Economic impact of the pandemic in Medellin, Antioquia
Colombia is facing a deep global crisis, which differs from recent economic and financial crises, and for which the world was under-prepared. The policies implemented to resolve those policies will not be sufficient to get out of the current one, since in none of these cases had global production of goods and services been curbed as is currently happening by the effect of the pandemic and health measures taken to prevent the spread of COVID-19. At the moment, the recession of the first half is clear, and uncertainty is concentrated on what will happen in the second (M. Alviar et al, 2020).
In this scenario, considerable monetary and fiscal policy efforts have been activated to contain their effects on economies: lower interest rates by central banks and greater provision of liquidity to the financial system, as well as the delivery of direct subsidies to families and the creation of business financing lines with reduced guarantees , are the most common actions around the world, varying in magnitude and scope depending on the state's fiscal capacity.
The consequences on emerging markets of this crisis may be even greater taking into account their own realities:
(i) precarious living conditions of a significant part of the population, high levels of informality in labour and productive markets
(ii) sudden reversal of capital flows and remittances
(iii) fall in demand and prices of primary goods in international markets.
(iv) the limitation on state financing, either through its own resources or access to international credit markets. China's economy could grow by 3% to 4% this year, when growth of more than 6% had been predicted prior to pandemic expansion. In the case of the U.S. product contractions are expected in the second quarter of the order of 14%, and between 2% and 3% by 2020 as a whole (M. Alviar et al, 2020).
For Colombia, analysist estimates indicate that, at best, the economy will contract by 1.9% by 2020.
This scenario would materialize by maintaining some 3 strict containment policies for the most severe stage of the pandemic and incorporating the mitigation policies announced by the national government. Other than that, the drop could reach up to -3.9%. A minor part of this contraction in domestic production will come on 20 the economy of the department of Antioquia and its Metropolitan Area (AMVA).
Taking into account the current operational restrictions determined by the national government for a wide range of economic activities under Decree 457 of 2020, our calculations suggest that this quarantine has a potential cost in terms of production for Antioquia of about $166 billion per day, of which $84 billion is for Medellin. This implies that the total cost the national government's total initial quarantine between March 24 and April 13 is equivalent to $3.1 trillion or 2.1 points of departmental GDP These amounts doubt the economic sustainability of a long or multiple quarantine strategy (M. Alviar et al, 2020).
Estimated lossses in production caused by quarantines in Valle de Aburra
In conclusion there are a set of measures that are being proposet at the national level that are intended to dinamizer the economy but preserving health of the population are the following:
1. 1. Strengthening
the hospital network, over-testing and developing new methods of monitoring and
controlling infected people.
Strengthening the hospital network during this quarantine will reduce the
risks of a saturation of the health system that jeopardizes the number of
patients who must enter it.
2. Gradual, safe and controlled economic reactivation.
The Ministry of Health and Social Protection with the support of the National Institute of Health has provided technical accompaniment, technological assistance and training to health professionals by tracking and Isolation Programme rests with territorial authorities, departments and districts, head of health secretariats.
However, the 31 territories work hard to meet the standards required for the program to be properly developed with efforts to ensure contact tracing and isolation need to be deepened in the context of economic reopening and selective isolation.These monitoring indicators are constantly being monitored by the Ministry of Health with the aim of proposing concerted improvement actions with the territorial entity.
3. Development of public safety nets and social assistance to vulnerable
people and mipymes
The high levels of poverty and informality of work and business are characteristic
of economies like Colombian and that have their maximum expression in a set of
sectors clearly identified in our city and the department, coupled with the
impossibility of safely reviving all productive activities, make it necessary
for local authorities to design and implement mechanisms to support vulnerable
people and small businesses, which complementent those developed by the
national government, concentrating especially on those segments where the
support will have more difficulty to reach. Actions should be developed to
reduce the pressure on spending associated with renting, food or other expenses
affecting the vital consumption of households (e.g., utilities) and small
businesses. In the latter item, it is important to take into account the
development of special programs for sectors such as commerce, hotels and
restaurants, and tourism, mainly, since these present a high vulnerability due
to the structure of their sectors in terms of informality and business size
Finally, according to the Ministry of Health the responsibility for the implementation of the Sustainable Selective Testing and the implementation of PRASS will be a determinant to reduce the risk of new outbreaks and the impact that the pandemic would have on the future as the risks of contagion associated with the performance of their productive activities make it unlikely to open up in the short term but with the immunization achievement infections could decrease significatively in the medium term (minsalud., 2020)
Alviar, M., Botero, J., Espinosa, J., Garcia, A., Londoño, L. J., Londoño, D., Montañez, D., Novoa, S., Trejos, O. O., Ramirez, L., Restrepo, D., Tamayo, C. E., & Torres, A. (n.d.). Efectos económicos y sociales del COVID-19 y alternativas de política: Un análisis para Medellín y el AMVA. Facultad de Minas - Sede Medellín - Universidad Nacional de Colombia. https://minas.medellin.unal.edu.co/descargas/ImpactocovidResumenEjecutivo
Ministerio de Salud y Protección Social de Colombia. (n.d.). Avances de la implementación del PRASS a nivel territorial. Más información del Coronavirus COVID-19. https://www.minsalud.gov.co/Paginas/Avances-de-la-implementaci%c3%b3n-del-PRASS-a-nivel-territorial-.aspx
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