SOURCE:
( A ) https://www.youtube.com/watch?time_continue=243&v=-BRlhQ-F2gE&feature=emb_logo
( B ) https://marcellus.in/blogs/the-foundations-of-indias-economic-recovery-are-in-place/
( C ) http://www.bbc.com/travel/story/20200405-covid-19-how-global-economies-will-recover-from-coronavirus
SER 10(B) OF X SERIALS (Infectious Diseases)https://bcvasundhra.blogspot.com/2020/04/ser-10-b-of-x-serials-infectious.html
SER 08 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/04/the-impossible-ethics-of-pandemic-triage.html
SER 07 OF X SERIALS (Infectious Diseases)
SER 04 / (C) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/ser-04-c-of-x-serials-infectious_27.html
SER 04 / (B) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/2019-2020-cornavirus-pandemic_26.html
SER 04 / (A) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/2019-2020-cornavirus-pandemic.html
SER 03 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/novel-coronavirus-covid-19.html
SER 02 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/history-in-crisis-lessons-for-covid-19.html
SER 01 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/infectious-diseases-infectious-diseases.html
PART - ONE OF FOUR PARTS
CLICK/GOOGLE THE URL BELOW TO OPEN THE VIDEO
https://www.youtube.com/watch?time_continue=243&v=-BRlhQ-F2gE&feature=emb_logo
Prannoy Roy discusses with experts the impact of the COVID-19 pandemic on the economy of India and the world as the coronavirus continues to infect and kill more and more people. Former Chief Economic Advisor Arvind Subramanian says the economic crisis linked to COVID-19 pandemic is something that the world has never seen before. "It's not just another crisis," he says. Nobel laureates Amartya Sen, Abhijit Banerjee and Esther Duflo also analyse the impact of coronavirus on the world economy. SBI Chairman Rajnish Kumar says the Reserve Bank of India is monitoring the situation and it will do everything to ensure the economy is not affected severely due to the lockdown.
“We have tremendous trust in our government, who are relatively transparent about every step they are taking to fight this crisis,” said resident Constance Tan, who works for data analysis platform Konigle. “As a general rule, if the government enforces something, we comply.” That said, there are still rule-flouters, and the country has taken away passports and work passes for those in violation, according to a 21 March report by Channel News Asia. “But as a whole, we work together, and we do not need to worry about social unrest, people dying on the streets or economic destabilisation,” said Tan.
As a small country, Singapore depends on the recovery of the rest of the world to have the most successful rebound, but residents generally believe in the strength of the future here. “As a people, like everywhere else, I think surviving this will make everyone more resilient,” said native Justin Fong. “One thing for sure, this has forced the adoption of technology which will bode well for Singaporeans.” Many businesses like Konigle implemented work-from-home policies quickly, and the government released the Trace Together app to help track the virus, which many residents have downloaded.
United States
To capture the United States’ broad geographic footprint, the index splits up the country into West, Central and East regions, but as a whole, the US ranks well (9th, 11th and 22nd, respectively) for its low-risk business environment and strong supply chain.
Containing the virus has proven challenging in major metropolitan areas like New York, and unemployment has already jumped to historic levels, in large part due to the mandatory shutdowns of more than half of US states, which has particularly hit restaurant and retail workers and other businesses that rely on foot traffic. But the US government has moved quickly to pass stimulus measures to stabilise the economy, and social distancing strategies enacted elsewhere in the country, which seem to be having an effect, should lessen the overall impact of the virus, allowing for a quicker economic recovery.
Financial institutions like Goldman Sachs and Morgan Stanley are predicting a “V-shaped” recession and recovery, with an unprecedented negative immediate impacts (as is already being seen) but a relatively quick recovery in the later quarters of the year; while consultants like McKinsey are taking a more measured, but still optimistic view, on recovery based on the successful implementation of public health measures – like the lockdowns in place – and policy interventions like the already-announced $2t stimulus package, likely the first of many. The US is also critical to the world economy, representing a nearly a quarter of global GDP, and the recovery of the global economy is highly dependent on how the US fares.
We want money, goods, services, labour and ideas to flow as freely as possible
“Generally speaking, the US economy is better-positioned to recover from large shocks and potential longer-run shifts than much of the rest of the world. The population is on average younger than much of the rest of the world with more mobility, and labour market restrictions are generally lighter, thereby facilitating greater labour reallocation” said Eric Sims, professor of economics at the University of Notre Dame. “More immediately, the Federal Reserve in the US and the Bank of England in the UK (neither of which have yet gone to negative policy rates) have a bit more space to provide monetary accommodation than other central banks around the world, such as the ECB or the Bank of Japan.”
To further enhance the US’ recovery, the presidential administration has proposed dividing the nation into areas that are less hard hit and allowing normal economic activity to recur. “I think those measures would go long way towards ultimately setting up the conditions for strong recovery,” said Peter C Earle, research fellow at the American Institute for Economic Research, a not-for-profit academic think tank. “We want money, goods, services, labour and ideas to flow as freely as possible, not just domestically but internationally as well.”
The US’ lack of universal healthcare has been one criticism of the county’s ability to handle the crisis, and one that needs to be addressed for future resiliency. “I think eventually the world can emerge stronger after the virus is contained and I believe the US can, too. But it all depends on the lessons we learn,” said Michael Merrill, an economist and labour historian in the Rutgers School of Management and Labor Relations. “We are going to have to invest in new forms of public health and create sustainable forms of social protection and institutional resiliency if we are to return to the commercially dense, interconnected, highly networked societies that were the norm only one month ago.”
Rwanda
We felt confident that the Rwandan government would handle the situation way better than in our home countries
Due to recent improvements in corporate governance, Rwanda has made some of the largest leaps in the index in recent years, jumping 35 spots to its current rank of 77th most resilient in the world (and fourth highest in Africa). Most importantly, it looks particularly well positioned to bounce back from this type of crisis as the country successfully contained Ebola from its borders after an outbreak from neighbouring Democratic Republic of the Congo in 2019. With its mix of universal health care, medical supply-delivering drones and thermometer checks at its borders, Rwanda stands to be well-equipped to maintain stability throughout the crisis, especially when compared to other countries in the region.
“A lot of foreign students like me stayed behind because we felt confident that the Rwandan government would handle the situation way better than in our home countries,” said Garnett Achieng, digital content curator for Baobab Consulting and student at the African Leadership University, who lives in Kigali and is originally from Kenya. “Amongst foreign African students, the only anxiety comes with knowing that our families back home are not in the same situation we are in.”
Rwanda was the first country in sub-Saharan Africa to impose a total lockdown, and is already distributing free food door-to-door to the country’s most vulnerable. While tourism is expected to be hit hard, as Rwanda is a popular destination for many international conferences and exhibitions, Achieng is hopeful that the country will have relatively few casualties to the virus, making it well-positioned to recover quickly.
New Zealand
Ranked 12th-most resilient in the index, New Zealand scores especially high in corporate governance and its supply chain. The country has also been able to move quickly to contain the spread of the virus by shutting borders to international travellers on 19 March and enacting a non-essential-business lockdown on 25 March.
It’s our time to sit down as a New Zealand family and decide who we want to be
“As an island nation, it is easier to control our borders, the main source of infections. So the effective border closure makes sense,” said Auckland resident Shamubeel Eaqub, economist at consultancy Sense Partners. “Compared to other countries, the response in New Zealand has been bold and decisive.” The measures are paying off, as some epidemiologists see it as having potential to be one of few “normal” nations left, according to a Guardian report, eliminating all cases if measures remain strong for the coming weeks.
With tourism and exports a major part of the economy, New Zealand will face some struggles to its economy in the near term, but this doesn’t necessarily have to be a bad thing. “By being insulated, we will have time to recalibrate,” said Dunedin resident Ron Bull, director of curriculum development at Otago Polytechnic. “We had already started talking about the impact of campers and backpackers on the environment, and this gives us time to weigh up what’s important against the waves of tourist dollars coming in.
” Overall, the country is well-placed for a stable recovery, with low levels of government debt and the ability to enact quantitative easing to keep interest rates low. “We have fewer constraints to both blunt the impact of dealing with [the] pandemic and supercharge the recovery,” said Eaqub. “Most importantly, New Zealand remains a relatively high-trust country. This will be a strong foundation for recovery from the biggest health and economic shock in generations.”
Bull agrees the country has a likelihood to come out stronger. “Just like a family living in the same house, you have to get to know each other,” he said. “It’s our time to sit down as a New Zealand family and decide who we want to be and make some decisions to make us stronger and better.”
( A ) https://www.youtube.com/watch?time_continue=243&v=-BRlhQ-F2gE&feature=emb_logo
( B ) https://marcellus.in/blogs/the-foundations-of-indias-economic-recovery-are-in-place/
( C ) http://www.bbc.com/travel/story/20200405-covid-19-how-global-economies-will-recover-from-coronavirus
INDEX
SER 12 (B) OF X SERIALS (Infectious Diseases) VIRUS WAR
https://bcvasundhra.blogspot.com/2020/04/ser-12-b-of-x-serials-infectious.html
SER 12 (D) OF X SERIALS (Infectious Diseases) VIRUS WAR
SER 12 (C) OF X SERIALS (Infectious Diseases) VIRUS WAR
SER 12 (B) OF X SERIALS (Infectious Diseases) VIRUS WAR
https://bcvasundhra.blogspot.com/2020/04/ser-12-b-of-x-serials-infectious.html
SER 12 (A) OF X SERIALS (Infectious Diseases) VIRUS WAR
https://bcvasundhra.blogspot.com/2020/04/ser-12-of-x-serials-infectious-diseases_16.html
SER 11 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/04/faith-groups-as-super-spreader-of_15.htmlSER 10(B) OF X SERIALS (Infectious Diseases)https://bcvasundhra.blogspot.com/2020/04/ser-10-b-of-x-serials-infectious.html
SER 10(A) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/04/how-can-indian-economy-recover-from.html
https://bcvasundhra.blogspot.com/2020/04/how-can-indian-economy-recover-from.html
SER 09 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/04/save-lives-ready-shovels.html
https://bcvasundhra.blogspot.com/2020/04/save-lives-ready-shovels.html
https://bcvasundhra.blogspot.com/2020/04/the-impossible-ethics-of-pandemic-triage.html
SER 07 OF X SERIALS (Infectious Diseases)
SER 06 ( B ) OF X SERIALS (Infectious Diseases)
SER 06 (A ) OF X SERIALS (Infectious Diseases)
SER 05 OF X SERIALS (Infectious Diseases)
SER 04 / (C) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/ser-04-c-of-x-serials-infectious_27.html
SER 04 / (B) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/2019-2020-cornavirus-pandemic_26.html
SER 04 / (A) OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/2019-2020-cornavirus-pandemic.html
SER 03 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/novel-coronavirus-covid-19.html
SER 02 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/history-in-crisis-lessons-for-covid-19.html
SER 01 OF X SERIALS (Infectious Diseases)
https://bcvasundhra.blogspot.com/2020/03/infectious-diseases-infectious-diseases.html
PART - ONE OF FOUR PARTS
How Can The Indian Economy Recover
From
COVID-19
- Prannoy Roy Talks To Experts
CLICK/GOOGLE THE URL BELOW TO OPEN THE VIDEO
https://www.youtube.com/watch?time_continue=243&v=-BRlhQ-F2gE&feature=emb_logo
Prannoy Roy discusses with experts the impact of the COVID-19 pandemic on the economy of India and the world as the coronavirus continues to infect and kill more and more people. Former Chief Economic Advisor Arvind Subramanian says the economic crisis linked to COVID-19 pandemic is something that the world has never seen before. "It's not just another crisis," he says. Nobel laureates Amartya Sen, Abhijit Banerjee and Esther Duflo also analyse the impact of coronavirus on the world economy. SBI Chairman Rajnish Kumar says the Reserve Bank of India is monitoring the situation and it will do everything to ensure the economy is not affected severely due to the lockdown.
============================
PART - TWO OF FOUR PARTS
PART - TWO OF FOUR PARTS
The Foundations of India’s Economic Recovery Are in Place [ https://marcellus.in/blogs/the-foundations-of-indias-economic-recovery-are-in-place/ ]
Four times in the last 40 years, a US recession alongside falling US bond yields and falling oil prices has been followed by a strong economic recovery in India. In fact, India has NEVER witnessed an economic recovery without a US recession preceding it! Now, all three conditions for an Indian economic recovery – a US recession, smashed crude prices and falling US Government bond yields are – in place. Our portfolios – CCP and LCP – are ideally designed to capitalise on such an economic recovery
Five years ago, in December 2015 in my previous job as a stockbroker, I constructed a note which made me a hate figure in some circles. At a time when the bull run inspired by Prime Minister Modi’s 2014 election victory was still underway, the brokerage which I managed had said that India was heading for an earnings recession as the traditional model of crony capitalist capex was all set to be jammed by Prime Minster Modi and by Mr Rajan (the then RBI Governor). Hence, we said that getting all steamed up about the large cap benchmark indices in India – which were stuffed full of poorly managed crony capitalist companies – was pointless.
Since December 2015, Nifty EPS growth has been a measly 2.5% per annum. The 17 companies which have exited from the Nifty since then are: Cairn India, Punjab National Bank, BHEL, Idea, Grasim, ACC, Bank of Baroda, Tata Motors DVR, Tata Power, Ambuja Cements, Aurobindo Pharma, Bosch, Lupin, HPCL, Indiabulls Housing and Yes Bank.
Five years on, in the midst of the Coronavirus driven mayhem, we believe the opposite call is warranted since all the ingredients are now in place for sustained recovery in Indian earnings growth.
These ingredients are: (a) cheap oil; (b) cheap money; (c) GST implementation; and (d) the corporate tax rate cuts.
Cheap oil: India’s economic reform process began tentatively in the early 1980s under Mrs. Gandhi and that led to India’s first economic growth spurt between 1982-87 (alongside a tremendous bull run in the Sensex) just as Ronald Reagan was bringing the US out of the 1979-82 recession. India’s second growth spurt came two years after the momentous economic reforms of 1991 and that too triggered a crazy bull run (which Harshad Mehta manipulated to his benefit). Both of these growth spurts and the golden growth period of 2004-08 and again from 2009-11 had a common feature – oil prices crashed at the beginning of the growth spurt alongside falling US Government bond yields (see the periods marked with red chevrons in the chart above). In each of these periods, the oil price crashes and the falling Government bond yields were triggered to a significant extent by a US recession [highlighted in grey in the chart shown above].
The correlation between a recession in the world’s largest economy, tanking oil prices and falling US Government bond yields is relatively easy to understand. But why does this cocktail of factors always trigger an economic recovery in India?
Cheap money: Ever since India liberalised its economy in 1991, foreign capital – both FDI and FPI – has been central to financing its growth story largely because over 80% of the flow of domestic savings has been directed towards physical savings (gold & real estate). As a result, capital inflows from America – which accelerate when US bond yields fall sharply – are all important for India. For example, the drop in the US 10 year bond yield from 6.7% in Jan 2000 to 3.4% in June 2003 (Link) was crucial for igniting China and India’s growth engines in the 2003-07 boom. Equally important for India’s post-Lehman recovery was the flood of foreign capital which swept through India in 2009 and 2010 (remember those oversubscribed crony capitalist IPOs & QIPs with prospectuses that reeked of corruption).
The demise of residential real estate in India as a credible asset class since 2015 has in this regard been useful – it has encouraged households to save through the financial markets. Unfortunately, in parallel, the overall households’ savings rate has fallen in India – from around 25% of income ten years ago to around 17% today. As a result even today, India is dependent on foreign risk capital to finance an economic recovery. Indian lenders can provide debt financing but NOT risk capital. There is only source of risk capital for the Indian economy – the US of A.
In this context, it looks likely that the flooring of interest rates by Western central banks could be doubly beneficial for India. Firstly, it is likely to encourage foreign capital to head towards India as and when the Corona panic abates. Secondly, it will encourage the RBI to do cut rates sharply (since CPI inflation is likely to be taken care of by compressed crude prices). If the Government of India also cuts the rates its offers on its savings schemes, this will help the banks cut their deposit rates and thus their lending rates. Rate transmission can then finally happen in India and SME lending – far more important for spurring GDP growth than crony capitalist capex – could potentially come to life.
With Brent crude having corrected from US$83/barrel to US$30/barrel now, with US Treasury yields now below zero and with the US economy now likely to be in recession, key prerequisites of an Indian earnings recovery are in place. But that is not all – two key domestic reforms have also set the scene for a select few companies to benefit from the rapid formalisation of the Indian economy.
GST is a massive driver of formalisation: Out of India’s workforce of around 600 million people, we estimate that around 250 million people work in the retail sector (shops, markets, supermarkets, etc). A further 50 million odd work in the logistics sector (driving trucks and the assorted light vehicles used for last mile delivery). Thus 50% of India’s workforce is associated with the retail sector. Until GST came along, most of these people never paid taxes and hence enjoyed tax free profit margins of 12-15%. With the Government going full throttle to implement GST due to fiscal compulsions, these profit margins have dropped to 2-4%. As a result, the retail sector is now gasping for working capital (for a detailed explanation see our 17th September 2019 blog). This in turn is pushing these retailers towards seeking financing from organised lenders. However, these lenders – banks like HDFC Bank, Kotak Bank and NBFCs like Bajaj Finance – are discriminating between retailers who sell leading brands like Relaxo, Asian Paints and Pidilite (their retailers seem to be getting channel financing at 8% interest rates) and those who sell laggard brands (such retailers are getting funded at 15%). As a result, the market leaders are gaining market share every quarter from the laggard brands. See, for example Asian Paints’ consistent double digit volume growth in a sector which is unlikely to be growing at more than 6%.
Corporate tax rate cuts help the market leaders: In September last year not only did the Government cut corporate tax rates from 35% to 25%, the Finance Minister also said that if companies committed to fresh capex in new entities, they would get a discounted corporate tax rate of 15%. For market leading firms whose ROCE is well above cost of capital – and hence who generate lots of free cash flow which can be used for capex – this announcement is manna from heaven. Companies like Relaxo, Asian Paints, Nestle and Pidilite anyway double the size of their operations every 3-5 years. Hence their effective corporate tax rates five years hence could be sub-20%. However, for their weaker competitors – who don’t have the financial means to expand capacity – the corporate tax rate is likely to continue to be 25%. A 500bps+ differential in profit margins will decisively swing the balance of power in favour of market leading companies who will then either acquire the smaller companies in their sector (see what Pidilite is doing) or turn them into outsourced suppliers. For more details on the benefit that our investee companies are deriving from these corporate tax rate cuts, read our latest Consistent Compounders newsletter.
Investment implications
Across both our portfolios – Consistent Compounders and Little Champs – we continue to stay invested in companies with clean accounts selling essential products & services with high barriers to entry. These companies have high ROCEs (because of their high entry barriers). As a result they have adequate cashflows to not only self-finance their growth but also to buffer their balance sheet from Coronavirus related lockdowns which could continue for several weeks. Supply issues vis a vis China also seem to be largely under control: see this presentation from our fund managers – Rakshit & Ashvin – on this subject.
In short, we have created two painstakingly curated portfolios which stand to benefit strongly from an economic recovery in India. We reiterate that the power of cheap money and cheap oil is such that the last 40 years of data shows that a recession in America is a necessary and sufficient condition for a subsequent recovery in India.
Disclosure: HDFC Bank, Kotak Bank, Bajaj Finance, Asian Paints, Pidilite, Relaxo and Nestle are part of most of Marcellus’ portfolios.
--------------------------------------------------------------
Saurabh Mukherjea is the Founder and CIO at Marcellus Investment Managers. He’s also the author of “Coffee Can Investing: the Low Risk Route to Stupendous Wealth”
PART 3 OF FOUR PARTS
COUNTRIES WITH THE MOST
RESILIENT ECONOMIES
By
Lindsey Galloway
6 April 2020
Experts have already begun assessing how a
recovery might look once the Covid-19 virus is
contained, and which countries stand to bounce
back best.
[ http://www.bbc.com/travel/story/20200405-covid-19-how-global-economies-will-recover-from-coronavirus ] The -19 pandemic has injected an unprecedented amount of uncertainty into the global economy, as countries across the world battle growing infections, implement wide-ranging social-distancing strategies and attempt early fiscal interventions to stabilise ]markets.
Top 10 most resilient countries, according to the 2019 Global Resilience Index
1. Norway
2. Denmark
3. Switzerland
4. Germany
5. Finland
6. Sweden
7. Luxembourg
8. Austria
9. US Central
10. United Kingdom
While managing the immediate health crisis is vital and necessary for economic stability, experts have already begun assessing how a recovery might look once the virus is contained and which countries stand to bounce back best.
To better understand this, we turned to the 2019 Global Resilience Index by insurance company FM Global, which ranks the resiliency of the business environment across 130 countries, based on factors like political stability, corporate governance, risk environment and supply chain logistics and transparency. Pairing these rankings with their country’s initial response to the virus, we identified the nations across the globe that have a high likelihood of maintaining stability and resilience through the crisis.
We talked to residents and experts in these places to understand how they’re coping now and what they might look forward to in the hopefully near-term future.
Four times in the last 40 years, a US recession alongside falling US bond yields and falling oil prices has been followed by a strong economic recovery in India. In fact, India has NEVER witnessed an economic recovery without a US recession preceding it! Now, all three conditions for an Indian economic recovery – a US recession, smashed crude prices and falling US Government bond yields are – in place. Our portfolios – CCP and LCP – are ideally designed to capitalise on such an economic recovery
Five years ago, in December 2015 in my previous job as a stockbroker, I constructed a note which made me a hate figure in some circles. At a time when the bull run inspired by Prime Minister Modi’s 2014 election victory was still underway, the brokerage which I managed had said that India was heading for an earnings recession as the traditional model of crony capitalist capex was all set to be jammed by Prime Minster Modi and by Mr Rajan (the then RBI Governor). Hence, we said that getting all steamed up about the large cap benchmark indices in India – which were stuffed full of poorly managed crony capitalist companies – was pointless.
PART 3 OF FOUR PARTS
6 April 2020
recovery might look once the Covid-19 virus is
contained, and which countries stand to bounce
back best.
[ http://www.bbc.com/travel/story/20200405-covid-19-how-global-economies-will-recover-from-coronavirus ] The -19 pandemic has injected an unprecedented amount of uncertainty into the global economy, as countries across the world battle growing infections, implement wide-ranging social-distancing strategies and attempt early fiscal interventions to stabilise ]markets.
Top 10 most resilient countries, according to the 2019 Global Resilience Index
1. Norway
2. Denmark
3. Switzerland
4. Germany
5. Finland
6. Sweden
7. Luxembourg
8. Austria
9. US Central
10. United Kingdom
2. Denmark
3. Switzerland
4. Germany
5. Finland
6. Sweden
7. Luxembourg
8. Austria
9. US Central
10. United Kingdom
While managing the immediate health crisis is vital and necessary for economic stability, experts have already begun assessing how a recovery might look once the virus is contained and which countries stand to bounce back best.
To better understand this, we turned to the 2019 Global Resilience Index by insurance company FM Global, which ranks the resiliency of the business environment across 130 countries, based on factors like political stability, corporate governance, risk environment and supply chain logistics and transparency. Pairing these rankings with their country’s initial response to the virus, we identified the nations across the globe that have a high likelihood of maintaining stability and resilience through the crisis.
We talked to residents and experts in these places to understand how they’re coping now and what they might look forward to in the hopefully near-term future.
Denmark
Ranked second in the index, Denmark scores high marks for its supply chain tracking and low governmental corruption. The country also moved quickly when it came to enacting social-distancing measures in light of the spread of the virus. It announced a shutdown of schools and non-essential private businesses on 11 March and closed its borders to foreigners on 14 March, when the country only had a handful of positive cases. But the moves have already proven effective.
“Regular flu has dropped by 70% versus last year, which must be a good indicator of the effectiveness of the steps taken by the government,” said Rasmus Aarup Christiansen, managing partner of Pissup Tours, based in Copenhagen. “I was sceptical at first but seeing how almost all other countries have taken similar steps [like lockdowns and border closings] soon after Denmark, it seems the government was doing the right thing.”
Most people feel a moral duty to make sacrifices for the sake of public health
Danish culture, which tends to be trusting of authority and willing to stand together for a common cause, has also had an impact on the effectiveness of the measures. “The word ‘samfundssind’ (which roughly translates to “civic sense” or “civic duty”) is the new buzzword in Denmark on both social and traditional media, and most people feel a moral duty to make sacrifices for the sake of public health,” said Aarup Christiansen. “No-one wants to be called out for being responsible for endangering the lives of senior citizens just because they won’t give up their usual luxuries.”
That doesn’t mean there haven’t been challenges, however. Aarup Christiansen has personally seen his travel business revenues plummet. While he appreciates the governmental financial aid packages, announced on 14 March (which include covering some of the costs of worker salaries), the rules and outputs have yet to be fully defined and put in place, leading to more uncertainty and layoffs. Still, the measures, like paying 90% of wages of hourly workers and 75% of those of salaried workers affected by the crisis, are being hailed as a model for the rest of the world, by essentially “freezing” the economy until the storm subsides. The model won’t come cheap however; the measures are expected to cost 13% of total GDP.
There’s also the sense here that this is a global crisis, and Denmark’s resilience will no doubt rely on how the rest of the world adapts and maintains open trade. “Denmark may be able to gain a relative advantage by having dodged some of the more serious consequences,” said Aarup Christiansen. In fact, the country is already talking about loosening some of the restrictions by Easter based on the containment so far, according to a Bloomberg report. “Denmark’s well-developed pharmaceutical sector may prove an advantage,” said Aarup Christiansen. “I would, however, find no pride in Denmark being better off if it comes from other countries having to suffer.”
Singapore
Singapore scores high in the index for its strong economy, low political risk, strong infrastructure and low corruption in the survey, pushing it to number 21 in the overall resilience ranking. The country also moved fast to contain the virus and has had one of the flattest curves in the pandemic.
There’s also the sense here that this is a global crisis, and Denmark’s resilience will no doubt rely on how the rest of the world adapts and maintains open trade. “Denmark may be able to gain a relative advantage by having dodged some of the more serious consequences,” said Aarup Christiansen. In fact, the country is already talking about loosening some of the restrictions by Easter based on the containment so far, according to a Bloomberg report. “Denmark’s well-developed pharmaceutical sector may prove an advantage,” said Aarup Christiansen. “I would, however, find no pride in Denmark being better off if it comes from other countries having to suffer.”
Singapore
Singapore scores high in the index for its strong economy, low political risk, strong infrastructure and low corruption in the survey, pushing it to number 21 in the overall resilience ranking. The country also moved fast to contain the virus and has had one of the flattest curves in the pandemic.
Surviving this will make
everyone more resilient
As a small country, Singapore depends on the recovery of the rest of the world to have the most successful rebound, but residents generally believe in the strength of the future here. “As a people, like everywhere else, I think surviving this will make everyone more resilient,” said native Justin Fong. “One thing for sure, this has forced the adoption of technology which will bode well for Singaporeans.” Many businesses like Konigle implemented work-from-home policies quickly, and the government released the Trace Together app to help track the virus, which many residents have downloaded.
United States
To capture the United States’ broad geographic footprint, the index splits up the country into West, Central and East regions, but as a whole, the US ranks well (9th, 11th and 22nd, respectively) for its low-risk business environment and strong supply chain.
Containing the virus has proven challenging in major metropolitan areas like New York, and unemployment has already jumped to historic levels, in large part due to the mandatory shutdowns of more than half of US states, which has particularly hit restaurant and retail workers and other businesses that rely on foot traffic. But the US government has moved quickly to pass stimulus measures to stabilise the economy, and social distancing strategies enacted elsewhere in the country, which seem to be having an effect, should lessen the overall impact of the virus, allowing for a quicker economic recovery.
Financial institutions like Goldman Sachs and Morgan Stanley are predicting a “V-shaped” recession and recovery, with an unprecedented negative immediate impacts (as is already being seen) but a relatively quick recovery in the later quarters of the year; while consultants like McKinsey are taking a more measured, but still optimistic view, on recovery based on the successful implementation of public health measures – like the lockdowns in place – and policy interventions like the already-announced $2t stimulus package, likely the first of many. The US is also critical to the world economy, representing a nearly a quarter of global GDP, and the recovery of the global economy is highly dependent on how the US fares.
We want money, goods, services, labour and ideas to flow as freely as possible
“Generally speaking, the US economy is better-positioned to recover from large shocks and potential longer-run shifts than much of the rest of the world. The population is on average younger than much of the rest of the world with more mobility, and labour market restrictions are generally lighter, thereby facilitating greater labour reallocation” said Eric Sims, professor of economics at the University of Notre Dame. “More immediately, the Federal Reserve in the US and the Bank of England in the UK (neither of which have yet gone to negative policy rates) have a bit more space to provide monetary accommodation than other central banks around the world, such as the ECB or the Bank of Japan.”
To further enhance the US’ recovery, the presidential administration has proposed dividing the nation into areas that are less hard hit and allowing normal economic activity to recur. “I think those measures would go long way towards ultimately setting up the conditions for strong recovery,” said Peter C Earle, research fellow at the American Institute for Economic Research, a not-for-profit academic think tank. “We want money, goods, services, labour and ideas to flow as freely as possible, not just domestically but internationally as well.”
The US’ lack of universal healthcare has been one criticism of the county’s ability to handle the crisis, and one that needs to be addressed for future resiliency. “I think eventually the world can emerge stronger after the virus is contained and I believe the US can, too. But it all depends on the lessons we learn,” said Michael Merrill, an economist and labour historian in the Rutgers School of Management and Labor Relations. “We are going to have to invest in new forms of public health and create sustainable forms of social protection and institutional resiliency if we are to return to the commercially dense, interconnected, highly networked societies that were the norm only one month ago.”
Rwanda
We felt confident that the Rwandan government would handle the situation way better than in our home countries
Due to recent improvements in corporate governance, Rwanda has made some of the largest leaps in the index in recent years, jumping 35 spots to its current rank of 77th most resilient in the world (and fourth highest in Africa). Most importantly, it looks particularly well positioned to bounce back from this type of crisis as the country successfully contained Ebola from its borders after an outbreak from neighbouring Democratic Republic of the Congo in 2019. With its mix of universal health care, medical supply-delivering drones and thermometer checks at its borders, Rwanda stands to be well-equipped to maintain stability throughout the crisis, especially when compared to other countries in the region.
“A lot of foreign students like me stayed behind because we felt confident that the Rwandan government would handle the situation way better than in our home countries,” said Garnett Achieng, digital content curator for Baobab Consulting and student at the African Leadership University, who lives in Kigali and is originally from Kenya. “Amongst foreign African students, the only anxiety comes with knowing that our families back home are not in the same situation we are in.”
Rwanda was the first country in sub-Saharan Africa to impose a total lockdown, and is already distributing free food door-to-door to the country’s most vulnerable. While tourism is expected to be hit hard, as Rwanda is a popular destination for many international conferences and exhibitions, Achieng is hopeful that the country will have relatively few casualties to the virus, making it well-positioned to recover quickly.
New Zealand
Ranked 12th-most resilient in the index, New Zealand scores especially high in corporate governance and its supply chain. The country has also been able to move quickly to contain the spread of the virus by shutting borders to international travellers on 19 March and enacting a non-essential-business lockdown on 25 March.
It’s our time to sit down as a New Zealand family and decide who we want to be
“As an island nation, it is easier to control our borders, the main source of infections. So the effective border closure makes sense,” said Auckland resident Shamubeel Eaqub, economist at consultancy Sense Partners. “Compared to other countries, the response in New Zealand has been bold and decisive.” The measures are paying off, as some epidemiologists see it as having potential to be one of few “normal” nations left, according to a Guardian report, eliminating all cases if measures remain strong for the coming weeks.
With tourism and exports a major part of the economy, New Zealand will face some struggles to its economy in the near term, but this doesn’t necessarily have to be a bad thing. “By being insulated, we will have time to recalibrate,” said Dunedin resident Ron Bull, director of curriculum development at Otago Polytechnic. “We had already started talking about the impact of campers and backpackers on the environment, and this gives us time to weigh up what’s important against the waves of tourist dollars coming in.
” Overall, the country is well-placed for a stable recovery, with low levels of government debt and the ability to enact quantitative easing to keep interest rates low. “We have fewer constraints to both blunt the impact of dealing with [the] pandemic and supercharge the recovery,” said Eaqub. “Most importantly, New Zealand remains a relatively high-trust country. This will be a strong foundation for recovery from the biggest health and economic shock in generations.”
Bull agrees the country has a likelihood to come out stronger. “Just like a family living in the same house, you have to get to know each other,” he said. “It’s our time to sit down as a New Zealand family and decide who we want to be and make some decisions to make us stronger and better.”
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Living In is a series from BBC Travel that discovers what it’s like to reside in some of the world’s top destinations.
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RESILIENCE INDEX DATA
The FM Global Resilience Index is an equally-weighted composite measure of three core resilience factors: economic, risk quality and the supply chain itself. Each factor is comprised of four core drivers. Scores are bound on a scale of 0 to 100 with 0 representing the lowest resilience and 100 being the highest resilience. Use the buttons to select the factor and associated driver scores. Click any column header to sort the table by that column.
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FM GLOBAL RESILIENCE INDEX
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