In December 2019, there was a cluster of Pneumonia cases coming from China, particularly from a small village by the name of Wuhan. Investigations found out that it was caused by a previously unknown virus, now named the Coronavirus. This is a relatively new virus and what society knows about it might change in the future. The Coronavirus is a large group of viruses, which consists of a core of genetic material surrounded by an envelope of protein spike. This gives them the appearance of a crown, which is corona in Latin, and therefore how it got its notorious name. There are different strains of Coronavirus that cause respiratory, intestinal and stomach issues. These respiratory diseases can range from the common cold to pneumonia and in most people, the symptoms tend to be mild. However, there are some types of coronavirus that can cause severe problems. This virus is commonly seen in patients that have diets heavy in seafood and raw meat. After that, the people that developed the disease passed it on to their loved ones and medical personnel. This disease has spread within China and also to a number of other countries such as the United States, with cases in California.
This obviously impacts health, however, how does this horrible disease have its effects on the economy? Economists have looked at previous influenza outbreaks to gauge the possible impacts of the Coronavirus, but they have to factor vast uncertainties from the specifics of this virus and how changes in medical organizations and communication technologies can also alter these outcomes. The World Health Organization, resolved by the UN to help save lives, has had 5 separate outbreaks this century with costs ranging from 33 billion USD for SARs to more than 50 billion USD for Ebola in 2013. Despite this hit in the economy, the epidemics have affected developing countries a lot more than already developed ones, such as the United States. Experts estimate that the cost of a moderate/ severe pandemic could be up to 570 billion US dollars. This situation can be compared to that of the Influenza, which took a devastating percentage of the population in the 1910s. Soon after was the Great Depression, and people say the Great Depression could only happen because the economy was so fragile after the Influenza outbreak. This is specifically interesting because it hit the working population the hardest. Estimates suggest that if a modern epidemic began like that of the Spanish Influenza outbreak, which was an airborne, fast-moving disease, it would kill more than 33 million people in 250 days and erode more than 3.6 Trillion US dollars. However, this was back in the 1910s, and a lot of things have changed since then, including medical and communication technology.
The global economy is further impacted by the fact that the world – through commerce and travel – is closely connected to China despite the distance. “You can’t really confine anything anywhere with what’s going on,” says CNBC’s Steve Liesman. To put it more in terms of the stock market, shares in Asia, the United States, and across Europe. Some of these effects may be positive, as oil prices in companies such as Brent Crude down about 60$ for the first time since October, which makes gas prices cheaper. This is because traveling and trading are limited in China, and therefore goods and people who trade are not allowed to leave or go into the country, which is a problem because the lunar new year is a big time for traveling, spending, and trading. The fact that people aren’t allowed in China also cuts back the major traveling that was done by different countries and delegations such as Hong Kong, Japan, the United States, and Thailand. These tourists spent over 180 billion dollars in 2018 on traveling to China. More stock shares that are linked with this effect such as Intercontinental Hotel, British Airways, and the luxury center of Burberry, are all down more than 5%. Rating agency Standard’s and Poor says a global epidemic would impact investment, travel, and tourism, along with industrial production.
These impacts could be lessened or weakened by increased government spending on health emergency services and vaccines. Right now, it is too early to tell exactly how much this epidemic will impact the economy, however, compared it to its baby cousin SARS, which had an estimated impact of 40 billion dollars, the results could be catastrophic. All man can do right now is work as fast as possible to find a cure for this horrible virus.