Governments in 2021 are likely to ramp up protectionist economic measures in a bid to stimulate domestic recovery from the COVID-19 pandemic despite the interests of the private sector lying elsewhere, Kathmina Hewage, Researcher at the Institute of Policy Studies has said.
“We will likely see an increase in the level of protectionist economic policies over the next year or so as governments try to stimulate a domestic economic recovery. However, the efficacy of such policies will be short-termist as broad protectionist policies will increase the costs for small and medium enterprises and ultimately be counterproductive to the country’s economic recovery,” Hewage, who is also part of the World Economic Forum’s Expert Network, said in a correspondence with Moscow-based Sputnik.
Speaking about food security amid widescale disruption in global supply chains, Hewage emphasized a similar divergence between governments and businesses.
“The private sector, in particular, is looking more towards suppliers who have factories and other sourcing networks across multiple countries in order to minimize disruption to the entire supply chain if a country faces a new wave of COVID-19. At the same time, many countries are also trying to develop domestic capabilities in order to provide suitable alternatives,” the economist explained.
Economic protectionism had been on the rise before the pandemic, which left global supply chains more brittle in the face of mass disruptions amid restriction measures.