Bubble in, bubble out: Lessons for the COVID-19 recovery and future crises from the Pacific.

Abstract

This note presents three important facts on the COVID-19 pandemic and 22 developing countries, namely those in the Pacific. First, social protection systems are less common in the Pacific than in the rest of the world, meaning the region is not particularly well equipped to deal with the sharp decline in economic activity associated with the disease and standard policy responses (e.g., lockdowns) without plunging a large share of the population into poverty. Second, aggressive travel restrictions and effective domestic policy responses have spared many Pacific countries from the worst impacts of COVID-19. Ten countries have not had a single confirmed case. The experience of the region thus offers helpful lessons for other developing countries in keeping the crisis at bay. Third, the relative success of Australia and New Zealand in managing the virus provides an opportunity to pilot and test in the region what a carefully managed pathway to allow the tourism, migration, and remittances, that many countries depend on, to begin flowing again. Against its relative success, the Pacific has a unique opportunity to show the world how to safely emerge from the current crisis and address underlying vulnerabilities before the next one.