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Easing COVID-19 restrictions brings risk, says GlobalData


Following the news that authorities in Dubai and Abu Dhabi announced the easing of some of the strict COVID-19 lockdown restrictions;

John Bambridge, Features and Analysis Editor at GlobalData, offers his view:

“Among the first countries to ease restrictions are those that first experienced rapid rises in their COVID-19 case count, including Iran and Bahrain. In Dubai, guidelines have also been drawn up for the prospective reopening of limited retail operations. Evidently, the risk-benefit analysis of regional governments is beginning to lean away from the stricter, more economically damaging policy options for curbing the spread of COVID-19.

“There are some situational similarities among the economies that are looking to open up again. Bahrain, Iraq and Iran have been badly affected fiscally by the string of historic lows in global oil prices and will be actively calculating the potential impact of containment measures on their non-oil sectors. Dubai’s economy is, meanwhile, notably non-oil focused, and a great deal of GDP and government revenue is derived from COVID-19-affected sectors including retail, trade, travel and tourism.

“Prolonged restrictions not only limit short-term business activity, but also impact long-term growth potential by hurting company balance sheets and stymying entrepreneurship. There are also social and political considerations. The expected announcement of Ramadan was a clear factor in the easing of restrictions on retail in Iraq, but it will likely feature in decision-making everywhere.

“In Iraq, where there is a political power vacuum in the absence of a duly appointed government, and protests continue over unemployment and public utility failings, the authorities will be particularly aware of the risk to public mood of prolonged disruption to daily, and religious, life. And yet easing restrictions carries significant risks.

“There is no readily available evidence yet that measures undertaken so far in MENA countries have ‘flattened the curve’ of COVID-19 case counts. Instead, most regional authorities are reporting rapidly rising numbers of infected, meaning the peak impact on medical services is still some way off in the future. As is the case globally, limitations on the screening and testing of the population also make it unclear how accurately official figures reflect the pandemic situation in a country.

“On the flipside, questions can be raised about the effectiveness of certain restrictions in reducing the risk of spreading COVID-19. Essential retail has continued to operate across the world with heightened hygiene and social distancing rules, and much non-essential retail operates in a similar manner and in similar locations to essential retail. As a result, resuming non-essential retail could increase the risk quantitively, in the sense of allowing more people to go about more and more different types of activity, but not necessarily qualitatively, in the sense of allowing people to engage in activities with riskier social distancing or hygiene scenarios.

“The growing trend of regional governments towards either maintaining lighter restrictions or easing harsher restrictions suggests that the economic perils of the pandemic are beginning to loom larger.”