MACRO: The politics of flattening curves and managing localized outbreaks

Below we provide a region-by-region update on the current state of the pandemic and what governments are doing to respond to the sustained increase of Covid-19 cases in some countries and the emergence of local outbreaks in others. The coronavirus continues to spread unevenly across the world. Even if most European and Asian countries seem to have succeeded in flattening the curve of the disease, some of them have recently seen a rash of new local outbreaks. On the other hand, countries in Latin America and Africa, where the pandemic struck slightly later, are finding much more difficult to bend the curve. The graph below shows that the number of daily cases is still growing in these regions. The limited testing capacity of many emerging markets makes fighting the pandemic even more complicated, given that the number of real cases could be underestimated. For instance, the graph below shows that countries with a relatively high number of daily confirmed cases (Mexico, Peru, India) are still lagging in their testing capacity. Latin America The pandemic struck Latin America later than the rest of the world, and most of the region is still in the ascending part of the curve. The key issue facing the region is whether exits from lockdowns are taking place prematurely amid concerns over the impact of prolonged economic disruption. According to the World Bank, Latin America and the Caribbean are set to suffer more economic damage than any other region in 2020, even without a second wave. Mexico, which entered a “new normal” phase in early June even as cases have been rising, is the most prominent example. It does not help that Mexico’s testing rates are so low. However, countries with relatively high testing rates – led by Chile and Peru – are still suffering serious outbreaks, which indicates inadequacies in their track and trace capabilities; testing on its own falls short. Chile may also have made the mistake of preparing for normalization prematurely after an early-stage lockdown created a false impression that the situation was under control. That phenomenon may be in evidence in Argentina, too, as the government is debating whether to reverse an earlier easing of restrictions in Buenos Aires after an apparent spike in cases. Middle East and North Africa The Middle East is still dusting itself off from a first wave that was often less devastating than feared. The explosive outbreak of infections in Iran was not replicated elsewhere, and many of the infections in the Gulf took place in crowded migrant communities rather than among nationals. Jordan was particularly aggressive in public health measures and had just a handful of cases; Lebanon and Syria, which both have relatively high levels of traffic to Iran, seem to have avoided significant outbreaks. Equally importantly, the robust informal sectors in the Levant and Maghreb withstood the economic shock of lockdowns. Subsidies and food distribution schemes helped avert wide-scale misery. Looking forward, though, most governments appear to have concluded that they have done all they can, and they need to put people back to work regardless of the health indicators. Saudi Arabia, for example, is diagnosing more than 4,000 new cases per day, but on 21 June essentially ended all commercial restrictions. Egypt is easing restrictions while more than 1,500 new cases are reported per day, with widespread speculation that it is a severe undercount. With relatively low oil prices hurting oil exporters and labor exporters alike, the region is in a weak position to withstand a second wave of shutdowns. Sub-Saharan Africa According to the limited data available (which is based on very little testing), the pandemic is spreading unevenly across the continent. In most countries, the daily number of confirmed new infection cases is still on the rise as countries are ramping up inadequate testing capacities. Total cumulative cases of 316,079 and 8,339 deaths were recorded across the continent as of 23 June, with the vast majority in South Africa, where testing capabilities appear comparable to those observed in many developed economies. Governments’ approaches to pandemic management and lockdown exits diverge increasingly, ranging from strict to laissez-faire and even outright denial. By and large, lockdown exits are driven by overwhelming economic need, and by the inability to provide both social safety nets and comprehensive enforcement. In West Africa, Ghana started easing its initial lockdown of key cities as early as mid-April, and Nigeria followed suit by early May. Most of the remaining social distancing measures, including regional travel bans and overnight curfews, are expected to be phased out by end-June, while regional borders are supposed to reopen in July. However, restrictions on international travel are likely to remain in place beyond July. In South Africa, border closures, restrictions on interprovincial travel, and most social distancing requirements remain in place. Europe Most European countries have lifted lockdown measures over the past month. So far, the region has not experienced a dramatic increase in cases, but localized outbreaks are becoming increasingly common. These tend to take place not only in capitals (such as Berlin and Lisbon) but also in factories with precarious working conditions. For instance, Germany, France, and Spain have experienced recent outbreaks in meat processing plants and abattoirs. Russia and Poland have also seen major outbreaks in large industrial/mining companies. Most governments have been so far reluctant to reactivate the all-encompassing lockdowns imposed in March. Political leaders seem to prefer instead implementing localized lockdown measures and stepping up the enforcement of already existing sanitary measures, such as mask-wearing requirements. On 23 June, Germany’s state of North Rhine-Westphalia put the local district of Guetersloh back on full lockdown. Restrictions have also been reimposed in Portugal’s capital after a spike in cases, particularly affecting young people. The coming two weeks will thus be crucial for gauging what the previously discussed risk of a new rise of infections may mean in terms of future restrictions and the constraints that governments could face in that scenario. Asia In Beijing, 249 new cases were identified between 11 and 22 June, after around 50 consecutive days with no new, locally-transmitted infections. City authorities responded with targeted lockdown measures. Meanwhile, South Korea has been grappling with a steady increase of roughly 30-60 new cases per day in June, as new clusters have repeatedly emerged at nightclubs, logistics centers, churches, and cram schools. The Korean Centers for Disease Control is now warning of a second round of infections. Authorities have therefore strengthened entry requirements at high-risk facilities and international entry ports to facilitate its test-trace-isolate program. Finally, Japan has avoided so far significant new clusters, enabling the government to continue relaxing restrictions. In some Southeast Asia countries, migrant workers – from both from abroad and traveling within country borders – are seen as the main risk in terms of new rounds of infections. In the Philippines and Indonesia, this includes displaced workers from the Middle East and cruise ships, as well as those that have lost their jobs in the cities; in Malaysia and Singapore, it mainly covers foreign migrant workers in construction and service jobs. These countries recognize the economic and social need to allow these workers to continue with their travel. Lastly, in India, where the number of daily cases continues rising, and testing capabilities are insufficient, some state governments are reimposing stricter quarantine measures, including curfews.

June 25, 2020

MACRO: The politics of flattening curves and managing localized outbreaks

BY Teneo Macro

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June 25, 2020

MACRO: The politics of flattening curves and managing localized outbreaks

BY Teneo Macro

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