Asian Insider video: US economy at stake as it decides on coronavirus response

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The United States faces a dilemma - whether to crack down with draconian social distancing measures like enforced lockdowns and defeat the spread of the coronavirus thus triggering a recession; or to hold back on extreme measures to give the economy room to breathe.

"It's a trade-off," says Dr Saad B. Omer, director and professor at the Yale Institute for Global Health, and associate dean of global health research at the Yale School of Medicine.

"And there are several counterfactuals," Dr Omer told The Straits Times Asian Insider, in an interview for Episode 29 of the Asian Insider video and podcasts series, titled The Brink of Recession.

In this episode, Dr Omer and Dr Danny Quah, Li Ka Shing Professor in Economics and dean of the Lee Kuan Yew School of Public Policy in Singapore, discuss how the economic crash due to Covid-19 will affect the globe.

Dr Omer said: "Governments and policymakers - the ones I have talked to - have to decide between having some of these measures now versus later. We do know pre-emptive measures are a lot more effective than measures that are reactive."

"Right now it's a reasonable strategy to have these measures and have drastic social distancing to break the rise of this outbreak in the US," he said.

And as of now, Dr Omer's assessment is that "social distancing is necessary but not sufficient".

"Community transmission is well established in many parts of the US," he said.

"There are several sub-outbreaks going on. We are getting more numbers due to not just new testing, but the fact that we have community transmission going on right now."

Dr Quah told Asian Insider: "There are quite a number of observers in Asia who are looking at how the Trump Administration has been handling this crisis with considerable horror."

"Many places in Asia have worked very hard at containment, at detection, and have been able to bring down dramatically the infection rate in our societies; Wuhan yesterday (March 19) reported zero new cases."

"There are strategies that work. But we're… worrying about now importing cases of Covid-19 so when we see the Trump admin switching 180 degrees in the space of a week… to the realisation that we're going to be seeing massive fatalities across different parts of the world is sobering and frightening because the world needs to come together but that leadership… to deal with these emergencies seems to have left the building."

"Up until a month ago or so, most of the expectation was that the slowdown in China, the initial centre for this Covid-19 epidemic, was going to be the critical factor for Asia," he said.

"And with that alone, many analysts, many economists, in Asia, were already shading down their prediction for growth over 2020-2021 by as much as 1 percentage point," Dr Quah said.

At that point, the expectation was that in the West, the broad outlook would remain unchanged. But now the centre of the pandemic had shifted to Western Europe, so "the best guess is recession is almost surely on the cards for many across Asia", he said.

President Donald Trump has also raised concerns by insisting on describing the coronavirus as a "Chinese virus".

This hostile US-China rhetoric with each blaming the other for the crisis is very worrying, Dr Quah said.

"A global pandemic is one of those challenges that doesn't carry a passport. The entire world has to come together to repair this, and right now the two great powers are not helping when the rhetoric escalates in this way," he said.

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