Coronavirus: When Will the Outbreak End? And What’s the Cost?

Source: Reuters

The world is shutting down. Many places are just ghost towns. Massive restrictions are in place – travel restrictions, ban on bazaars and school closures.

But when will it end?

Politicians give the impression it could be done in 4-12 weeks. But even if numbers fall over next three months, it is still far from the end. It may take years, unless a vaccine is available.

The current strategy of shutting-down is not sustainable in the long-term. The social and economic damage is enormous.

What is the “exit” strategy?

There are essentially three ways out of the mess as James Gallagher of BBC cites:

·       Vaccination;

·       Immunity through infection; or

·       A permanent change in behaviour

Each of the routes may reduce the ability of the virus to spread. Vaccines will take another 12-18 months. Immunise enough people, about 60% of the population, then the virus may not cause an outbreak. The third is a permanent change in behaviour that will keep transmission rates low.

The short-term strategy by many governments is to drive down cases. This is to prevent hospitals from being overwhelmed. It is easier for a developed country to build capacity than an emerging economy. That’s just resources. But Italy proved otherwise because of its slow initial response.

What’s the cost?

The Asian Development Bank estimates that the global cost of coronavirus may reach USD4.1 trillion. That’s almost 5% of global GDP. A shorter containment period could limit damage to USD 2 trillion, or 2.3% of world output.

The ADB cut its 2020 growth forecast for Asia to 2.2% from 5.5%. China’s forecast was slashed to 2.3% from 6%. Tourism and commodity-dependent nations will suffer the most. Economic recovery is quicker if the disease is contained within 3 to 6 months. Hence, Malaysia’s strategy of containment is lauded until a more permanent solution is found.

Reference:

1.     Siegfrid Alegado, Global Cost of Coronavirus May Reach $4.1 Trillion, ADB Says, 3 April 2020, Bloomberg

2.     James Gallagher, Coronavirus: Are we getting closer to a vaccine or drug? 3 April 2020, BBC