Dozens of low- and middle-countries (LMICs) have now implemented stringent policies to slow the spread of COVID-19 in communities, including closing schools, workplaces, and enforcing physical distancing. These policies accompanied by population-level testing–where possible–can help flatten the epidemic curve. Flattening the curve reduces the pressure on health systems during the wait for effective treatments for COVID-19 to become available.
Yet flattening the curve comes at a cost–it also flattens the economy. Purchasing stops, jobs are lost, and investments cease. These costs will be felt differently depending on the income level of a country. Large falls in GDP, combined with large informal sectors, could spell disaster for many households in LMICs.
In high-income countries, massive debt-financed fiscal packages will help households and businesses “keep the lights on,” and to keep the economic infrastructure in place to accelerate recovery once the crisis is over. Leading economists and public health experts agree that premature abandonment of these severe lockdown measures will likely both increase the loss of life and the economic damage linked to COVID-19. Without a clear exit plan, “keeping the lights on” will remain the status-quo for some time.
However, using these same tactics may be completely impractical for policymakers in low- and middle-income countries, and could even cause more harm than good. Disease containment policies are much harder to implement for communities that lack running water, are made up of overcrowded township housing, and entirely rely on informal and in-person work. The scope for economic responses is limited, and—with recession almost a certainty—the adequacy of economic response lies in the hands of shareholders and decisionmakers at international financial institutions, such as the IMF and the World Bank.
In the absence of historic levels of resource mobilisation at home and from abroad, policymakers in LMICs face the incredibly difficult problem of balancing the positive health impacts of flattening the COVID-19 epidemic curve with the negative health impacts linked to flatlined economic activity. There are two key ways in which the negative economic impacts of COVID-19 will have knock-on effects on health, these are: the impact of economic crises on health outcomes, and the longer-term availability of resources for health. We outline three ways the international community can swiftly support response and recovery in LMICs.
Economic crises can substantially increase negative health outcomes
For LMICs, there is a range of evidence to suggest that economic crises can have severe negative impacts on health outcomes. Economic downturns and associated social issues, such as unemployment, have been linked to increased mortality in Brazil, decreased child health in South Africa, negatively affected mental health in China, and long-lasting deteriorations in several population health outcomes across Latin America. Ongoing research will help describe how economic recessions impact the health workforce.
A recent CGD piece highlighted projections that a sharp decline in GDP, caused by COVID-19, could be associated with hundreds of thousands of deaths in LMICs—without taking into account any deaths directly linked to the disease. It is complex to explain this at the individual level, yet, with the tens of millions at risk of impoverishment due to the COVID-19 crisis—it is clear that economic crisis could increase negative pressures on the health and welfare in these countries. It could have severe health implications for the 52 million children worldwide who suffer from malnutrition, and the hundreds of millions of people who choose between financial hardship or health-related hardship, due to catastrophic health expenditures.
We are already seeing the immediate effects created by responses to COVID-19. India’s attempt to impose a sudden 21-day lockdown is leading to undesirable, but predictable, human costs linked to mass impoverishment and migration. In Kenya, where informal labourers account for 83.6 percent of the total workforce, business has started to dry up and the government faces the COVID-19 crisis with its economy already under severe stress. Drastic measures can help buy time for health systems to deal with the COVID-19, but come at a severe price that can only be offset by economic backing that is much less readily available in LMICs.
COVID-19 could severely constrain health resources in the long term
Policymakers dealing with COVID-19 in LMICs face immediate and longer-term spending challenges that will have substantial impacts on people’s health and wellbeing. In particular, the crisis presents substantial opportunities and challenges for countries trying to move towards universal health coverage.
In the immediate term, LMICs can employ a variety of health financing measures to maximise their health system capacities for COVID-19 response. These measures will include:
- reallocating non-essential expenditures,
- using exceptional spending measures,
- accelerating legislation to earmark funds for disease outbreak response.
While these measures are being implemented, governments will also have to ensure that public funds are tracked, and reach frontline healthcare providers around the country quickly. The availability of resources, and the likelihood that the supply will be sufficient to match demand, will differ substantially–both between and within LMICs–be it protective clothing for frontline healthcare professionals, essential commodities and healthcare equipment, or adequate technical expertise.
In the longer term, as countries deal with the wake of sharp economic downturns, and the strain that COVID-19 has placed on health workers, they will have to decide what their health systems can reasonably provide for their populations and aspirations of achieving universal health coverage (UHC).
COVID-19 may provide the platform for political leadership to accelerate reforms towards UHC through national, publicly financed health systems. Some high-income countries have already initiated a form of short-term nationalisation, through large payments to private healthcare companies for the use of their facilities to help with the COVID-19 health crisis.
Yet the scope for change in LMICs may be much smaller. Immediate financial pressures and domestic fragility may severely impact the scope for mobilising domestic resources to deliver UHC. The pathways for countries transitioning away from aid may become longer. Even if the transitions continue, evidence suggests that spending on social sectors, including health, will fall in favour of infrastructure development and other non-social sectors. This trend, like many others, could be exacerbated by incoming economic crises.
Policymakers need to protect lives and livelihoods to minimise the overall health impacts of COVID-19
Policymakers in LMICs face large challenges when deciding the best way to protect the immediate and longer-term welfare of their citizens from the impacts of COVID-19. They will have to apply different policies to their counterparts in high-income countries. They will have to face the prospect that, when outbreaks of COVID-19 begin to crest, flattened economic activity could continue to severely impact people’s health and any hopes of achieving universal health coverage.
The global community, particularly international financial institutions, needs to ensure these policymakers have access to every available resource to help them manage the immediate threats posed by COVID-19, and the health impacts linked to the disruptions to households, health systems, and economies. High profile statements need to marshal immediate actions. Right now, there are at least three ways the global community can support governments and people in LMICs:
- Protecting livelihoods now to protect lives in the future. This means guaranteeing the use of unprecedented financial support measures, now and in the future, to protect households, health systems, and economies.
- Proactively forecasting the net health impacts of COVID-19 and using them to inform action. This means estimating morbidity and mortality that is directly linked to COVID-19, the disruption and ill-health caused by the interventions used to suppress it, and the associated economic crises, including those that are preceding severe outbreaks of COVID-19 in many LMICs. These forecasts should be should be communicated to policymakers and journalists, as regularly and as eminently as the daily headlines that exclaim expected COVID-19 case numbers and death tolls.
- Design an exit strategy. This means that once harms of COVID-19 suppression policies begin to outweigh their benefits, there is a swift switch from lockdowns and curfews to more practical measures tailored to the realities faced in many LMICs.
Acting quickly will slow the spread of COVID-19 in LMICs, but taking approaches that evade economic reality could have severe repercussions for people’s health. COVID-19 focused sights on universal health coverage, but it could dissolve the resources needed to achieve it. The global community will need to act quickly so that governments in LMICs can manage this parallel crisis of disease and disruption, and prevent COVID-19 from harming health for years to come.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
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