COVID ECONOMIC RECOVERY INDEX
What will influence countries' recovery?
The recovery of a country’s main trading partners will significantly drive their recovery. It is therefore crucial that countries maintain open borders for both imports and exports, but also for investment and movement of people. Trade blocks can benefit their members if they can ensure that people, investment, goods and services can move as freely as the sanitary situation allows.
The degree of digitalisation throughout society and the economy has been critical in mitigating impact for some sectors and will be critical to recovery and rebuilding. COVID 19 crisis is set to accelerate the digital transformation of businesses. Countries that have the necessary infrastructure (including for cyber security) and skills in place, will be able to accelerate recovery. Directing stimulus programmes towards investment in digital skills and infrastructure as well as protection from cyber risks and adaptation by businesses is therefore crucial.
Social security systems have played a huge role in shielding livelihoods during the crisis and will continue to do so for some time. They are particularly important for countries with high socio-economic inequalities, because the COVID19 crisis affects people at the lower end of the income spectrum more. Countries with low social resilience, i.e. high poverty rates, high rates of vulnerable employment should consider strengthening social security.
Training and re-skilling capacity will play an outsize role in recovery and for future transformations. Many vulnerable sectors will not recover in the near future and the degree to which people can reskill and upskill – notably as part of active labour market policies – rapidly and into future-proof roles will be crucial to facilitating these transformations.
A greater focus on inclusion and equality will improve resilience to health risks in future. Access in many countries remains limited and this has proven to be the weak point in health resilience in many countries.
Over-arching factor is that society-wide trust and social capital more generally important for the success of containment, it will be important for the long-haul recovery that lies ahead. Social capital and trust enable effective policy making and close collaboration between all players, which is necessary for building resilient economies.
A base for future thinking, not a prediction of the future
The COVID Economic Recovery Index (CERI) presents the characteristics of countries that we know are important to development, growth and recoveries based on theoretical and empirical research. How countries emerge from this crisis and their future trajectories will depend on policy choices, including novel ones, which may have unexpected effects. It is also possible that countries will rethink elements of their economic frameworks, such as social protection laws, which will affect their recovery paths. The crisis could also change consumer and business behaviour in a lasting way. It could, for example, lead to accelerated digitalization of businesses that could result in increased productivity, thus fueling growth at faster rates than past data can predict. This index and related insights are intended to facilitate a discussion on policy options and further exploration of what these effects might be.