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COVID 19 on Seats in Small Economical Country – Good or Bad?
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COVID 19 on Seats in Small Economical Country – Good or Bad?

Jul 9, 2024

The COVID-19 outbreak has affected countries worldwide, but developing and particularly small and highly dependent on exports are the most affected. These countries were reeling in calamity as the health crisis went global in 2020. 

  1. Tourism Revenue Plummets 

Small island nations and many developing countries form a major part of the global tourism industry and depend a lot on revenues generated from this industry. Due to measures that have been put in place by governments across the world banning the movement of people from one place to the other, tourism income reduced significantly or was nearly nonexistent. For instance, the revenue generated from the tourism sector constitutes more than 75% of export earnings in the case of Maldives. The severe decline in the number of visitors was a massive shock that caused more harm to the economy. Other economists say that in 2020 tourism-dependent countries lost billions of U.S dollars.

  1. Supply Chain Disruption

In the case of smaller countries, most of the needs ranging from foods, fuels, and manufactured products are usually imported. Factory shutdowns in some countries due to the outbreak of the pandemic, as well as border closures, disrupted complex supply chains and led to scarcity and high prices. The importation of important items was either made costly or was rendered infeasible for those countries that largely depend on imported items/goods. 

  1. Unemployment Surges

When the level of economic activity gradually dipped, the rates of unemployment in small-economy, tourism-dependent countries began to rise. Sustained high levels of unemployment still persist, even if the numbers are better than in the early days of the pandemic. Overall in Jamaica, for instance, the losses were felt with available statistics revealing that six out of ten tourism workers were laid off. If there is high unemployment, poverty, and hunger rates are likely to rise because developing countries usually lack adequate welfare programs.

  1. Debt Crises Loom

Small states are in unfavorable debt dynamics as tax revenues declined while spending pressures rose due to COVID healthcare costs and stimulus measures, while debt rose. The recovery of these funds under deteriorating economic circumstances may trigger more financial crises. There are increasing demands on governments of the GOP nations to come in handy in debt relief before certain countries reach a stage where they cannot afford to pay for the debts.

  1. The Positive Side 

Nevertheless, the impact has taken its toll where the economic consequences are concerned; nevertheless, the pandemic has also pointed out that it is possible to develop the economies in a way that is less dependent on specific niches, such as tourism. Governments should use measures that encourage the growth of enterprises, increase connectivity of infrastructures, and increase investment in the national workforce. ‘Economic resilience in the course of the recovery will define how some small developing nation-states adapt to subsequent shock events at the global level. 

In general, what can be ascertained is that COVID-19 amplification revealed a host of structural vulnerabilities for most ASEAN member states with smaller economies that are highly reliant on external demand for exports and imports, tourism, and imported necessities. However, if the consequences entrench themselves in society as pathological, imposing deep and lasting lesions, then whether this will be a negative pathology, a pathology of the past, or a pathology that brings about positive change will be determined by the policy decisions being made by governments today.

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