New variants of the coronavirus are producing the worst outbreaks in many countries in the Indo Pacific. Progress with vaccine rollouts has been uneven, further contributing to inequality of outcomes. The pandemic could have lasting effects by reinforcing nationalism, protectionism, and other trends that are already undermining globalisation. The most serious challenge posed by a pandemic induced acceleration towards a digital economy is the disruption to labour markets, made worse by divergent demographic trends in the region. Policies that increase factor mobility can narrow differences in capital-labour ratios and assist in productivity catch-up to promote more inclusive growth. Since commodity movements can substitute for factor movements, regional initiatives that liberalise trade can also reduce adjustment costs. Investing in a skilled and flexible workforce remains the long-term remedy.
Last updated on 03/08/2021