landing is multiplying the effects.

Thermal scanning arriving passengers at Don Mueang Airport, Thailand
Thermal scanning arriving passengers at Don Mueang Airport, Thailand John Le Fevre

Fearful that a quick trip to a neighbouring country could land them in quarantine, many regional business and recreational travellers are reassessing their need to leave home.

The Australian government has warned its citizens that medical facilities in some destinations might not be of a standard they expect at home, adding that evacuation might not be an option going forward.

The result is eerily empty and quiet airport check-in counters and arrival and departure halls. The number of flights “suspended for the next 30- or 60-days” is increasing each day.

Whether the trend observed in Thailand, where three major banks have so far shut-down their foreign currency exchange operations, will expand throughout the region is yet to be seen.

Being stranded at an airport far from home with a pocket full of nonconvertible currency has become an additional concern.

Regional airlines to crash

For already loss-making national flag carriers such as Thai Airways International, Malaysia Airlines, Garuda International, and Philippine Airlines, the COVID-19 outbreak is likely to be the straw that breaks the camel’s back. Few airlines will be able to downsize their burgeoning labour forces or fleets fast enough to handle the greatly diminished demand.

Loss making airlines such as Thai Airways will most likely fail due to the effects of COVID-19
Loss making airlines such as Thai Airways will most likely fail due to the effects of COVID-19 Z3144228

The region’s low-cost carriers (LCC) and boutique airlines, such as Thailand’s Nok Air, Bangkok Airways, and even regional LCC giants AirAsia, Cebu Pacific, and Lion Air, will also come under intense pressure, with all three LCCs having orders for new aircraft deliveries this year.

The short-term is expected to see a flurry of deep discounting and “book now, fly later” promotions, but the speed with which SARS-CoV-2 is spreading requires a huge leap of faith to expect that any regional carrier will still be flying in six or nine months.

The longer-term is likely to see a return to the fewer and more expensive flights that were common before the aviation industry was deregulated.

The knock-on effect will hit resorts, hotels, and tourist destinations, along with airport operators, no longer receiving the revenue needed to provide the level of services previously required. The result will be increased health and safety risks, and large scale employee redundancies.

In the past, stimulus packages aimed at increasing domestic tourism have been used to compensate for falls in international visitors. It is difficult to see this tactic working this time round, when being close to strangers is the last thing anyone wants.

Failed foreign investment policies

The costs and delays to manufacturers from decontaminating workplaces from just a single employee testing positive for COVID-19 will likely see output reduced, highlighting weaknesses in national sustainability and self sufficiency. The resultant shortages will increasingly shine a spotlight on the foreign investment policies of the past that focused exclusively on building industries that exported their entire production to the detriment of local consumers.

Manufacturers are likely to introduce automation to help mitigate risks. Charoen Pokphand Foods (CPF) factory in China Video Citizen1961

The popularity of globally distributed supply centres and just-in-time logistics will also frustrate the efforts of manufacturers, placing them at the mercy of their weakest link.

Manufacturers who can afford it will likely maintain larger stocks of components and diversify their suppliers, while the introduction of automation is likely to be accelerated as a means of reducing the risk of shut-down due to a single case of COVID-19.

In addition to empty shelves, inefficient manufacturing and distribution brought on by broken supply chains will likely see the price of many manufactured goods rise, driving up inflation, as economies of scale fail to be met.

For countries such as Thailand, Vietnam, and Cambodia, which are particularly reliant on imported raw materials for their manufacturing sector, the effects of supply chain disruptions could be significant. More bad news, employers could see thousands of their workers forced to quarantined for 14-days or more.

Global recession looms

It is now expected that between 40 and 70 per cent of the world population will this year become infected with SARS-CoV-2. If this occurs, a recession with global GDP growth constrained to under 1.5 per cent appears increasingly likely.

Regionally the effects will be considerably worse than the 1997 Asian Financial Crisis, high levels of personal debt making wage and salary earners throughout the region particularly vulnerable to income loss or price increases. This in turn makes banks and microfinance institutes vulnerable to sudden repayment pattern changes.

For Thailand full-year growth is likely to struggle to hit 0.5 per cent while Cambodia will likely see its full-year growth drop from about 7 per cent last year to about 4.5 per cent in 2020. Regional manufacturing powerhouse Vietnam is also particularly vulnerable to supply chain shock, with South Korea battling to contain an active  COVID-19 outbreak there that threatens to disrupt the supply of parts and components.

Cambodia garment industry is particularly sensitive to supply chain disruption with its workforce also being heavily indebted
Cambodia’s garment industry is particularly sensitive to supply chain disruption and its workforce is heavily indebted. Samer Muscati/ Human Rights Watch

The Philippines, heavily reliant on repatriated money from overseas workers, is likely to see a similar whack to its economy as more Filipino seek the comfort of home.

Lower factory outputs and disrupted supply chains will see reduced customs and taxation revenues, placing even greater strain on national reserves.

Governments that hastily splurge their reserves on populist or nationalist policies, such as bailing out national flag carriers, will see the money rapidly run out with little to show for it.

The risk to authoritarian regimes throughout the region should not be overlooked, especially if large segments of their security forces becoming infected with SARS-CoV-2.

Similarly, the ability of China to bring its SARS-CoV-2 outbreak under control through the use of uncompromising enforcement of zero-tolerance policies, backed by an unquestioning security force non-existent in most other countries, should not be overlooked.

One burning question is whether liberal democracies will be as successful as Beijing in enforcing strict quarantines and compliance to requirements such as compulsory mask wearing in public.

Domestic focused policies needed

Face masks sell at inflated prices on the streets of Bangkok while hundreds of tonnes are exported
Face masks sell at inflated prices on the streets of Bangkok while hundreds of tonnes are exported John Le Fevre

To best withstand the long-term effects of the COVD-19 pandemic a rapid rethink of current investment policies is needed.

Rather than focusing on industries that deliver export earnings, what is needed urgently are policies that build domestic resilience and self sufficiency, while stimulating the local consumer market.

In Thailand and Cambodia, face masks are manufactured for export and sold abroad for pennies, while masks smuggled from neighbouring countries sell for many times that on the streets of Bangkok and Phnom Penh.

This situation and others like it cannot continue. Foreign investment must benefit the country where it occurs and deliver more than menial employment roles requiring minimal skills that robotisation is increasingly becoming more adept at doing.

The strengthening of national supply chains to ensure resilience against shuttered supply sources in other countries must be the priority of each government. It is no longer sufficient to presume that traditional supply networks will continue to operate. Once local demand is satiated, surpluses can be exported.

The time for talk aimed at maintaining calm is past. In the absence of a global travel ban lasting until well past  the very last case of COVID-19, or the miraculous discovery of a vaccine, COVID-19 will be a scourge erupting at random around the world, crippling industries, eduction, and healthcare systems.

While no one can predict how deep the abyss we are now falling into is, the effects are likely to range from extreme to severe and leave almost no person unaffected.

COVID-19 is definitely not “just the flu”, and it is not going away any time soon with so many easily entered sources of nutrition available for it to feed on.

To reduce your risk of contracting COVID-19 wear a surgical or N95 face mask when in close proximity to people, along with wrap-around eye goggles, and gloves.

Wash your hands frequently, and refrain from using your mobile phone in the toilet. Remember, someone else had to grasp that door handle or bum gun handle, and you have no idea of their hygiene standards.

 

Feature photo John Le Fevre

 

 

 

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John Le Fevre

Thailand editor at AEC News Today

John is an Australian national with more than 40 years experience as a journalist, photographer, videographer, and copy editor.

He has spent extensive periods of time working in Africa and throughout Southeast Asia, with stints in the Middle East, the USA, and England.

He has covered major world events including Operation Desert Shield/ Storm, the 1991 pillage in Zaire, the 1994 Rwanda genocide, the 1999 East Timor independence unrest, the 2004 Asian tsunami, and the 2009, 2010, and 2014 Bangkok political protests.

In 1995 he was a Walkley Award finalist, the highest awards in Australian journalism, for his coverage of the 1995 Zaire (now Democratic Republic of Congo) Ebola outbreak.

Prior to AEC News Today he was the deputy editor and Thailand and Greater Mekong Sub-region editor for The Establishment Post, predecessor of Asean Today.

In the mid-80s and early 90s he owned JLF Promotions, the largest above and below the line marketing and PR firm servicing the high-technology industry in Australia. It was sold in 1995.

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