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18 June 2020

Post-pandemic recovery conditions. Russia is in top-5 countries

Institute of Economic and Peace analyzed preparedness for the post-pandemic recovery. The Institute for Economics and Peace is the world’s leading think tank dedicated to developing metrics to analyze peace and to quantify its economic value.

“The two factors that will assist countries in the post-pandemic recovery are high levels of Positive Peace – guaranteeing effective institutions, social cohesion and transparent, representative governments – and favorable economic conditions before the pandemic.

Four indicators are used to measure these economic conditions:

• low central government debt as a proportion to GDP will help countries borrow to mitigate the economic downturn during the crisis and fund post-pandemic recovery initiatives;

• low unemployment rate, especially long-term unemployment, means that the labour market is resilient and agile, facilitating the re-training and re-allocation of workers to a new postpandemic business environment;

• low tax revenue relative to GDP means that central authorities will have some leeway to increase taxation in the medium term to help fund the budget deficits enlarged by the crisis. This may remove the need to erode government debt through high inflation and economic instability; and

• low dependence on international trade – exports plus imports – relative to GDP means that countries may navigate the disruption of international logistics caused by COVID-19 and a possible future reduction in international trade.

The World Trade Organisation (WTO) is expecting international trade to fall by between 13 and 32 % in 2020 as the COVID-19 pandemic disrupts normal economic activity. In this analysis “economic recovery” means returning to a country’s pre-pandemic activity conditions, and does not denote economic development in absolute terms. According to available published data, China, Indonesia, Russia, Mexico and Australia are the countries with the best pre-pandemic systemic states to facilitate a recovery. This does not mean, however, that the recovery will be quick or easy, but only that countries with propitious economic pre-conditions are better placed relative to others”.

COVID-19 and Peace Report. Full version