Economic Consequences of the COVID-19 Outbreak - Frontiers

COVID-19 is not only a global pandemic and public health crisis; it has also severely affected the global economy and financial markets. Articles JonathanLing UniversityofSunderland,UnitedKingdom JacquesOosthuizen EdithCowanUniversity,Australia DimitrisBallas FacultyofSpatialSciences,UniversityofGroningen,Netherlands Theeditorandreviewers'affiliationsarethelatestprovidedontheirLoopresearchprofilesandmaynotreflecttheirsituationatthetimeofreview. Abstract Covid-19andtheEconomy Conclusion AuthorContributions ConflictofInterest References SuggestaResearchTopic> DownloadArticle DownloadPDF ReadCube EPUB XML(NLM) Supplementary Material Exportcitation EndNote ReferenceManager SimpleTEXTfile BibTex totalviews ViewArticleImpact SuggestaResearchTopic> SHAREON OpenSupplementalData PERSPECTIVEarticle Front.PublicHealth,29May2020 |https://doi.org/10.3389/fpubh.2020.00241 EconomicConsequencesoftheCOVID-19Outbreak:theNeedforEpidemicPreparedness AntonPak1†,OyelolaA.Adegboye1*†,AdeshinaI.Adekunle1,KaziM.Rahman2,3,EmmaS.McBryde1andDamonP.Eisen1 1AustralianInstituteofTropicalHealthandMedicine,JamesCookUniversity,Townsville,QLD,Australia 2NorthCoastPublicHealthUnit,NewSouthWalesHealth,Lismore,NSW,Australia 3TheUniversityofSydney,UniversityCentreforRuralHealth,Lismore,NSW,Australia COVID-19isnotonlyaglobalpandemicandpublichealthcrisis;ithasalsoseverelyaffectedtheglobaleconomyandfinancialmarkets.Significantreductionsinincome,ariseinunemployment,anddisruptionsinthetransportation,service,andmanufacturingindustriesareamongtheconsequencesofthediseasemitigationmeasuresthathavebeenimplementedinmanycountries.IthasbecomeclearthatmostgovernmentsintheworldunderestimatedtherisksofrapidCOVID-19spreadandweremostlyreactiveintheircrisisresponse.Asdiseaseoutbreaksarenotlikelytodisappearinthenearfuture,proactiveinternationalactionsarerequiredtonotonlysavelivesbutalsoprotecteconomicprosperity. Covid-19andtheEconomy OnMarch11,2020,theWorldHealthOrganization(WHO)characterizedCOVID-19asapandemic,pointingtoover3millioncasesand207,973deathsin213countriesandterritories(1).Theinfectionhasnotonlybecomeapublichealthcrisisbuthasalsoaffectedtheglobaleconomy.Significanteconomicimpacthasalreadyoccurredacrosstheglobeduetoreducedproductivity,lossoflife,businessclosures,tradedisruption,anddecimationofthetourismindustry.COVID-19maybethata“wake-up”callforgloballeaderstointensifycooperationonepidemicpreparednessandprovidethenecessaryfinancingforinternationalcollectiveaction.Therehasbeenampleinformationontheexpectedeconomicandhealthcostsofinfectiousdiseaseoutbreaks(2,3),buttheworldhasfailedtoadequatelyinvestinpreventiveandpreparednessmeasurestomitigatetherisksoflargeepidemics. Withglobalization,urbanization,andenvironmentalchange,infectiousdiseaseoutbreaksandepidemicshavebecomeglobalthreatsrequiringacollectiveresponse.Althoughthemajorityofdevelopedcountries,predominantlyEuropeanandNorthAmerican,havestrongreal-timesurveillanceandhealthsystemstomanageinfectiousdiseasespread,improvementsinpublichealthcapacityinlow-incomeandhigh-riskcountries—includinghumanandanimalsurveillance,workforcepreparedness,andstrengtheninglaboratoryresources—needtobesupportedbyusingnationalresourcessupplementedwithinternationaldonorfunding.Internationalcollectiveactionamonggovernments,non-governmentorganizations,andprivatecompanieshasbeenadvocatedinbuildingandfinancingtechnologicalplatformstoacceleratetheresearchonanddevelopmentresponsetonewpathogenswithepidemicpotential(2,4).InthecaseofCOVID-19,suchcooperationiscritical,especiallyforthedevelopmentandproductionofavaccine.TheCoalitionforEpidemicPreparednessInnovations(CEPI),aglobalpartnershiplaunchedin2017,hastrackedglobaleffortsinCOVID-19vaccinedevelopmentactivityandisadvocatingforstronginternationalcooperationtoensurethatvaccine,whendeveloped,willbemanufacturedinsufficientquantitiesandthatequitableaccesswillbeprovidedtoallnationsregardlessofabilitytopay(5).Furthermore,affectedcountriesmaybenefitfromexchangingtechnologicalinnovationsincontacttracing,suchashealthQuickResponse(QR)codes,tomanagetheoutbreakmoreeffectively.However,thereareimportantprivacyimplicationsthatneedtobeconsidered(6).InthecaseofCOVID-19,thecollectiveresponseandadoptionofpreventivemeasurestostoptheglobalspreadwereimplementedtoolate,afterCOVID-19hadalreadypenetratedotherregionsthroughinternationaltravel.Figure1ApresentsthedynamicsofconfirmedCOVID-19casesandshowsthatlargecountriesinEurope(e.g.,Italy,Germany,andtheUK)andtheU.S.havealreadyoutnumberedChina,theoriginofepidemic,inthenumberofconfirmedCOVID-19cases. FIGURE1 Figure1.(A)Cumulativenumberofconfirmedcasesinemergingepicenters.Datasources:WHOCoronavirusdisease(COVID-2019)situationreports(14).(B)DynamicsofthevalueofstockindicesandoilfuturesrelativetoJanuary2,2020.Datasources:historicaldataforstockindicesandBrentoilfutureswereextractedfromYahooFinance(www.finance.yahoo.com).Closingpricesareusedinthecalculations.Dailyvaluesarecalculatedrelativetoanindexvalue(100)onJanuary2,2020. Inadditiontothesubstantialburdenonhealthcaresystems,COVID-19hashadmajoreconomicconsequencesfortheaffectedcountries.TheCOVID-19pandemichascauseddirectimpactsonincomeduetoprematuredeaths,workplaceabsenteeism,andreductioninproductivityandhascreatedanegativesupplyshock,withmanufacturingproductiveactivityslowingdownduetoglobalsupplychaindisruptionsandclosuresoffactories.Forexample,inChina,theproductionindexinFebruarydeclinedbymorethan54%fromtheprecedingmonth'svalue(7).Inadditiontotheimpactonproductiveeconomicactivities,consumerstypicallychangedtheirspendingbehavior,mainlyduetodecreasedincomeandhouseholdfinances,aswellasthefearandpanicthataccompanytheepidemic.Serviceindustriessuchastourism,hospitality,andtransportationhavesufferedsignificantlossesduetoreductionintravel.TheInternationalAirTransportAssociationprojectsalossinairlinerevenuesolelyfrompassengercarriageofupto$314billion(8).Restaurantsandbars,travelandtransportation,entertainment,andsensitivemanufacturingareamongthesectorsintheU.S.thataretheworstaffectedbytheCOVID-19quarantinemeasures(9).TheadvanceseasonallyadjustedinsuredunemploymentrateintheU.S.hasalreadyreachedarecordlevelof11%fortheweekendingApril11,2020(10). Inadditiontomarkedhealthinequalities,especiallyincountrieswithoutuniversalhealthcarecoverage,theeconomicimpactoftheCOVID-19pandemicwillbeheterogeneousacrossthecountry'sincomedistribution.Forexample,officeworkersaremorelikelytotransitiontoflexibleworkingarrangementsduringtherestrictions,whilemanyindustrial,tourism,retail,andtransportworkerswillsufferasignificantreductioninworkduetocommunityrestrictionsandlowdemandfortheirgoodsandservices. GlobalfinancialmarketshavebeenheavilyimpactedbytheeffectsofCOVID-19spread.Asthenumbersofcasesstartedtoincreaseglobally,mainlythroughtheUS,Italy,Spain,Germany,France,Iran,andSouthKorea,theworldfinancialandoilmarketssignificantlydeclined.Sincethestartoftheyear,leadingU.S.andEuropeanstockmarketindices(theS&P500,FTSE100,CAC40,andDAX)havelostaquarteroftheirvalue,withoilpricesdecliningbymorethan65%asofApril24,2020(Figure1B).Dailydataonstockmarketvolatilityandpricemovementsaregoodindicatorsofconsumerandbusinessconfidenceintheeconomy.ThereweresignificantnegativerelationshipsbetweenthedailynumberofCOVID-19casesandvariousstockindices(Figure2).Thecorrelationrangesfrom−0.34to−0.80. FIGURE2 Figure2.CorrelationbetweenthenumberofCOVID-19casesandstockmarketsinselectedcountries. LargereconomicproblemsareassociatedwiththecurrentandpotentialfuturedemandforoiltranslatingintofluctuationsinoilpricesduetoreducedeconomicactivitiesdrivenbytheCOVID-19pandemic.Expectedexcesssupplywasalsoresponsibleforsignificantpricereductions.Iflowerthanexpectedoilpricescontinue,manyoil-dependenteconomiesmaycontractfollowingreductionsintradeandinvestment.Shockstothelabormarketswillbesevere,especiallyforcountriesdependentonmigration.Globally,migrantworkersmakeimportantcontributionstothelabormarkets,addressingimbalancesinbothhigh-andlow-skilledoccupations(11,12).AsinternationaltravelrestrictionsandquarantinearelikelytoremainfortheforeseeablefutureascountriestrytohaltthespreadofCOVID-19,migrationflowswillbelimited,hinderingglobaleconomicgrowth,anddevelopment(13). Conclusion Asthespreadofthevirusislikelytocontinuedisruptingeconomicactivityandnegativelyimpactmanufacturingandserviceindustries,especiallyindevelopedcountries,weexpectthatfinancialmarketswillcontinuetobevolatile.Thereisstillaquestionastowhetherthisunfoldingcrisiswillhavealastingstructuralimpactontheglobaleconomyorlargelyshort-termfinancialandeconomicconsequences.Ineithercase,itisevidentthatcommunicablediseasessuchasCOVID-19havethepotentialtoinflictsevereeconomicandfinancialcostsonregionalandglobaleconomies.Becauseofhightransportationconnectivity,globalization,andeconomicinterconnectedness,ithasbeenextremelydifficultandcostlytocontainthevirusandmitigatetheimportationrisksoncethediseasestartedtospreadinmultiplelocations.Thiswarrantsinternationalcollectiveactionandglobalinvestmentinvaccinedevelopmentanddistribution,aswellaspreventivemeasuresincludingcapacitybuildinginreal-timesurveillanceandthedevelopmentofcontacttracingcapabilitiesatthenationalandinternationallevels.Asoutbreaksofnovelinfectionsarenotlikelytodisappearinthenearfuture,proactiveinternationalactionsarerequirednotonlytosavelivesbutalsotoprotecteconomicprosperity. 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Editedby:JonathanLing,UniversityofSunderland,UnitedKingdom Reviewedby:DimitrisBallas,UniversityofGroningen,NetherlandsJacquesOosthuizen,EdithCowanUniversity,Australia Copyright©2020Pak,Adegboye,Adekunle,Rahman,McBrydeandEisen.Thisisanopen-accessarticledistributedunderthetermsoftheCreativeCommonsAttributionLicense(CCBY).Theuse,distributionorreproductioninotherforumsispermitted,providedtheoriginalauthor(s)andthecopyrightowner(s)arecreditedandthattheoriginalpublicationinthisjournaliscited,inaccordancewithacceptedacademicpractice.Nouse,distributionorreproductionispermittedwhichdoesnotcomplywiththeseterms. *Correspondence:OyelolaA.Adegboye,[email protected] †Theseauthorssharefirstauthorship COMMENTARY ORIGINALARTICLE Peoplealsolookedat SuggestaResearchTopic>