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The Economic Impact of School Closures During the Pandemic in Asian Countries
Introduction
According to a report by Oxford Economics, the prolonged school closures caused by the pandemic in several Asian countries could result in the loss of over $500 billion in potential economic growth. The countries most affected by this include India, Indonesia, Malaysia, the Philippines, and Thailand. These economies may experience an average annual loss of 0.3% to 0.8% of their potential GDP from 2021 to 2035.
The Impact on GDP and Investments
The report estimates that the collective GDP of these countries could decrease by approximately $511 billion as a consequence of the extended school closures. Among the five countries, the Philippines is anticipated to suffer the greatest loss in potential GDP and investments during the period of 2021 to 2035. In contrast, Thailand, which had the shortest duration of school closures among the countries, is expected to have the least impact on its potential GDP and investments.
The Consequences for Students and Future Generations
Many students in these developing economies come from lower-income households and faced challenges such as limited access to internet, inadequate technology, and unfavorable study environments during the school closures. As a result, these students are more likely to drop out of school entirely, leading to long-term economic consequences such as lower income levels and reduced spending power. The report warns that lower human capital, incomes, and health could create a vicious cycle of reduced education and opportunities for multiple generations.
The Effect on Investments
The economic impact of school closures goes beyond the individual level. The lack of education and reduced income levels may discourage both local and international companies from investing in these countries. Oxford Economics estimates a significant decrease in total fixed investment, projecting a reduction of $181 billion across the five countries from 2021 to 2035. India is expected to face the highest losses in investments, with a potential decline of nearly $100 billion over the same period, followed by Indonesia, the Philippines, Malaysia, and Thailand.
In conclusion, the prolonged school closures during the pandemic have had severe economic consequences for Asian countries. The loss of potential GDP, investments, and human capital may hinder the long-term growth and development of these economies. It is crucial for governments and policymakers to prioritize the recovery of education systems and ensure access to quality learning opportunities for all students, especially those from disadvantaged backgrounds.
Hot Take: Impact on New Businesses
The economic impact of prolonged school closures in Asian countries during the pandemic goes beyond the immediate effects on GDP and human capital. It also has implications for new businesses and potential investments in these economies.
One significant consequence of the extended closures is the potential decrease in investments, both from local and international companies. The reduced education levels and lower income prospects of the current and future generations may deter businesses from establishing or expanding operations in these countries. This could result in missed opportunities for new businesses hoping to tap into growing markets and leverage local talent.
Additionally, the disruption in education and the increased dropout rates among students may have long-term effects on the skill sets available in the job market. This could lead to a shortage of qualified workers, particularly in industries that require specific technical or specialized knowledge. New businesses may face challenges in finding well-trained employees or may need to invest more resources in training and development programs.
However, there is also an opportunity for innovative new businesses that can address the unique challenges brought about by the pandemic. Companies that provide technological solutions for remote learning, online educational resources, or affordable access to internet connectivity could find a niche market and contribute to bridging the education gap during these difficult times.
In conclusion, while the economic impact of school closures presents challenges for new businesses, it also opens up opportunities for those able to adapt and address the changing needs of education and remote learning. By understanding the nuances and demands of these markets, new businesses can position themselves to play a role in the recovery and development of these economies.
Article First Published at: https://www.cnbc.com/2023/07/27/asia-could-lose-500-billion-gdp-from-pandemic-school-closures-oxford.html.svg)
