A real recovery plan for Malaysia

 

From Paolo Casadio and Geoffrey Williams

As the number of positive Covid-19 cases continues to rise, many people are quite rightly wondering about how the government should respond to a prolonged health and economic crisis which looks increasingly out of control.

When trying to forecast and devise policy in an environment that is changing rapidly, we need to look at likely scenarios and evaluate the balance of risks and outcomes in each case in order to come to the right policy.

We need to look at such scenarios urgently as the cases, already exceeding 13,000 per day, are likely to rise exponentially in the near future, according to health director-general Dr Noor Hisham Abdullah, as well as experts in forecasting epidemics.

We suggest three scenarios. The first is an “inertia scenario,” in which the virus follows an unconstrained transmission path and lockdowns and vaccination strategies are used as a response. This is the policy that has been followed so far. It is backward-looking and because of that, it is always wrong.

The second is the “adaptive scenario,” where lockdowns are eased in response to clear criteria such as falling case numbers, rising vaccinations and the pressure on the health system.

This is the approach in the national recovery plan (NRP). It is also backward-looking, reacting to previous data rather than expected future possibilities and although it changes, the changes are always late and always wrong.

The third is the forward-looking “recovery scenario” which looks at the likely trajectory of the virus and how it can be reduced using all methods of virus control, including the use of prophylaxis and therapeutics following the example of India and other countries.

This is forward-looking based on evidence from the past and learning from the effects of different policies elsewhere and, because it is a learning strategy, it is more likely to be right and less likely to be systematically wrong.

The basic predictions of these three scenarios are shown in Figure 1 which shows that the inertia scenario of lockdown and vaccinate has not controlled the number of positive cases, in fact they are growing exponentially.

If the government responds under the adaptive scenario using extended lockdowns to bring positive tests down from say 20,000 per day which are predicted in the next few days, then the reduction will take a long time. We are not likely to hit even the first NRP threshold of fewer than 4,000 positive cases on a national level until at least December.

If a recovery strategy using alternative treatment options, including prophylaxis and therapeutics is followed, then there is a good chance that the number of new positive tests can be reduced quickly, hitting the first and second NRP thresholds in September and fully opening up by December at the latest.

                                            Figure 1: Three paths for Covid-19 cases

There are two key objections to this strategy. The first is the risk that daily deaths may rise. Our analysis, which is similar to that from other sources, suggests that the exponential growth in positive tests, coupled with the management approach of the health ministry, will lead to a higher daily death rate and a very much higher cumulative death rate than the alternative treatment strategy. These are shown in Figure 2. Under the recovery scenario, the daily deaths fall quickly and there are almost 10,000 lives saved.

                                            Figure 2: Possible Covid-19 deaths

The second objection will be the suggestion that treatments including prophylaxis and therapeutics should complement alternative management strategies including “Find-Test-Trace-Isolate-Treat,” recommended by the World Health Organization or targeted, data-driven controls recommended by many industry associations and think tanks.

The example of India and other field studies around the world suggest that now is the time to consider this option. Indeed the narrative on this issue has changed recently and has become more rational.

Even the health director-general has stated that he himself has used certain prophylaxis and therapeutics “off-label”, and the health ministry is actively investigating options.

                                            Figure 3: Three paths for the economy

The economic consequences of the different scenarios are presented in Figure 3. The inertia scenario sends the economy into a significant downturn extending for many years.

Formally, this can be considered an economic depression where gross domestic product (GDP) does not recover to the pre-pandemic level for many years, even beyond 2025.

The adaptive scenario, which is closest to the current strategy in NPR, tips the economy into huge disruption for businesses and households that will not see GDP recover to pre-pandemic levels until the first quarter of 2024. Our forecast also puts unemployment in this case in double figures before the end of the year.

This is because the number of cases are increasing exponentially due to new variants, the vaccination roll-out is slow, even at enhanced daily jab rates and the pressure on the health service is not eased because of management policies which, for example, hospitalise all cases.

The only scenario that provides any hope of a feasible solution is the recovery scenario in which GDP can recover to pre-pandemic levels by the end of 2021 and can grow at the previous potential growth rate.

Even under this scenario, the loss of GDP during the crisis and the gap between the new growth path and the pre-pandemic growth path cannot be recovered.

Decoupling the management of the health crisis from the management of the economy is not a matter of saying which is more important, lives or the economy? It is about understanding the most effective method of dealing with the virus by evaluating the consequences of multiple strategies on both lives and the economy.

The international experience of multiple strategies including prophylaxis and therapeutics provides a feasible alternative option to the current policy approach which can save thousands of lives and avoid prolonged economic costs tipping Malaysia into a depression.

So far, only one strategy has been considered and the economic costs have been devastating.

Only once the virus dynamics and the human costs are under control based on forward-looking analysis and not arbitrary thresholds is it possible to reopen the economy in a responsible way. By considering alternatives we understand that both the loss of lives and the economic costs can be reduced quickly. - FMT

Paolo Casadio is an economist at HELP University and Geoffrey Williams is an economist at Malaysia University of Science and Technology, both based in KL.

The views expressed are those of the writers and do not necessarily reflect those of MMKtT.