COVID-19 economic impact. COVID-19 is caused by a respiratory virus, which means it can spread without direct contact. A cough or sneeze from an infected person close to you is quite enough. So how can we take a preventive measure and how does the virus spread? The rate at which the pandemic spread has skyrocketed the world recording a huge number of infected cases.
COVID-19 economic impact: why coronavirus demands special attention.
Economic Challenges of the COVID-19
- China’s economy contracted in the first quarter of 2020 – the first time since records began in 1992.
- More than 5 million Americans filed for unemployment last week, bringing total US jobless claims to 22 million over a four-week period.
- The International Monetary Fund says Asian economies will see zero growth for the first time in 60 years.
- The UK’s Office for Budgetary Responsibility has warned the economy could shrink by 35% with 2 million job losses.
- Denmark has said companies registered in tax havens won’t be able to access financial aid.
We cannot denied that the pandemic has brought about negative economic impact at most to the world economy. Businesses are coping with lost revenue and disrupted supply chains as factory shutdowns and quarantine measures spread across the globe, restricting movement and commerce.
On 15 April, the IMF warned economies in Asia would see no growth this year, for the first time in 60 years, with the service sector particularly under pressure.
Unemployment is skyrocketing, while policymakers across countries race to implement fiscal and monetary measures to alleviate the financial burden on citizens and shore up economies under severe strain.
The Chinese economy is likely to be hit further by reduced global demand for its products due to the effect of the outbreak on economies around the world.
Data released on 16 March showed China’s factory production plunged at the sharpest pace in three decades in the first two months of the year.
Pandemic shutdowns led to the first GDP contraction in China since official record-keeping began. But the drop wasn’t as bad as some predictions, giving investors reason for hope. Here’s what we’re watching in the markets today, with @jimwillhite. #WSJWhatsNow pic.twitter.com/q1tOMDgcaA
— The Wall Street Journal (@WSJ) April 17, 2020
Why the lockdown; How necessary?
The way COVID-19 jumps from person to person is staggering. Under normal social conditions, one infected person would infect about three others every three days.
The explosive spread of the virus is such that although its fatality rate is relatively moderate, the sheer number of people who may get infected is astronomical. And with a large enough pool of cases, the worldwide deaths could number in the millions. That level of trauma is simply untenable.
There is no benefit of a vaccine or cure yet, so dependent on social and behavioural change to avert this disaster.
What does this mean in a practical sense?
One way is to focus on individual behavioural change as a means of reducing the likelihood of getting – or passing on – the virus. This is where good hand hygiene and limited face touching come in. But people are people, and old habits die hard.
So the alternative is to reduce the rate of spread by disrupting normal social conditions to reduce opportunities for transmission. To do this, we have to reduce the number of healthy people who come into contact with others infected with the virus. And one of the more drastic measures in this respect is an enforced lockdown, the quarantine of everyone in a given community from everyone else. No contact means no spread.
COVID-19 economic impact
Problem with the lockdown: What the lockdown can’t do
The lockdown of the hotspots is one of the sharper weapons in world’s fight against COVID-19. It may flatten the pandemic curve if it lasts long enough. But the lockdown is only a treatment for a pandemic, not a cure.
The lockdown will deal with what comes after it was effected, but it will do absolutely nothing about all the cumulative transmissions of the virus that have occurred before
All of the infections that occurred before the lockdown, all the policy lapses that allowed them, and all of their consequences – those will still need to be dealt with even after the lockdown is effected.