Statsguru: Migrant workers' exit to job crisis, victory over Covid-19 tough

What stands out is how a weak economy limits the response
Beyond public health, the second order effects of the Covid-19 spread are now visible: Joblessness is rising, migrants are returning home in India, and macroeconomic fundamentals are deteriorating. 

But what stands out is how a weak economy limits the response.

We see some evidence that early focus on testing and contact tracing helped New Zealand and Australia arrest the spread of the virus, though low population density might have also helped. On the other hand, Brazil and Mexico show high prevalence of deaths and low testing, a sign of risk (chart 1). Testing has been weak in India as well. 


Consider India and Brazil in the above chart. At same level of testing, Brazil and Mexico have shown a higher number of cases, as well as deaths. However, higher disease spread and fatalities in some countries (top right) are correlated with higher levels of testing. As of May 6, India performed only one test per 1000 people. Israel has performed nearly 50 times more tests. 

But there seems to be a link between the level of testing and per capita income of a country: Low income countries across the world have seen limited testing (chart 2). Incomes are further expected to fall due to the decline in economic activity. 


Only richer countries have been able to test more, while countries with low per-capita income seem to struggle with it. In the mid-range incomes, Russia, Turkey and Peru have done better testing, and have registered more cases per million people, as a result.

As a result, the International Monetary Fund’s “optimistic” projections show a sharp drop in growth, though it still believes that India and China will post positive growth (chart 3). However, India’s fiscal response in the form of a stimulus, till now at 0.8 per cent of GDP, has been one of the lowest among countries for which data is available (chart 4). 



By announcing that it will borrow Rs 12 trillion (gross) this year from the market, over 50 per cent more than the original target, the Union government seems to be preparing for some kind of support (chart 5). Revenue losses, however, would hamper its effectiveness, as they might take up a large part of the borrowing.

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines

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