Western lockdowns are Killing People in the Developing World

 - May 5

There are a million reasons why the economy vs lives meme in relation to relaxing COVID-19 restrictions is a false dichotomy. Here’s another: Western lockdowns are killing people in the developing world.  

Opponents of beginning to ease Australia’s COVID–19 restrictions have been characteristically tasteless. One very esteemed and serious UNSW economics professor said those questioning government policy were promoting “boomer remover” strategies while a Guardian journalist accused the IPA of “barracking to kill grandmas”.   

It’s unknown whether these active members of the tolerant and compassionate brigade have considered the impact of Australia’s lockdown on the developing world. 

The potential impact of COVID-19 in poor countries is massive. The UN University World Institute for Development Economic Research published a paper with a range of projections, the most severe of which estimated that as many as 420-580 million extra people could be living in poverty as a result of COVID-19. A study published by World Bank economists argued 49 million people would be living in extreme poverty because of the crisis. 

Of course, the bulk of this is down to the devastation of the virus itself and the impact of economic contraction within developing countries. But the severe contraction of demand as a result of lockdowns from Western countries like Australia for goods and services produced in the developing world will exacerbate the situation.  

Trading Economics estimates that in the last 12 months Australia imported a little over $1.1 billion worth of goods and services from Bangladesh largely in the form of garments, fabrics, and knitwear. If the market for these goods shrinks what happens to the workers in Dhaka who are already existing on the precipice of extreme poverty? What happens to their families?  

The collapse of remittances will also be horrendous. Remittances are monies sent by immigrants back to their families in their home countries. The UN says global remittances are three times bigger than global foreign aid. In places like El Salvador and Honduras, they represent up to a fifth of GDP. According to the UN three-quarters of remittances are typically used to “put food on the table and cover medical expenses, school fees or housing expenses”.    

The World Bank estimates that Australian remittances are worth USD 16 billion. Much of this goes to developing countries, for example, USD 1.9 billion to India, USD 1.2 billion to Vietnam and USD 1 billion to the Philippines. This will undoubtedly take a massive hit as a result of lockdown related job losses.  

Whilst some of these lost remittances will be partially offset by welfare, many remittance-payers – hundreds of thousands of international students and temporary visa holders for example – don’t qualify. There will be families going hungry in the developing world as a result of lost remittances due to Australia’s COVID-19 lockdown.  

The other big hit to developing countries will be lost tourism. Five of the top 10 destinations Australians visit are developing nations, with the ABS counting 2.3 million trips to Indonesia, India and Thailand alone in the 2018/19 financial year. To be blunt, these places will be smashed by the hiatus in international travel from Australia and other rich nations. In Cambodia, for example, 26% of jobs are dependent on tourism according to the World Travel and Tourism Council. 

Losing a job in Australia is terrible but the loss of a job in a place like Cambodia can be a catastrophe. It forces some to choose between feeding their children or sending a sick elderly relative to the doctor.   

Of course, the plight of people in other countries is rightly down the list of Australia’s public policy priorities. When and how we ease the lockdown should and will be based on what is in Australia’s best interests.  

But the dire consequences of our lockdown for our developing neighbours is yet another example of why the economy vs lives meme is so useless in picking our way through the response to this crisis. Critics of relaxing the lockdown would do well to remember the suffering taking place in the developing world as a result of policies they support before invoking tragic COVID-19 deaths for political point-scoring.