Health comes first…

I’ve made my fair share of statements about the latest inflation rates yesterday, both on television and my YouTube channel. I might tackle this issue again in next morning’s report if need be. But for now, I would like to focus on another matter.

The World Bank Group has recently released the technical details of its Global Economic Prospects report and unfortunately, they all attracted some heavy criticism just like the IMF reports.

According to the report, “Measures needed to protect public health have undercut an already fragile global economy, causing deep recessions in advanced economies and emerging market and developing economies (EMDEs) alike. EMDEs that have weak healthcare systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit, the analysis notes.”

As a matter of fact, the report highlights some future problems that we all have been expecting to happen: “In the long-term, the pandemic will leave lasting damage through multiple channels, including lower investment; erosion of physical and human capital due to closure of businesses and loss of schooling and jobs; and a retreat from global trade and supply linkages. These effects will lower potential output – the output an economy can sustain at full employment and capacity – and labour productivity well into the future.”

In its report, the World Banks introduces an interesting proposition as well: “Policies to rebuild both in the short and long-term entail strengthening healthcare services and putting in place very targeted stimulus measures to help reignite growth. This includes efforts to maintain the private sector and get money directly to people so that we may see a quicker return to business creation after this pandemic has passed. During the mitigation period, countries should focus on sustaining economic activity with targeted support to provide liquidity to households, firms and government essential services. At the same time, policymakers should remain vigilant to counter potential financial disruptions.” As you may remember, I’ve highlighted in my previous articles that times of pandemic always offer an opportunity to start reform and restoration efforts.

“Don’t tell me the problem; just give me a solution…”

I recalled an old memory while I was writing this report. Two years ago, when I was peer-reviewing academic essays and articles, I had read a paper on the “healthcare system in petroleum exporting countries”, which argued that their healthcare system was greatly struggling due to the decline in oil revenue, because the healthcare services in Petroleum Exporting Countries were entirely offered by the State. The paper, however, didn’t include any solutions or constructive suggestions, other than a shallow, pages long ‘conclusion’ chapter that attempted to show the situation through numerous statistics. As I send the paper back to its author for review and correction, I wrote him a short note: “Should the healthcare system in these countries be privatized? Or should the government help sectors, apart from the petroleum the industry, gain some upward momentum? What do you suggest?”

It’s of utmost importance that young academics should start abandon studies and approaches that merely focus on the why of the problems while their minds are still young. I hope this young colleague used my advice wisely.

So, the World Bank’s report also details the implications of the oil price plunge for the global economy and for energy-exporting emerging market and developing economies, indicating that current low oil prices present an opportunity to review energy pricing policies as energy-importing emerging market and developing economies need to move away from costly subsidy schemes and allocate their limited fiscal resources for higher-priority expenditures involving improvements in public health and education programs.

In short, healthcare professionals and improvements in healthcare system will play a major role in helping Turkish economy quickly recover from the coronavirus. As the saying goes, “We must never change a winning strategy, and keep fighting against the virus”.

I must also say that we excessively interfere with the equilibrium of financial markets. I just hope we won’t make it worse.