Striking the right balance: Health versus economy during the COVID-19 pandemic

Pandemic has brought much pain, but Indonesian businesses have responded well to lockdowns and social distancing measures, the PAIR Summit heard.


Day 3 of the Summit focused on economic recovery, with a session on using data to plot a policy course between effective health measures and the needs of the economy.

The speakers were Dr Pierre Le Bodic, the COVID-19 Research Co-lead at Monash University in Melbourne, Associate Professor Sri Astuti Thamrin, COVID-19 Research Co-lead at Universitas Hasanuddin and John Dovaston, a Jakarta-based partner for Asia Pacific with PwC.

Professor Thamrin told the summit discussion that reducing economic activity was necessary to help contain the spread of COVID-19 and save lives.

“However, the consequences of economic decline can be long standing,” she said.

“And for people in extreme financial precarity leads to life threatening situations.

“Governments need to make the impossible decision of optimising wellbeing of their population from both the health and economic perspective in the short to long-term.”

Professor Thamrin spoke of the policies to contain the virus outbreak implemented by both the national and provincial governments in the form of large scale social restrictions or ‘PSBB’.

“The COVID-19 pandemic has hit the Indonesia economy quite hard. Slowing COVID means slowing the economy,” she said.

“And what is a right balance between these opposing objectives?

“And this is not just for Indonesia or South Sulawesi, but also for other countries, because countries that control the pandemic better also achieve more meaningful economic recovery.”

Researcher Dr Pierre Le Bodic said their work was done pre-vaccine and pre-Delta but still offered important lessons.

“And the decisions are whether we trigger a soft lockdown, a hard lockdown… or in which we can decide individually,” he said.

“And then we also have connections between the cities we can close.”

PwC Asia Pacific partner John Dovaston said the pandemic was unique in that it was a health crisis, compared with financial crises such as the GFC and the oil price shocks of the 1970s.

“[In those earlier events] people could still go about out their day-to-day work and still mingle with each other,” Mr Dovaston said.

“From a GDP perspective globally, [the pandemic] is estimated to have caused about a 3.5% decline in global GDP, as compared to say the GFC that had a 1.79%.”

Mr Dovaston said the pandemic had caused a significant impact on people’s mental health, while physical distancing measures had forced many Indonesians back below the poverty line.

“But the ramifications of what happened with this physical distancing is about 1.8 million [Indonesian] people became unemployed through to February ’21, another 3.2million exited the labour market.

“And I think strikingly, 2.8 million people have fallen back into poverty over that period of time, because there is a very significant informal sector of employment, which is the contractors and gig workers and such like,” he said.

“And the types of industries that people work in and around the retail manufacturing and farming.”

Mr Dovaston praised Indonesia for avoiding the public disharmony and protests that had occurred in many other parts of the world due to lockdown measures.

He also noted the impact of homeschooling during lockdowns, with education sure to be central to economic recovery post-pandemic.

Mr Dovaston the pandemic had provided “ an impossible situation” and that these models went beyond the lockdown phase.

“I don’t think a model just exists for the lockdown phase. I think a model just begins at the lockdown phase, with that important data and takes us forward and looks at what sort of supply chain for vaccinations? What sort of manufacturing? What sort of storage? And what sort of medical support?

“And these types of things can inform government policy and business policy making, going forward.”

Mr Dovaston said the pandemic had the positive effect of bringing together people from within companies and businesses.

“Someone said to me that it used to take a long time to get certain things done around organising teams, within an organisation to come together, to enable online, to enable digital transformation,” he said.

“And when the pandemic came, it had a unifying event that enabled a lot of the teams within an organisation to come together and accelerate banking and other tasks and bring on customers in online retailing.”

Mr Dovaston said people had largely adjusted well to the changed circumstances and modified their work behaviours accordingly.

“I think that what [the pandemic] did start to do was really accelerate the public’s transition to the digital economy, which is a very big part of Indonesia,” he said.

“There’s a number of ‘unicorns’ that have been established in Indonesia, which are all around that digital economy. And in previous sessions we’ve heard about the educational programs and such that are going on there.

“But you know, it’s all about transformation in Indonesia. It’s transformation of supply chains, transformation of workforce, transformation of customer experience, transformation of the business, and transformation of the economy.”

Digital Communications Coordinator,
Australia-Indonesia Centre