Economists had only a few examples of recent epidemics and pandemics, and basically they took the most recent – the SARS epidemic, or SARS, 2002, which also began in China, and SARS itself is the closest relative of the new coronavirus for DNA similarity.
When the coronavirus infection, an outbreak of which was recorded in the Chinese city of Wuhan in December 2019, was only gaining momentum, no one could predict what scale it would reach and how many countries would be under attack.
Atypical pneumonia then affected about 8000 people in 29 countries of the world, 813 people died. The Chinese economy suffered slightly and recovered quite quickly. Approximately such a scenario was expected by economists this time.
However, by the end of February, it became clear that it was not possible to keep the new virus within the borders of China, the infection spread quickly around the world, and as a result, when China began to recover from the epidemic and slowly withdraw the economy from a coma, the number of infected and died from coronavirus in the USA and Central Europe began to grow at a tremendous pace.
The only effective method of containing the infection was the general isolation of the population, stopping transport links between countries and “freezing” the life of cities: only grocery stores operate from stores, the entire service sector and public catering are closed, and the work of many companies, for example, travel agencies, was unclaimed. Of course, coronavirus has a great impact on the global economy. We asked the expert about forecasts for the near future.
The effect of coronavirus on the economy of Russia and other countries is inevitable
– The last time an epidemic of this magnitude occurred in 1918: it was an epidemic of Spanish flu. Then the “Spaniard” mowed up to 100 million people. Coronavirus is also spreading rapidly, but since then, medicine and public awareness of hygiene and infection prevention have gone far ahead and there will be no such number of victims.
As for the impact of coronavirus on the economy, most likely in the near future we will see a recession – a decline in production or a slowdown in economic growth – in China, the USA and European Union countries, primarily in Italy, Spain and France.
A slowdown in the European economy could lead to a massive banking crisis in Europe.
China is likely to show a GDP growth rate in the range of 4.5-5%. During the crisis, China and other Asian countries – such as Singapore and South Korea – have shown that they can deal effectively with the pandemic, unlike in Europe. This may change the system of international relations, and the role of Western countries will decrease significantly following the crisis.
As for the tourism industry, in recent months tourism has been operating in the red, and not only in Russia. The government promised to give carriers and travel companies 300 billion rubles, but the scale of the Russian anti-crisis plan is inferior to both Western and Chinese, so there is probably not enough money for everyone, and bankruptcies will begin in the industries, which will lead to the enlargement and monopolization of the market.
But a shortage of goods cannot be expected: the “factory of the world” China has already resumed production and is ready to supply the necessary goods, including to Russia. Also, many companies have switched to remote work, but the Russian Internet segment shows fast growth, and food and food delivery services are able to cope with mass quarantine and satisfy the demand of citizens.
The impact of coronavirus on the economy: the three most popular scenarios
- The first, most optimistic scenario, in which only the Chinese economy, international research institutes, financial agencies and private forecasters will be completely dismantled from the coronavirus pandemic.
- The second, moderate scenario, is considered the most likely. Under him, many countries will nevertheless defeat the spread of coronavirus in the near future, but with much greater losses than China, because they are distinguished by great civil liberties and an acute reluctance of people to change their usual way of life. In this scenario, the global economy will begin to recover in the third quarter of 2020.
- Finally, some predict that universal quarantine and restrictions will continue until the fall of 2020 – especially if the virus in the Northern Hemisphere does not respond to warming. In this case, the impact of coronavirus on the economy will be equal to the financial crisis of 2007-2008, experts write. Airlines and travel agencies will miss the summer season, because of this oil prices will fall even lower, and the main locomotives of the global economy will be in a deep crisis.