In some ways, the pandemic has put time on fast-forward. In others, it transported us back—way back—into the past. For the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020. According to the recent World Economic Outlook, global growth is projected at -4.9 percent in 2020, 1.9 percentage points below the forecasts made in April 2020. In 2021, global growth is projected at 5.4 percent—with a lot depending on the epidemiology of the virus, the effectiveness of containment measures, and the development of vaccines, all of which are hard to predict. Radical uncertainty is still the best way to define this extraordinary crisis. But, this much is certain: the pandemic will lead to permanent shifts in political and economic power—an overhaul of social norms and if fortunate, a window for change.

We have already witnessed that COVID-19 is no “great leveler”: in fact, it is an amplifier of existing inequalities. New estimates suggest that up to 100 million people worldwide could be pushed into extreme poverty, erasing all gains made in poverty reduction in the past three years. Nowcasting global poverty is not an easy task—however, it is quite clear that countries where the virus is taking a heavy toll depends mainly on two factors: the impact of the virus on economic activity and the number of people living close to the international poverty line. Pakistan happens to top both criteria.

The Economic Survey 2019-20 estimates that at least another 10 million people are expected to slip below the poverty line because of the coronavirus pandemic. The good news is that targeted poverty reduction interventions have been made through Ehsaas programme, BISP, Sehat Sahulat programme and expanding coverage of Waseela-e-Taleem programme etc. The State Bank of Pakistan (SBP) has also recently slashed the country’s policy rate by 100 basis points from 8 percent to 7 percent. Other efforts outlined in the “crisis budget” such as lowering of sales tax, allocation of various subsidies in energy, food and other sectors, reduction of customs duty rates for raw materials and intermediate goods etc. are laudable. However, given the severity of the crisis, significant further efforts are essential. This includes taking the measures needed to avoid further scarring of the economy—to save and protect both lives and livelihoods.

Keeping this in mind, let’s make sense of the ground shifting beneath our feet and urge the government to prioritise a more inclusive recovery. Pakistan entered this crisis in a vulnerable state with already sluggish growth, high debt levels and limited fiscal space to support the health sector and the flagging economy. The provisional GDP growth rate for the fiscal year 2020 is estimated at -0.38 percent as a result of a decline in the agricultural, industrial and services sectors respectively. The Consumer Price Index (CPI) inflation stands at 11.22 percent with some 18.53 million people projected to be unemployed—reflecting precipitous demand declines, supply interruptions, and uncertain future earnings prospects. With our population composition skewed towards the working age population—61.4 percent of population falling in the age group 15-64—Pakistan needs to prioritise not just efficiency but equity in its policy interventions. Here is what we suggest; for starters, a fiscal stimulus that delivers for people.

This means a government spending increase that can bolster demand for goods and services and in doing so help decrease the recession’s depth and length and make the recovery more robust. When it is safe to reopen the businesses and for people to go back to work, a weaker demand will persist even when the temporary supply constraints will be reduced due to an economic “slack”—the gap between aggregate demand and what the economy is capable of producing with full use of its productive resources. Pakistan should channel a sizable chunk of its resources aimed at lifting aggregate demand and creating employment opportunities.

Empowering through accessible and quality education must also be focused on. According to a research on education and inequality by the IMF—a 10-point increase in a country’s Gini coefficient—a common measure of inequality—is associated with a much lower educational attainment. This could in turn decrease lifetime earnings and result in “income and opportunity gaps to become persistent across generations”.

The population which is 10 years and older that has ever attended school lies at 61 percent in 2018-19 in Pakistan. The percentages of out-of-school children (aged 5-16) lie at 21 percent for Punjab and 42 percent for Sindh. It would be due diligence to not only spend more on schools and distance-learning capacity, but also improve the quality of education and the access to “life-long learning and re-skilling”. Consideration must be given to protecting poor families—shielding them from the potentially tragic dilemma of choosing between school or work, healthcare, and even food for children. The government should not lose sight of the long game: ensuring that all children and young people are educated to build a healthy, prosperous, and secure future.

Digitisation and financial technology for inclusion is another policy intervention that’s needed. Part of the reason the coronavirus era feels so unmoored from the timeline we usually live in is that it has pushed us into a technologically sophisticated, hyper-connected future that otherwise may have been years, decades, or generations away. It has also bared the glaring digital divide that exists.

According to the latest statistical data, there are 164.9 million mobile connections in Pakistan in January 2020. We also have 37 million social media users and 76.38 million internet users that makes up 75 percent of the total population. We believe that education and access to financial services and technology are key factors of intergenerational mobility. A key priority should be to introduce financial products and make them accessible to facilitate credit to businesses and monetary aid to individuals. Fintech solutions if incorporated into formal government schemes can increase financial inclusion for the unbanked population and support the needs of a rapidly evolving workforce.

We are only as strong as our weakest link. As we move forward—our agenda should be to repair and prepare for a more inclusive recovery.

Dr Izza Aftab and Sadaf Akbar

Dr Izza Aftab is the Chairperson of the Economics Department at Information Technology University, Lahore. She has a PhD in Economics from The New School University. She tweets