A brief reflection on 2022 and the year ahead   |05 January 2023

Mr Yakub

The year 2022 witnessed world events of huge impact and significance that they overshadowed other positive developments that took place. Despite seeing the green shoots of post-Covid-19 recovery in some countries like Seychelles, we, as global citizens, were largely preoccupied with Russia’s war in Ukraine and its negative impact on grain supplies, fuel prices, global inflation rates and cost of living in the preceding year of 2022.

However, amid the turmoil, some remarkable developments were made in the field of health and medicine. In January 2022, we learnt that a 57-year-old terminal heart disease patient in the U.S. had received a pig heart, genetically modified to be compatible in a human. That made headlines because it gave us, humans, hope. With thousands of people dying while waiting for a transplant, this was a breakthrough. However, the American patient died two months after the operation, but his courage, self-sacrifice and the determination of the medical research staff have shown us that this approach can work.

2022 was also a good year for vaccine research and development. In June 2022, the Lancet, a general medical journal in England, reported that Covid-19 vaccines had helped prevent nearly 20 million deaths in the first year of use alone. And in December 2022, the pharmaceutical company, Moderna, announced that a cancer vaccine it has developed, based on the mRNA technology that they used to create their Covid injection, had reduced the risk of skin cancer returning in 157 patients by 50%. Moderna is now planning a trial of at least 1,000 patients this year.

In the field of neuroscience, in Lausanne, Switzerland, a team of Swiss neurosurgeons and scientists made a major advance that is set to transform medicine. They developed and implanted an AI (artificial intelligence) software directly on the spinal cord to get paralysed patients to walk again. The AI device basically stimulates nerve cells in the spinal cord. After a few months, the Swiss researchers reported that 4 out of 9 patients implanted with the device no longer need to ‘switch on’ the device in order to walk. It seems that after a few months of electrical stimulation, the specific nerve cells had been ‘rebooted’ and they were now working by themselves. I am told there are plans to conduct bigger trials in 2023.

Looking back, I think it would be fair to say that 2022 was a testing year and results were mixed. Why? 2022 was plagued by a demanding macroeconomic environment. Much of the world was preoccupied with ‘putting out fires’ judging from the large-scale disorder and human misery caused by climate change and the invasion of Ukraine. And these events somehow eclipsed the breakthroughs made by the medical profession in the advancement of health science and technology in 2022. But there is always light at the end of the tunnel if you have faith in human progress and in our ability as homo sapiens to overcome the challenges ahead.

Finally, in reflecting briefly on the year ahead, the IMF forecasts that one-third of the global economy will be in recession this year. It claims that the UK, US, Europe and possibly China will all see their economies slow down. True, the more advanced economies are in a slump today and growth has fallen. On the other hand, India seems to be better positioned to navigate global headwinds. The World Bank has revised India’s 2022-23 GDP forecast upward to 6.9 percent in October 2022.

When faced with such difficulties, governments should avoid retreating and isolating themselves with tariff and non-tariff barriers. They should pursue growth-oriented reforms that embrace free trade, reform immigration, improve labour productivity and introduce simpler and lower taxes.

We all know that inflation means rising prices of basic commodities that are in constant demand, thus affecting mostly those at the lower end of the income distribution. Recession, on the other hand, is worse. It will reduce consumer spending and some people may lose their jobs. Unemployment could rise and incomes will fall.

There are ways for governments to address that through fiscal policy, and these are difficult decisions to be made. One option is to raise taxes for those at the highest end of the income distribution and spread purchasing power more equitably. Of course, policy choices are always tough. But on balance, the economic damage that can be caused by a recession is higher than that caused by high inflation.

So, if you had a choice between inflation and recession, which poison would you choose?

A. G. Yakub