The day after the pandemic will be more challenging for countries and their economies than fighting the COVID-19 outbreak with technology-shy Cyprus especially struggling, experts told the Financial Mirror.
Economists said the current health crisis we are living through is particularly alarming because it has several new and unfamiliar features Cyprus is unprepared for.
“It’s a global medical emergency caused by a virus we still do not fully understand. It has a self-inflicted economic catastrophe as a necessary policy response to contain its spread,” said Alexandros Apostolides, an economic historian.
The scientific collaborator at the European University said, however, humanity has lived through many pandemics, “this is the first time we have decided to take measures which would be damaging to the economy, to fight back”.
He argued that the decision to put health before the economy brings about a whole new array of changes to societies.
Pool of debt
“Quite rightly, governments across the globe had pulled out the big guns to fight the pandemic, injecting cash into the market and the economy.
“However, public debt will balloon, creating financial challenges around the world, and the main question is how the debt will be handled,” said Apostolides.
Noting that governments will be bigger after playing the role of insurer and investor of last resort during the crisis.
Institutions such as the European Central Bank may have an even bigger role in handling the debt.
He said that a large part of EU debt is now in the hands of the European Central Bank who bought bonds in the secondary market in the form of recovery funds.
“The big question is whether the ECB will be holding onto that debt for a longer period than expected, call it in, or write part of it off?
“One thing is for certain; those who make the most out of the EU recovery funds, making substantial investments in infrastructure to boost recovery, will be the first to bounce back.
“In that sense, we need to grab the opportunity that is given to us, use the funds to set the right frameworks for recovery.”
Apostolides argued that Cyprus, like other EU countries, needs to pinpoint what policies and investments will generate sustainable growth.
“The passports scheme is dead in the water. In any case, which had an expiry date. Cyprus needs to look at other options, having in mind that the future is digital.
“Cyprus, just like any other country, should pull on its own resources to exit the crisis, which is nothing more than investing in infrastructure and its workforce.”
Lack of digital skills
Apostolides argued that countries whose regulators are quick to jump on the digital train would recover faster.
“You can’t expect to do business in a digital world running around with paper files in your hands.”
Lack of digital skills could reflect the labour market between those who have them and those who are technologically illiterate, creating polarisation in wages.
“Cyprus lacks in digital skills, so efforts to upgrade people’s skills will have to go into overdrive”.
It is unclear what kind of jobs will survive coronavirus and what will happen with employees previously working for businesses that went under during lockdown.
“With the future being digital, we would expect Cyprus to have some sort of plan of boosting people’s digital skills. Unfortunately, we have not heard of one yet.”
Cyprus is in the past
At the Centre of Economic Studies of the University of Nicosia, Marios Christou said the future is brought forward with Cyprus left behind.
“Before the virus outbreak, we imagined a future with people working from home; classes carried out online.
“These are forced upon us, but we are having difficulties to respond, as we have not done much to digitalise our economy or society.”
Christou said Cyprus’ financial sector was quick to pick up the pace on digitalisation, but the same does not apply to promoting e-governance.
“I see more liberalisation of trade being on the cards, pushed by online trade and shopping.”
The economist said the current situation has meant that companies with international supply chains are dealing with shortages and bottlenecks.
Christou argued this situation could lead to a new state of affairs where companies merge, creating duopolies or even monopolies.
“We could even witness the consolidation of currencies to remove part of the risk of international trade. Some 15 years ago, the Gulf countries talked about creating a single currency. In the aftermath of the coronavirus, we could see such efforts take-off again.”
Associate Professor of Developmental Psychology, University of Cyprus, Panayiotis Stavrinides, said the past year has seen humanity make leaps in medicine and science but failed to maintain its social cohesion.
“Those of us who had the chance to witness leaps in the pharmaceutical industry have seen what progress means.
“A few years ago, it would have been unimaginable that science would be able to produce a vaccine against a virus in such a short time,” said Stavrinides.
He argued social coherence was challenged and broken as the public witnessed profiteering from the vaccines and incidents of what is called ‘vaccine nationalism’ where countries prioritise their own vaccine needs.
“These are not things that honour humanity in the 21st Century.”
On the other hand, he argued that COVID gave a push to already rising movements that challenge the very essence of science, posing a threat for recovery in the day after.
“Towards the end of the 20th-century, humanity almost made childhood diseases such as smallpox, the mumps extinct, but anti-vaxxers have put those efforts at risk, and these diseases are coming back.
“We’ve sadly seen a preview of this show. In some cases, the same people who cast doubt on climate change are now pushing false information about the pandemic and its impact.
“Usually, these people are prone to conspiracy theories, ultranationalist, highly religious and with low education.”
Stavrinides said when a set of conspiracy theories meet, they make for a hazardous cocktail, especially in times of crisis.
“At the moment, society is restless, more so in Cyprus, with people dissatisfied with how the pandemic has been handled.
“A large part of society has been paying a hefty price due to the pandemic, while they witness the elite becoming wealthier through corrupt means.
“Throw in the mix the EU’s failure to secure vaccines while other countries like Israel have vaccinated almost 80% of its population and the USA having vaccinated some 20% in the short time Biden took office while Cyprus is at 5%, then the sense of restlessness will grow.”
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