As the stock market continues to plummet, we’re all wondering how severely the Coronavirus pandemic will effect economic activity. Shipments, goods, flights, and services have all been hit hard by the outbreak. Because there is no cure yet for the virus, this kind of panic is being compared to that of the Severe Acute Respiratory Syndrome (SARS) in 2002. During that outbreak, victims showed more severe symptoms and suffered a mortality rate near 10%. The medical community and governments were able to contain SARS after a few months. The questions we face are how long will it be before the Coronavirus is contained and how badly will our economy be impacted?
Back in 2002, the Severe Acute Respiratory Syndrome broke out in Asia. The symptoms for that virus were more severe than those of the Coronavirus, but the virus carriers could be easily detected. Therefore, the disease was much easier to contain than with Coronavirus. The latest reports indicate that it can take up to 14 days for those infected to show symptoms of the Coronavirus. SARS was contained after a few months, despite having no vaccine developed prior to the outbreak. Countries used strict health measures including quarantine and tracking down any people exposed to the virus. At the time of the SARS outbreak, China had the sixth largest economy in the world, accounting for 4.2% of the global economy. Today, they are the second largest economy, behind the United States, accounting for 16.3% of the global economy.
According to CNBC, the Severe Acute Respiratory System caused the global economy to lose $40 billion. Overall, the Coronavirus will have a bigger impact on the world economy due to its impact on China and that county’s central roll in so many global supply chains. More and more countries will be impacted by the virus, with trade, travel, and tourism grinding to a halt in countries such as South Korea and France. According to Bloomberg, Coronavirus could cost the global economy around $2.7 trillion dollars, over 65% more than what SARS caused.
It’s safe to presume the outbreak will last a few months in the United States. The virus started appearing in Wuhan, China back in December of 2019 and quickly spread throughout the country. China currently has the most people that are infected, with more than 80,000 cases. National and local governments in China shut down transportation to certain cities and quarantined neighborhoods and people to an extent that would be impossible in the USA. Although China was initially slow to react to the disease, their numbers of new cases are now going down. Over 58,000 people have been released from treatment and quarantine, which means China’s solutions have been effective. The question is now whether the USA and other countries will follow in their footsteps and how stringent will measures need to be to achieve the turnaround that China is now seeing?