4 ★ FINANCIAL TIMES Wednesday8 April 2020

CO R O N AV I R U S

H

arry Truman, US president from 1945 to

1953, reputedly yearned for a “one-armed

economist” who would give unambiguous

advice rather than the “on the one hand, on

the other” kind. In the coronavirus crisis, his

wish may have come true. Academic economists on both

sides of the Atlantic are virtually unanimous in their sup-

port of lockdown measures taken by governments to stop

the virus from spreading, despite the huge economic costs.

Over the past week, the scale of those costs has become

apparent. In many countries jobs are being lost at a pace

not seen since the 1930s.Ten million Americans aveh

applied for unemployment insurance and1m Britons aveh

registered for universal credit in the previous two weeks.

Purchasing managers’ indices in big European econo-

mies have recorded theirsteepest declines n record. Mosto

analysts expect a bigger and faster contraction in output

across the global economy than during the financial crisis.

Some ask whether the cure might be worse than the dis-

ease. But the reply from economists is a resounding “no”.

“In times of great uncertainty, most economists think

the government should intervene,” said Rachel Griffith,

president of the UK’s Royal Economic Society and profes-

sor of economics at the University of Manchester.

Surveys show a striking degree of consensus among top

economists in favour of the lockdowns.

The IGM Economic Experts Panel’slatest survey f topo

US macroeconomists asked for their view of the statement

“Abandoning severe lockdowns at a time when the likeli-

hood of a resurgence in infections remains high will lead to

greater total economic

damage than sustaining

the lockdowns to elimi-

nate the resurgence risk”.

Eighty per cent of the

panel agreed, the rest

were uncertain or did not

respond. Not a single

expert disagreed.

In Europe, 65 per cent

of respondents agreed that “severe lockdowns — including

closing non-essential businesses and strict limitations on

people’s movement — were likely to be better for the econ-

omy in the medium term than less aggressive measures”.

Only 4 per cent disagreed.

“Clearly there is a cost” to the lockdowns, said Ms Grif-

fith, “but what is the counterfactual? The cost of not con-

taining the virus would be greater — even economically.”

Not only was saving lives inherently valuable, but fear of

contagion would cause economic disruption even in the

absence of government action, she explained.

While there was “exponential infection growth... I am

not surprised that there is a consensus on the need for

lockdown”, said Beatrice Weder di Mauro, president of the

Centre for Economic Policy Research. “The disagreements

will be on how long and how to get out of it.”

For the moment, economists are deferring to medical

and epidemiological experts on when the contagion could

be said to be under control. “We should lift the restrictions

the minute we can,” said Ms Griffith, “once we have testing

and measures for containing the virus... for now it is a

medical not an economic issue.”

In the meantime, many governments are asking econo-

mists to keep a close eye on the costs of the lockdown and

how best to mitigate them without interfering with the

desired epidemiological effects. “There are lots of micro

issues” on which economists could help, said Ms Griffith,

“but broadly the government should do what it is doing.”

A more significant role for economists, she suggested,

lay in thinking about what to do in the longer term. “The

biggest questions are intergenerational issues” such as

“what will happen to those who receive less schooling” as a

result of the lockdowns. There was already a “torrent of

research” taking place, she said. “How do we rebuild the

economy and who do we focus on?” These, she said, were

the sort of questions economists would be exploring,

“starting in six months and going on for the next 20 years”.

[email protected]

GLOBAL INSIGHT

WORLD ECONOMY

Martin

Sandbu

Economists unite in

support of lockdowns

despite the damage

‘The cost of not

containing the

virus would be

greater — even

economically’

DAV I D P I L L I N G— LO N D O N

Tidjane Thiam, former chief executive
of Credit Suisse, is among several promi-
nent Africans pressing for a two-year
moratorium on $115bn of sovereign
African debt owned by the private sec-
tor in what, under normal circum-
stances, would be considered a default.
In a letter seen by the Financial
Times, several senior African figures
said the private sector should join a
planned moratorium on bilateral and
multilateral debt to give African govern-
ments the fiscal space to fight thecoro-
navirus pandemic.
The proposals are expected to be dis-
cussed at the IMF and World Bank
spring meetings, which will be heldnext

week. Mr Thiam told the FT it was right

to ask the private sector to waive cou-

pon payments given theextraordinary

natureof the crisis.

“This is a global exogenous shock.

This is not the result of economic mis-

management,” he said. He added that

the suspension of payments should not

be seen as a default and should not lock

African governments out of hard-won

access to capital markets.

“I would use the word standstill

rather than moratorium since morato-

rium has negative connotations,” Mr

Thiam said.

“If we don’t do this, there is a risk that

official assistance will end up funding

the private sector,” he said, explaining

that governments might otherwise use

bilateral and multilateral debt relief to

pay off private foreign creditors rather

than fighting the health crisis.

Twenty-one African countries have

outstanding foreign currency debt obli-

gations in the form of eurobonds of

roughly $115bn, according to Moody’s,

the rating agency.

China, which has extended billions of

dollars in bilateral loans to African

countries and is owed about a fifth of the

region's total sovereign debts, would

also need to be part of any debt payment

standstill, Mr Thiam said.

As well as Mr Thiam, a French-

Ivorian, backers of the initiative include

Louise Mushikiwabo, secretary-general

of the Organisation International de la

Francophonie; Ngozi Okonjo-Iweala,

former Nigerian finance minister; and

Strive Masiyiwa, executive chairman of

Econet and one of Africa’s most promi-

nent businessmen.

Abiy Ahmed, Ethiopia’s prime minis-

ter, has alsopushedthe G20 to back

widespread debt relief, including

eurobonds.

Ken Ofori-Atta, Ghana’s finance min-

ister, has referred to the need for a

“HIPC on steroids” to help countries

manage the crisis — a reference to the

sweeping African debt relief pro-

gramme launched by the IMF and

World Bank in the late 1990s.

Matt Robinson, an associate manag-

ing director at the rating agency

Moody’s, told the FT that any default,

however it was presented, was likely to

have ratings implications. “Failure to

make a coupon payment at the time in

which it is due would in all likelihood

represent a default,” he said.

Razia Khan, Africa economist at

Standard Bank, said markets welcomed

the idea of bilateral and multilateral

debt relief, but had not priced in any

Africa-wide suspension of eurobond

payments.

“Great care would need to be exer-

cised so that developing countries can

tap international markets in future,”

she said, warning against anything that

looked like a “credit event”.

Eurobonds

Thiam joins calls for halt on Africa debt

Former Credit Suisse chief

among those pressing for

suspension of payments

‘If we don’t

do this,

there is a

risk that

official

assistance

will end up

funding the

private

sector’

C H R I ST I A N S H E P H E R D— B E I J I N G
R O B I N Y U— H O N G KO N G

Days after thecity of Wuhan was put on
lockdown, Song Shan, a recovering
stroke victim in his late 80s, was told he
had to vacate his hospital bed to make
room for coronavirus patients.
“Wuhan’s public transport had all
stopped, there were no cars to carry
him,” his granddaughter Zhou Xiaoxue
said. he pushed her grandfather on aS
trolley through empty streets lick withs
rain in search of a hospital bed.
But the virus had stretchedhealth-
care beyond capacity. Eventually she
took her grandfather home. He died five
days later.
“He worked hard his whole life doing
all he could for the nation, but when he
died there was no place for him,” she
said. The lack of a proper send-off for a
Chinese Communist party member
made her deeply unhappy.
She was finally able to bury her grand-
father two weeks ago after Wuhan cau-
tiously started to liftrestrictions.
Wuhan today lifts its 76-day lock-
down, following a significant drop in
new cases. The number of coronavirus-
related deaths fell to zero on Tuesday.
The loosening of restrictions has been
a relief for many in the city. State news-
paper The Global Times reported
around 55,000 people would today try
to leave the city by train. But it has also
stirred up residual anger over initial
delays andcover-ups hat some feel ledt
to unnecessary infections and deaths.
Last weekend was Qing Ming, China’s
annual tomb-sweeping festival, when
families show filial piety to ancestors by
cleaning headstones, laying flowers and
setting fire to paper money to send the
deceased good fortune in the afterlife.
However, as elsewhere in the world
the outbreak has convulsed rituals for
the dead. The city government last week
banned vigils and group visits to grave-
yards, asking cemeteries to instead pro-
vide free online “tomb sweeping”—

families can visit a digital “grave” to pay

respects and make virtual offerings.

The restrictions coincided with new

doubts over official Chinese tallies of

Covid-19 victims that arose on March 26

after pictures circulated on social media

of crowds forming outside the desig-

natedfuneral home for coronavirus vic-

tims. The relatives were queueing to col-

lect their loved ones’ remains, prompt-

ing some social media users to question

why there were so many people.

On the same day, Caixin, an inde-

pendent Chinese publication, quoted a

truck driver saying he had delivered

5,000 urns to the funeral home that

week, a report that led to expressions on

Chinese social media of further distrust

of the official death toll. Authorities say

2,571 have died as a result of the out-

break in Wuhan as of Monday.

The funeral home, which was

assigned confirmed Covid-19 victims as

well as any death ruled as potentially

from coronavirus, declined to com-

ment. It is unclear how regularly urns

are delivered to the home or what pro-

portion of the Wuhan deaths from coro-

navirus it has handled.

Nurses ave told the FTh they sus-

pect he authorities are under-reportingt

cases. In the early days of the outbreak a

lack of test kits meantsome cases might

have gone undetected. China began to

report a daily count of symptomatic

cases only last week but it has not

revealed a retrospective tally.

In Wuhan, even funeral homesnot

dealing with victims of Covid-19 have

been feeling the strain of the lockdown.

Now that it has eased, relatives are being

asked to pick up the remains of their

loved ones s soon as possiblea. Liu Yao-

cheng, a 36-year-old Wuhan resident,

said the municipal disease control

authorities had contacted her. “Due to

the large volume of urns they had to

look after, they could no longer keep my

aunt’s until the end of April,” she said.

Ms Liu added authorities appeared

to be struggling.“Amid all this chaos,

how can I be sure that what I’m going

to pick up are really my aunt’s ashes?”

Salia Yang, who lost both her mother

and grandfather to the virus, has been

unable to collect their belongings romf

hospital. The items were deemed to be

“virus-contaminated” and would be dis-

carded, medical staff told her, despite

Ms Yang telling themshe needed the

belongingsto make insurance claims.

“It’s bad enough that people have lost

their loved ones. Why do they have to

make it so hard to take care of the affairs

afterwards?” Ms Yang said.

Despite her grandfather’s death, Ms

Zhou is optimistic about the city’s abil-

ity to move on. She has been impressed

with how local community officials

organised and paid for the funeral.

“I felt resentful, but later it has gradu-

ally changed to understanding and sor-

row,” she said. “The spiritual scars will

vary from person to person, but the gen-

eration who lived through this catastro-

phe will never forget.”

Additional reporting by Qianer Liu in

Shenzhen and Emma Zhou in Beijing

China. estrictions easedR

Wuhan urns bear witness to city’s tragedy

Crowds at funeral home to

collect remains stir doubts

over official tallies of victims

Grim task: a

man wearing

full protective

clothing carries

a box containing

someone’s ashes

from a funeral

home in Wuhan

last week

RomanPilipey/EPA

A N D R E W JAC K —LO N D O N

Closing schools does little to slow the
spread of coronavirus and imposes
economic costs that could outweigh the
benefits, according to a study that
raises questions over the widespread
application of the policy worldwide.

“The evidence to support national clo-
sure of schools to combat Covid-19 is
very weak,” said the research led by
Russell Viner, a professor at Great
Ormond Street Institute of Child Health,
part of University College London.

“The economic costs and potential

harms of school closure are undoubt-

edly very high,” concluded the study

published yesterday in the journal Lan-

cet Child and Adolescent Health.

Governments have ordered the clo-

sure of schools as the pandemic has

spread, with the aim of limiting infec-

tion and easing the pressure on health

services struggling to respond to a surg-

ing number of serious cases.

Unesco, the Paris-based international

organisation, estimates that 91 per cent

of the world’s learners —nearly 1.6bn

people, mostly of school age — have

been affected by nationwide closures of

schools in 188 countries.

The policy has caused difficulties for

many parents who have been confined

for long periods, many juggling working

from home with childcare and home

schooling.

Forced absenteeism of parents from

work as they look after children would,

in the UK, cost up to 1 per cent of gross

domestic product for a 12-week closure,

and 3 per cent of GDP for an eight-week

closure in the US, the study found. Inter-

national organisations have also warned

about the broader and longer-term risks

to children of closures, including con-

cerns over child safety and welfare. In

many countries, school offers a sanctu-

ary from abusive households, provides

essential feeding programmes and

reduces the risk of sexual violence.

Robert Jenkins, Unicef’s global chief

for education, said: “This goes beyond

learning to many other services pro-

vided in schools.”

There are worries closures could, in

lower-income countries, hasten the rate

at which children drop out of school.

The UCLanalysis of academic stud-

ies s based on scrutiny of a limitedi

number of published academic studies

and non-peer-reviewed ones examining

the effects of school closures during the

outbreak and previous coronavirus epi-

demics. It examined studies of closures

notably in China, Taiwan, Hong Kong

and Singapore.

The authors stressed that most chil-

dren infected with Covid-19 had no — or

mild — symptoms and cautioned:

“Policymakers need to be aware of the

equivocal evidence when considering

school closures.”

Education

Cost of school closures likely to outweigh benefits, study finds

ST E P H A N I E F I N D L AY— N E W D E L H I

The chief of one of India’s largest pri-

vate hospital chains has warned that

the country faces a critical shortage of

ventilators and intensive care unit staff

if coronavirus infections rise rapidly.

India isrushing to contain the coronavi-

rus outbreak fter confirmed cases leapta

250 per cent in less than a week to

almost 5,000. Experts fear that authori-

ties are underestimating the scale of the

crisis and that the actual number of

infections is far higher. India, they point

out, has one of the lowesttesting rates ni

the world.

Narendra Modi’s government has

placed India in a 21-day lockdown until

April 14 in the hope of preventing the

virus from overwhelming its fragile

healthcare system.

But Ashutosh Raghuvanshi, manag-

ing director and chief executive of Fortis

Healthcare, said the healthcare system

was ill prepared for a surge in infections.

“Definitely there will be a shortage of

ventilators in case the outbreak goes to a

level it has gone in some other coun-

tries,” he said.

Mr Raghuvanshi added that there was

also a scarcity of staff required to oper-

ate the equipment. “Not many people

are used to taking care of critical

patients who are on ventilators and who

require this complex care.”

The government has blamed the

rapid rise of infections on a series of

superspreader events, including a gath-

ering of Muslim missionaries inNew

Delhi. Health officials are worriedCov-

id-19 is spreading unchecked through

densely packed urban slums where

social distancing has been difficult to

enforce.

India, which only spends about 1 per

cent of its gross domestic product on

healthcare, has allocated fewer than

20,000 ventilators for the treatment of

Covid-19 patients.

According to a Johns Hopkins report,

the US, which is tryingdesperatelyto

procure more of the life-saving devices

for its significantly smaller population,

has about 160,000 ventilators.

Healthcare

India hospital chief warns of

equipment and skills shortage

Contracts & Tenders

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