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The Economics of COVID-19

On the eve of 31 December 2019, as the world celebrated the start of a new decade, the province of Wuhan alerted the World Health Organization of several ‘flu-like’ cases. Less than a week later, a novel coronavirus, was identified. In February, the disease it caused was named COVID-19. Even now, as the global infection rate crosses 1,00,000 and the death toll surpasses 3000, we are yet to understand the threat posed by this new coronavirus. There is no vaccination to prevent it, and no antiviral to cure the sick. While high numbers are being reported daily, agencies may still be unaware of many cases.

While some of us may find it easier to resign ourselves to fate, what we need most right now is credible and comprehensive information from professionals that can help us understand what the Coronavirus is, and how we can prepare and protect ourselves against it. The Coronavirus is the first book that addresses the history, evolution, facts and myths around the pandemic.

Here’s an excerpt from the book below:

‘Give me a one-handed economist. All my economists say “on the one hand”, then “but on the other . . .”’
—Harry Truman

Since the economists that President Truman sought are even more elusive than Sundarbans tigers, the ambidextrous opinions of even-handed experts could map our strategies.

Each new infection moderately severe or worse is estimated to cost approximately $570 million or 0.7 per cent of global income, according to the World Bank. On 9 March, economists at the United Nations estimated the economic impact of COVID-19 to range from $1 trillion to $2 trillion, depending on the ability of various governments to mitigate its impact.

According to World Bank estimates, six major zoonotic outbreaks between 1997 and 2009—Nipah, West Nile fever USA, SARS, HPAI or bird flu, Bovine Spongiform Encephalopathy or mad cow disease, and Rift Valley fever—have cumulatively cost the world at least $80 billion. While the global economic cost of the Spanish flu pandemic of 1918–19 is unknown, McKibbin and Fernando have estimated that if it repeated itself in the year 2020, it could cost the global economy up to $9 trillion.

The SARS outbreak of 2002–03 cost the global economy about $54 billion as per World Bank estimates. The Ebola outbreak in West Africa in 2014 exemplified the grave economic toll of an emerging infectious disease in an unprepared region. Gross Domestic Product (GDP) growth in Liberia and Sierra Leone dropped from 8.7 per cent and 5.3 per cent respectively, to less than 1 per cent between 2013 and 2014, despite the illness-related death toll falling during the same time. Guinea saw a GDP growth of 0.1 per cent for 2015, compared to the 4 per cent predicted. The outbreak cost these three nations a total loss of $1.6 billion, whereas the rest of the world lost about $550 million.

MERS hit South Korea in 2015. With over 16,000 quarantined and thirty-eight deaths, 41 per cent fewer tourists visiting the country, residents avoiding public spaces like malls, restaurants and theatres, the impact on the economy
was severe. Eventually, the Bank of Korea was forced to reduce its interest rates to a record low, and the country faced a total loss of roughly $12 billion. Saudi Arabia was estimated to have lost $16 billion during the MERS outbreak due to a complete standstill on pilgrim activities. The Zika epidemic in Latin America and the Caribbean drained their economy of an estimated $7–18 billion between 2015 and 2017. Influenza, which returns annually causing about 700,000 deaths, costs the economy roughly $500 million each year, according to a 2017 WHO study by Victoria Fan and colleagues.

Disease outbreaks affect economies, both directly and indirectly. Government expenses increase as it intervenes to provide basic amenities to its people. Often this involves lowering prices of goods and commodities and reduced direct taxation on companies. Companies face setbacks as sales plummet with people less likely to spend on non-essential goods and leisure activities. This further lowers income from value-added taxation. Illness or forced quarantines impact labour and production and manufacturing abilities of industries. At the individual level, people face increased medical costs, lost pay due to sickness, mortality and loss of close ones. Private and foreign investors do not invest in an uncertain market.

Even if the disease is contained, its aftermath lingers. With business hurt, economy disrupted, stigma and fear plaguing citizens, with the most vulnerable populations hardest hit, the outbreak has far-reaching social, economic, political and psychological effects.

The Coronavirus: What You Need to know about the Global Pandemic brings together medical experts Dr. Swapneil Parikh, Dr. Rajesh Parikh, and Maherra Desai, to present a timely and reliable narrative on the Covid 19 pandemic and possible ways forward.

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