As dreadful and daunting as the virus

March 05, 2020

The fast-spreading new coronavirus known as COVID-19 continues to sow fear and panic across the world. Latest news reports said the deadly virus has infected more than 94,900 people in 75 countries and has killed at least 3,283.

The death rate, according to the World Health Organization, is now officially pegged at 3.4 percent, higher than earlier figures of 2 percent, and “far higher than that of the seasonal flu, which kills about 0.1 percent of those infected.”

And many people feel that as dreadful as the spread of the virus and rising death toll is the economic uncertainty ahead, as the impact of COVID-19 continues to plunge the world economy into its worst downturn since the 2008 global financial crisis.

“Hopes that the epidemic that started in China late last year would be over in months, and that economic activity would quickly return to normal, have been shattered,” Reuters reported last week. “World shares were on course for their largest weekly fall since the 2008 financial crisis, bringing the global wipeout to $5 trillion as supply chains were disrupted, travel plans postponed and major events canceled.”

The Associated Press also reported on the turmoil last week as stock markets in New York, London, Frankfurt and elsewhere in Europe posted sharp declines last week of as much as 4.61 percent. In Asia, “Tokyo benchmark fell by an unusually wide margin of 3.4% and Shanghai, Hong Kong and Seoul all dropped by more than 2%,” the AP said as it described a tumultuous week in this part of the world.

“Economists have forecast global growth will slip to 2.4 percent this year, the slowest since the Great Recession in 2009, and down from earlier expectations closer to 3 percent. For the United States, estimates are falling to as low as 1.7 percent growth this year, down from 2.3 percent in 2019. But if COVID-19 becomes a global pandemic, economists expect the impact could be much worse, with the US and other global economies falling into recession,” the AP report added.

In describing the adverse effects of COVID-19, AP said: “Amid fears about where the next outbreak of a fast-spreading new virus would appear, infections and deaths continued to rise across the globe Sunday, emptying streets of tourists and workers, shaking economies and rewriting the realities of daily life... Panic-buying of daily necessities emerged in Japan, tourist sites across Asia, Europe, and the Mideast were deserted, and governments closed schools and banned big gatherings. Amusement parks have been shuttered and concerts canceled.”

Among the hardest hit by COVID-19 in Europe is Italy – which reported 3,089 cases and a death toll of 107 as of March 5 – where “cities and towns in the north have been placed under full or partial shutdown, effectively quarantining 100,000 people. Also, schools are suspended, public spaces like swimming pools or parks are closed, and major events closed to reduce the risk of infection.”

Japan has also closed schools nationwide, and Saudi Arabia has banned foreign pilgrims from entering the kingdom to visit Islam’s holiest sites.

The Organization for Economic Cooperation and Development (OECD) has also warned that economic growth “could be cut in half if the outbreak continues to spread” and that “global gross domestic product would grow by just 1.5% in 2020 if the coronavirus spreads widely throughout Asia, Europe and North America.

"The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions. Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected," OECD chief economist Laurence Boone said.

With such a seemingly gloomy future, policy makers really need to act quickly and decisively to meet the daunting challenges of COVID-19 that threatens to wreak more havoc in the days and months ahead.