Tuesday, April 28, 2020

Under control?

After the first couple of cases were picked up in March, the Guatemalan Government acted fast and fairly decisively to enact mitigation measures. 

Nevertheless, with positive tests now at 500, there has been a suggestion that some restrictions could be loosened as early as next week.

We're entering a critical period of truth-bending by our leaders. They will struggle to explain a laxer approach without sounding callous, insincere or, as in the case of Donald Trump, just plain stupid.

Trump has made many errors over the course of the year to date, but one he may seriously regret later is buying in so enthusiastically into the notion that the economic dip has been almost entirely the result of government policy  and will be as easy to reverse.

It's almost as obviously false as his bleach cure, yet so far he's been able to push it without appearing like a total moron.

Here in Antigua Guatemala we've been discovering that our economy had some pronounced vulnerabilities to a global pandemic that many might not have given much thought to before. The biggest risks always appeared to be IN-country.

Crucially, elements of the economic impact in Guatemala were manifesting before the government did anything. So it's logical that some of the economically-depressive tendencies, here and elsewhere, could survive the political commitment to mitigation.

Hence, come November Trump could really start to look like a dunce on this issue as well, and come to rue not having nuanced his optimism a bit more at this rather critical stage.

The lesson learned from the last crash just over a decade ago is that a V-shaped recovery is possible if the turnover of most consumer-facing businesses like non-essential shops, restaurants and so on returns to at least 90% of pre-crash levels quite quickly.

You don't need a degree in economics to appreciate why that is unlikely this time around  even if the pandemic wanes significantly over the summer and there is no resurgence in the autumn. (Or indeed a vaccine is announced tomorrow.)

If we opened all the shopping centres, bars, cinemas, restaurants, nightclubs etc in Guatemala tomorrow, 90% of the good old days would still be a distant dream.

Perhaps the greater irony though is that many of the countries that were seemingly most successful in the use of policy measures to contain the spread of SARS-Cov-2 are now almost certainly going to be the ones that find it hardest to extricate themselves from quarantine.

We don't know enough about post-disease immunity to make any definitive judgments, but it's clear that the lower infection rates have been kept, the greater the chance of a sudden resurgence. We're starting to see this in the way the R number is creeping back up again in Germany.

Trump might like to think of the USA as a bigger version of a European calamity, like Italy: Gee it was tough, but now it's over. Yet he's actually in charge of a patchier pandemic experience, more akin to the EU as a whole.

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