Medically reviewed by Susan Kerrigan, MD and Marianne Madsen
Not only has the novel coronavirus (COVID-19) brought serious health risks upon the public, the outbreak has also dealt a huge blow to the economy. Almost every industry has seen a financial hit from the virus. People are buying less. Stock markets have crashed, airlines have been bankrupted, and people are no longer going to work due to self-isolation policies imposed by world governments. COVID-19 has brought in a new age of economic uncertainty, and the end is nowhere in sight.
Not surprisingly, the industry most affected by the outbreak is the travel industry. More than 100 countries have introduced restrictions on travel to curb the spread of the virus. According to various data, the U.S. travel industry could lose over $24 billion. But restaurants, gyms, hotels, movie theaters, and more will also suffer tremendously from the COVID-19 pandemic. These industries all rely on workers leaving their homes. Due to lockdowns, employees cannot come to work and generate new income for themselves and their companies, resulting in economic stagnation.
To determine how much the economy will be impacted, experts are comparing the COVID-19 outbreak to the 2002-2003 SARS epidemic. In 2003, SARS infected around 8,000 people and claimed almost 800 lives globally. China’s economic growth went down by 0.5 to 1 percent during that year, and the global economy suffered a $40 billion loss. However, the key difference between the COVID-19 pandemic and the SARS epidemic is that China’s economy only made up 4% of the world’s GDP in 2003. Since then, it’s grown to 16.3%.
So far, it already appears that the financial impact of COVID-19 will be much greater than that of SARS. The Organisation for Economic Co-Operation and Development (OECD) predicts that the Chinese economy will only grow by 4.9% this year, as opposed to their earlier forecast of 5.7%. And the global economy will only grow by 2.4% rather than 2.9%, as the OECD had predicted earlier.
However, some predict that after the economy sees a negative impact from the virus, it will quickly catch up and receive a positive growth impact in the coming years. Forecasters say the economy will take a large hit during 2020, but the global GDP will recover until 2021-23, and from then on will continue to grow. In the long run, the economy will be just fine.
The reality is that this pandemic has only just begun, and we don’t yet know how much it will hurt the global economy and society in general. All we can do in the meantime is wash our hands, maintain our social distance from others, and keep our spirits up.
