Interconnectedness of Health and Economy in Post-COVID-19: A Systems Thinking Approach to Synergies, Trade-Offs, and Policy Responses in Nepal

Abstract

Background: This study addresses the economic challenges posed by the Coronavirus Disease 2019 (COVID-19) pandemic, with a specific focus on Nepal. Employing a Systems Thinking approach, the study develops a comprehensive model that integrates macroeconomic interventions, exploring the trade-offs and synergies among various economic sectors. The interconnectedness of health, economic, and policy domains highlights the need for a holistic understanding of the pandemic's effects. Methods: An exploratory research design was used. The model introduces three primary subsystems—import, local demand, and local production—illustrating their interdependence. The causal loop diagram depicts the implications of fiscal and monetary policies on the economy, emphasizing the synergy and trade-offs resulting from policy interventions. Results: Findings reveal the significant economic impact of the pandemic on Nepal, leading to its negative growth rate in FY 2020/21, the first time Nepal has experienced this in the last two decades. The results show that both intended and unintended consequences are observed following the adoption of fiscal and monetary policy that aimed at minimizing the spread of virus suggesting a complex nature of relationship among the policy variables. The fiscal policy induced negative consequences on the increasing loan, slow revenue growth, while positive feedbacks are observed on increased investment opportunities, and boosting of local economy. The monetary measures yielded unintended consequences on the rising land prices, surge in share market. Conclusions: The study concludes by emphasizing the crucial role of informed policymaking in navigating the complex landscape, offering insights for creating a resilient and sustainable post-pandemic future. Keywords: Causal loop diagram; COVID-19; economic sectors; systems thinking approach.