The coronavirus pandemic presents an unprecedented challenge to the world’s nations: Choose...

The coronavirus pandemic presents an unprecedented challenge to the world’s nations: Choose between economy and health

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Workers take a rest near the closed restaurant and bank in Wuhan, China. Warning that China, February 23, 2020. 
Associated Press
  • The coronavirus pandemic has led some governments to impose nationwide lockdowns, shuttering businesses and restricting residents’ movement.
  • Though these lockdowns so far seem effective in slowing the virus’s spread, they come at a high economic cost.
  • The UK avoided enacting severe measures for longer than other coronavirus-stricken countries in Europe, but a lack of social distancing could cost hundreds of thousands of lives.
  • For the latest case total, death toll, travel information, and guidance on protecting yourself, see Business Insider’s live updates here.
  • Visit Business Insider’s homepage for more stories.

In cities across China, major roads have been empty for the last seven weeks. Businesses have sat shuttered, delivery drivers have been overloaded with bags of food and supplies, and workers have sprayed the streets with bleach.

An estimated 780 million people have been largely confined to their homes during China’s weeks-long lockdown. Italy, Spain, France, Belgium, and El Salvador have since taken similar measures. California and Illinois have issued statewide shelter-in-place orders.

Though the quarantine seems to have slowed the spread of the virus in China, it came at a high cost. In January and February, China’s economy took a historic hit: Industrial production fell by 13.5% and service production fell by 13%. Retail sales there have declined by 20.5% this year, according to a note from Pantheon Macroeconomics published Monday.

qatar airways

“I think all countries are going to have to face this difficult trade-off between the health and the economic impact, and there’s definitely going to be a heavy impact on both,” Dr. Ben Cowling, who leads the WHO’s Collaborating Center for Infectious Disease Epidemiology and Control at Hong Kong University, told Business Insider. “But there’s a little bit of choice about how bad on each one.”

What’s more, Cowling said, a month-long lockdown just delays the outbreak’s peak, likely by about three months. So once China lifts the restrictions, many experts fear the number of infections there will begin to rise again.

China and other countries could end up in a “vicious cycle,” Cowling said, where they have to shutter businesses and implement mass quarantines every three months.

The UK could face economic demise or 500,000 deaths

boris johnson coronavirus uk
Britain’s Prime Minister Boris Johnson speaks during a news conference on the ongoing situation with the coronavirus outbreak in London, March 16, 2020. 
Richard Pohle/Pool via Reuters

In evaluating the trade-offs between economic damage and public-health risks, not every country initially chose health. As the United Kingdom’s case count passed 500 and the virus sickened health minister Nadine Dorries, schools and businesses remained open. Mass gatherings were still allowed. Government officials made a plan to shore up the British economy. Chris Whitty, the Chief Medical Officer, said they were playing a “long game.”

It was quite different from China’s and Italy’s decisions to implement mass quarantines.

“Their decision was on the other end of the spectrum,” Cowling said of UK leaders. “That’s a different philosophy for the UK that they’ve often included economics in calculations of public-health policies.”

Other countries’ interventions, including travel bans, school closures, and widespread testing, fall somewhere in between the UK’s and China’s.

Italy coronavirus lockdown restaurants
A waiter stands by empty tables outside a restaurant at St Mark’s Square after the Italian government imposed a lockdown in an attempt to contain the country’s coronavirus outbreak. 
Manuel Silvestri/Reuters

Italy, Spain, France, and Belgium have all restricted residents to their homes except for essential travel (to the pharmacy or the doctor, for example). Some countries require residents to have government approval to leave the house. US states and cities started implementing similar, though less stringent, measures this week.

On Monday, the UK pivoted to a “suppression” approach, advising residents to work from home and practice social distancing. The measures were not mandatory, but a series of major events were canceled following the new guidelines. On Wednesday, Prime Minister Boris Johnson announced that all UK schools would close.

The change came as a report from the Imperial College London’s COVID-19 Response Team suggested that without such measures, COVID-19 could kill half a million people in the UK. The report acknowledged that the precautions necessary to prevent such large-scale death involve a huge trade-off, though.

“Suppression, while successful to date in China and South Korea, carries with it enormous social and economic costs which may themselves have significant impact on health and well-being in the short and longer-term,” the researchers said in the report.

‘No good choices’

spain coronavirus lockdown
Spanish National Police officers guard the empty Larios street during partial lockdown as part of a 15-day state of emergency to combat the coronavirus outbreak in downtown Malaga, Spain, March 15, 2020. 
Jon Nazca/Reuters

On one end of their spectrum of choices, governments can opt to do nothing to stop the spread of the new coronavirus, resulting in overwhelmed hospitals and potentially hundreds of thousands of deaths. On the other side, they can place their populations on total lockdown and decimate their own economies.

“It’s critical to slow down transmission. I think health is the number-one priority, but it may also be valuable for a city or a state or a country to think about how economic activity can be maintained,” Cowling said. “If people lose their jobs and don’t have money, then there’s the long-term impact on their health.”

Modeling from The Australian National University released earlier this month predicts that the US could see a gross-domestic-product loss of up to $1.7 trillion in 2020 in a worst-case scenario. Treasury Secretary Steven Mnuchin told Republican senators that US unemployment could rise to 20% without intervention.

US jobless claims surged to a two-year high last week, and Goldman Sachs predicted an eightfold increase this week.

“Even in the best-case scenario of a low-severity impact, the economic fallout is going to be enormous and countries need to work together to limit the potential damage as much as possible,” Warwick McKibbin, the Australian study’s author, wrote.

Just how severe that economic impact is depends in large part on how governments choose to address the waves of infection that come after their first lockdowns end.

“They can shut down for a month, but then when they reopen, they’re still going to have an epidemic starting again,” Cowling said. “I don’t see the long-term plan for those locations. Are they going to just cycle, just down one month in every three months? Because that’s extremely destructive to the economy.”

Some governments are cushioning the blow with tax cuts, stimulus packages, and other economic relief tools, but the cost of containing the virus will still be inordinately high.

“I don’t know where the best middle ground is,” Cowling said. “There are no good choices.”

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