It was around this time last year, when most countries around the world had lost about a quarter’s worth of economic activity, or firms were just starting to see the pandemic’s effects on their business getting reflected for the first time in their April – June results. Which happened to be almost universally dismal of course. But the feeling, indeed the fact, of everybody being on the same boat was slightly reassuring. Firms folded entire divisions, many even went out of business. Layoffs were inevitable, although the furlough schemes that some countries put in place very cleverly, proved useful in staving off mass unemployment. Those who did, left themselves ideally placed for the V-shaped recovery we all coveted.
We kept returning to the concept in this page from time to time throughout the year, in terms of its desirability over a W-shaped recovery, where the economy keeps dipping in and out of periods of contraction followed by expansion. The V-shape denoted bearing the brunt of the damage in one go, before rebounding sharply as well, in one go with all the momentum you can to make sure you don’t fall back again. If necessary, you could even delay the Great Reopening to make sure that the worst is over, and maintain that recovery in one go. It’s the sort of thing where in order to pull it off, the idea must be incorporated into your overall strategy such that every move you make is geared towards that.
You cannot just rely on the pent-up demand in an economy finding a vent to express itself. If you’re hoping for a recovery driven by a consumption boom, you must do all you can to facilitate it. The furlough scheme I praised earlier reveals its full genius here. Even recoveries where jobs are plentiful and so are workers, traditionally we’ve had to deal with an initial lag period during which these workers and jobs get matched with each other. By allowing workers to remain on a firm’s books (instead of getting laid off) even if their position had to be temporarily closed during the pandemic, countries that operated such furloughs can be expected to benefit by minimising that lag. Who says policymaking can’t be an art?
Meanwhile the situation specific to Bangladesh since it was unexpectedly hit by the second wave in March, with a gradual increase in daily positivity rates as well as infections, just when it was hoping to move at full speed towards recovery, has been effectively captured by apex trade body MCCI. At a program to unveil its quarterly review for January-March 2021, it confirmed that the country's economy had been showing signs of recovery in the very same period (Q3 of FY21). And it could only lament that at a time when diligently finishing the job at hand was possible, it was instead complacency that visibly crept into the public response. The responsibility must be borne by all.