EDITOR’S NOTE

By Tanja Porčnik*

A pandemic is a great threat to the health and safety of the people. In addition, given the interdependence of economic and social systems, a pandemic produces considerable social costs and profoundly disrupts the economy.

The COVID-19 pandemic of 2020 has unexpectedly and significantly cut into societies’ economic patterns around the globe. The novel coronavirus (SARS-CoV-2) has infected millions and brought economic activity to a near-standstill as countries imposed strict and far-reaching restrictions on movement to limit the spread of the virus. The World Bank (2020) predicts that the COVID-19 pandemic will plunge most countries into recession in 2020, with per capita income contracting in the largest fraction of countries globally since 1870.

In responding to the exigencies of the current global health crisis caused by an outbreak of the coronavirus, governments worldwide have made vast and unprecedented decisions to combat the virus’s spread and protect lives by detecting disease, reducing new cases, and limiting mortality. These state emergency measures, which are, on the one hand, vital to the health and safety of the people, on the other hand, have put their economies into a state of hibernation. The latter has severely impacted the economic performance of countries and the economic standing of their citizens. In such times, governments need to exercise prudence when introducing emergency measures to control the virus, weighing carefully what limitations to impose on human rights and freedoms.

It is with great pleasure that I present Issue 5 of The Visio Journal that features four papers exploring the economic implications of the coronavirus pandemic for the citizens, workers, households, businesses, state budgets, and economies.

Finally, I would like to recognize the generous contribution of the Friedrich Naumann Foundation for Freedom for supporting the journal that is before you.

* Tanja Porčnik is President of Visio institut and editor of The Visio Journal.

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Evaluating COVID-19 policy responses in Poland

By Aleksander ŁASZEK*

COVID-19 reached Poland a few weeks later than Western Europe, to which the Polish government responded promptly by introducing a nation-wide lockdown. Administrative restrictions to constrain the spread of the virus coupled with reactions of wary consumers led to economic disruptions that peaked in April 2020. This paper presents data showing how COVID-19 affected companies in Poland and discusses policy responses to it.

The first part of the paper points to the strengths and weaknesses of the Polish economy on the eve of a pandemic. In the second and third parts, the paper portrays both steps taken by the Polish government to limit COVID-19 spread and economic policy responses aimed at mitigating economic fallout due to a pandemic. In the fourth part, it presents how the overall situation of companies changed during the pandemic. In contrast, the fifth part discusses in detail the most pressing issues for companies at the height of the lockdown.  In the final part, the paper discusses the efficiency of a policy response to the problems faced by companies and what macroeconomic effects can be expected.

Key words: COVID-19, policy response, lockdown, administrative restrictions.

* Aleksander Łaszek is Chief Economist and Vice President of the Civil Development Forum in Poland. He holds PhD in economics from SGH Warsaw School of Economics.

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We had joy, we had fun, we had seasons in the sun: pandemic disruptions in economic seasonality 

By Jure STOJAN*

Economic time series exhibit periodically recurrent movements at the daily, weekly, and monthly levels. Also known as seasonality, it has been usually treated as a nuisance to be removed prior to analysis. Often, data is already deseasonalised by data providers since it distracts from medium-term time trends and long-term cycles. Moreover, seasonality disappears when data are aggregated to a yearly basis – it is a phenomenon at work at shorter time frames. It is an expression of the cyclical nature of much of human activity. For example, most workers do not work on weekends, days off work tend to cluster around public holidays, and income is usually received on a fixed day of month. Therefore, sudden changes in seasonality can be interpreted as a measure of economic disruption. Using a state-space framework of time series analysis (wherein seasonality is modelled as time-varying, and estimated using the Kalman filter), this paper analyses the changes in seasonality brought about by the coronavirus pandemic of 2020. While no significant crisis effects appear in daily euro-denominated transfers from Slovenia to Bosnia and Herzegovina, trend levels in Slovenian aggregate electricity consumption did decline noticeably. The day-of-the-week patterns remained stable even in times of the lockdown. Not so in Apple mobility data, where seasonality is shown to have altered significantly in Slovenia but also in Sweden, Serbia, Romania, Germany, and Austria.

Key words: time-varying seasonality, pandemic disruption, mobility.

* Jure Stojan, DPhil (Oxon.).

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In pursuit of the vaccine against viral inequalities? Notes on pandemic, panacea, poisons and placebo

By Octavian-Dragomir JORA*

We all stand equal in front of death, though we live in unequal ways, for our gifts and fates that Gods or odds reserve for us are profoundly different and unevenly distributed. We, the ruled ones, are allegedly equal before the law, while rulers one-sidedly legislate a fake uniformity. At the same time, statisticians sequestrate us in income/wealth quartiles, deciles, percentiles only to fuel lamentations for redistributive justice. While getting bored in the suffocating safety of our lazaretto homes, a question hits us: is the new coronavirus a leveller, an equalizer? But more than that, is not the ever-haunting ghost of egalitarianism a more dangerous contagion? This essay examines the routes by which the pandemic leads to even-more-uneven social access to money, jobs, education, healthcare or empathy. Adding an extra-layer of disdain, in times of a pandemic, towards market-freedom capitalism (de-homogenized from the state-infiltrated surrogate), for democratic social fairness reasons, invoking socio-macroorganisms’ infirmities in front of bio-microorganisms, is so deceptive. First, it is simply faulty, since capital and labour are the two sides of the same coin: they face and fall together to natural hazards. Second, this optic gives the floor to fraudulent policymaking of control-and-command equality, powerless in front of both poverty and pandemics. Prior to a COVID-19 cure, humankind needs a thoughtful vaccine against even more sophisticated, and deeply sophistic, viruses of the mind.

Key words: personal freedom, social fairness, inequality of chance, redistributive justice, market vs. governmental failures.

* Octavian-Dragomir Jora is Associate Professor, Ph.D., at the Bucharest University of Economic Studies, the Faculty of International Business and Economics. He is also the founder and editor-in-chief of The Market for Ideas magazine.

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The COVID-19 crisis: economic implications for Bosnia and Herzegovina

By Damir Bećirović*, Faruk Hadžić** and Admir Čavalić***

In mid-March 2020, close to complete government paralysis of economic activities due to the COVID-19 pandemic put the economy of Bosnia and Herzegovina (B&H) into hibernation. Like in other countries, this decision had a devastating impact on the economy of B&H, with quickly and sharply rising unemployment, falling consumption and public revenues, closure of businesses, and the like. In following April, different government levels in the country began to formulate and partially implement economic measures in response to the crisis. This paper analyzes the economic implications of the COVID-19 pandemic in B&H, with particular consideration of governmental ‘corona’ measures. In addition to the macroeconomic analysis, the paper also explores the perceptions of the business community regarding the impact of the pandemic on their business, government measures and their effectiveness, and their anticipation of the future – present optimism. Measures taken by various levels of government in B&H to address the economic and other consequences of the COVID-19 pandemic are viewed as insufficient and belated. Most respondents believe that the pandemic will change people’s consumption and lifestyle, but also that it represents a chance to modernize businesses and business models.

Key words: Bosnia and Herzegovina, COVID-19, economic implications, business.

* Damir Bećirović is a professor of economics at IPI Academy Tuzla.

** Faruk Hadžić is a doctoral student at University of Tuzla and a macroeconomic analyst.

*** Admir Čavalić is a doctoral student at University of Tuzla, economic analyst and the founder of association Multi.

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