'Public health capability will be tied to economic success'

Former World Bank President Jim Yong Kim delivers a keynote speech via video to the Seoul International Finance Conference at the Conrad Hotel on Yeouido, Thursday. / Korea Times photo by Kim Bo-eun

By Kim Bo-eun

As countries around the globe battle the devastating economic effects of COVID-19, former World Bank chief Jim Yong Kim said government capabilities in containing infectious diseases will be crucial in determining future economic success.

“Public health capabilities will be intimately tied to economic success for many years to come,” Kim said in an online speech to the Seoul International Finance Conference at the Conrad Hotel on Yeouido, Thursday.

Kim said this is based on forecasts that the pandemic will not come to a complete end anytime soon.

“If you listen to predictions of how effective vaccines may be, experts are saying 70 percent efficacy will be a wonderful accomplishment,” Kim said. “But this is nowhere near enough to reach herd immunity, a level large enough so that the overall population is protected. It is possible we won't even have a 70 percent effective vaccine. There is no magic bullet coming.”

He said the current situation is deeply worrying.

“The scope of COVID's economic impact dwarfs the global financial crisis of 2008,” Kim said, adding that the pandemic's economic shock has been three times worse.

“The latter was severe but it didn't affect everyone on the planet. No one on earth has escaped the impact of COVID. Economic activity and human social life will be changed by COVID and sectors like transport, telecoms, tourism and energy have been deeply altered, altered permanently.”

Governments around the world have struggled to find a balance between saving the economy and containing the spread of the virus. Many economies in Europe have opted for draconian measures.

But Kim said it does not necessarily have to be a choice between keeping the economy going or enforcing stricter quarantine measures.

“There is evidence that countries that implemented the most public health measures have experienced the strongest economic growth,” he said, referring to the case of Korea.

The OECD expected Korea's GDP will contract by 1 percent this year, which puts it in second place among major economies after China. Korea had 1.9 percent GDP growth in the third quarter from a quarter earlier.

Kim attributed this to “focused lockdowns that didn't shut down the entire economy.” “This was possible with confidence in a fully developed testing and contact tracing system,” he said.

He also noted that “even if we get new vaccines, it's the countries with a robust public health response in place that will benefit the most.”

Kim referred to a rise in Korea's competitiveness as a financial center, backed by the effective management of COVID-19.

In the London-based think tank Z/Yen's latest Global Financial Centers Index in September, Seoul's ranking jumped to 25th out of 110 cities, from 33rd out of 108 centers in March. But Korea still falls short of major financial hubs around the world.

“To become a major global financial center, Korea needs to ensure that future outbreaks of COVID and other infectious diseases are quickly stopped, as you are doing now,” Kim said.

“Build on early success and find a new normal which is both sound from a public health perspective and supportive of strong economic growth. Korea is in a better position to find that new normal than any other country in world.”