We’re Sick of It: Economic Effects of Pandemics
Coronavirus is not the first sickness to attract worldwide attention. Whether it’s an outbreak, epidemic, or pandemic, the spread of dangerous illnesses is never a joking matter. Lives are at stake, and if things get out of hand, people will wish Thanos had snapped his fingers for a peaceful, silent demise.
But apart from the human costs of such widespread illnesses, several parts of society also suffer. And where is it more evident than in the economic mechanism that keeps a community running? In this article, we’ll look at two of the most disruptive, if not deadliest, pandemics that pummelled the economies of the countries it ravaged: SARS and the Ebola virus.
SARS, or severe acute respiratory syndrome, originated in southern China between November 2002 and July 2003. SARS resulted in more than 8,000 cases. And among those, it claimed 774 lives in 17 countries. The majority of cases were found in China and Hong Kong, with a 9.6% fatality rate, according to the World Health Organization.
Before we dive into how SARS affected China’s economy, let’s look at its effects in terms of social and health aspects.
In terms of health, as mentioned, this virus killed hundreds around the world in just around six months. It’s also interesting to point out that the spread of the illness also affected the mental health of people.
According to studies, the SARS pandemic triggered negative psychological impacts. According to some, the pandemic created immense emotional sadness, with people fearing treatment while not seeing their family members.
The social impacts of SARS ranged from panic buying to academic dissatisfaction. According to some accounts, panic buying started when there was scarcely any official information. Rumors spread, and everybody was afraid.
And because such a situation doesn’t sit well with thinking heads, experts and academics became dissatisfied. With fear looming, experts questioned the Chinese health department for the case, demanding them to publish accurate figures as soon as possible. Questions arose whether SARS was really “under control.” This scrutiny attracted the attention of the international community.
Now, let’s look at how these affected the economy of China as well as the other countries affected by the pandemic.
Economic Impact of SARS
Different studies and models estimate the economic damages by SARS around the world amounted to between $40 billion and $80 billion.
- Asian states lost $12 billion to $18 billion, with the virus affecting travel, tourism, and retail sales. In tourism and related industries, population movements in China and other countries decreased.
- Retail was also severely affected, with people cutting down on spendings on food, clothes, travel, and even entertainment.
- In hotels, the number of guests decreased very much. With panic prevailing amid the uncertainty of what SARS was, China saw its largest cities empty of people on the street.
- When the government gave out stricter advice to travelers and airlines, international tourism, transport, and business sectors suffered heavily.
In the words of a media journalist, Beijing “became a ghost city.” According to estimates, the pandemic chopped 1% off of China’s GDP and 0.5% of that of Southeast Asia.
In other studies, data showed that in the second quarter of 2003, SARS brought the average annual household income to $175.44, or a whopping 22.36% below the expected figures.
Economically speaking, SARS disrupted the growth of China at the time. But after the SARS fiasco, China’s emergency management system was massively improved. Thus, when the next epidemic occurred, the H7N9 pandemic, generally fewer damages were suffered.
Now, from China, we move to West Africa and look at another deadly pandemic: the Ebola virus.
Ebola Epidemic—West Africa, 2013 to 2016
The Ebola virus results in the Ebola hemorrhagic fever, which kills an average of 50% of infected cases. From 2013 to 2016, the world witnessed the most widespread outbreak of the Ebola virus disease.
The first outbreak surfaced in Guinea. The epidemic quickly turned into a pandemic when the disease spread to the neighboring countries, Liberia and Sierra Leone. In 2014, the disease spread outside West Africa, starting in September in the United States.
The economic effects of the Ebola pandemic are devastating, affecting every sector and leaving long-lasting effects. Here are some of the key takeaways:
Economic Damages are Greater than Epidemiological Effects
Throughout the countries, investment, production, and consumption suffered greatly. Commodity prices also experienced a shock.
The mortality has been 60%, while death per capital has been 5 per 10,000. The GDP per capita was reduced by an average of $125 per person in the West African countries affected.
- Liberia: GDP growth slowed to 0.7% in 2014 from 8.7% in 2013
- Guinea: GDP growth slowed by 0.1% in 2015
- Sierra Leone: GDP growth was 4.6% in 2014 thanks to expanding iron ore production. But non-iron ore GDP production slowed steeply to 0.8%, from 5.3% in the previous year.
Commodity Price Declines
While the Ebola pandemic was raging, the prices of primary commodities such as bauxite, iron ore, and gold have plummeted by 30% to 60%.
Volatility has also been tough to manage, particularly amid the side effects of the sharp declines in prices.
Household and Labor Markets
Surveys also showed that there had been significantly higher unemployment, lost incomes, and less food consumption.
Since the start of the Ebola crisis, the number of people working in Liberia has decreased as much as 40%. Meanwhile, 10% of Guinean families pulled out children from schooling. A massive chunk of those cited Ebola has the main factor. In Sierra Leone, 9,000 wage workers and 170,000 self-employed workers were no longer working.
Trade and Transportation
Trade and transportation have sorely suffered. In 2014, Sierra Leon declared a three-day lockdown to decrease people’s movement and give healthcare to identify new cases and spread awareness.
Quarantine areas appeared, and the country also imposed curfews. In some areas, such restrictions stayed for as long as several months.
Tourism Also Suffered
Tourist arrivals halved from 2013 to 2014, with borders closed and airlines stopped. At the same time, tourists perceived the entire continent of Africa to be at risk.
Total Economic Costs of the Ebola Epidemic
Guinea, Liberia, and Sierra Leone lost $2.2 billion in GDP in 2015 because of the pandemic. The private sector growth suffered the worst, with agricultural production and trade tagging along.
A more recent study showed that the total economic and societal cost of the fiasco was around $53 billion. This measure took into account the cost of losing human life, long-term conditions for survivors, costs of treatments, and the deaths by other diseases amid the pandemic.
- Even in 2019 Ebola used to present in headlines
BBC News - Focus, Ebola in the DR Congo Warzone Violent attacks make treating the worst Ebola outbreak in DR Congo's history even harder.
Possible Economic Effects of Future Pandemics
Based on these previous pandemics, a 2018 study revealed that a pandemic that kills 720,000 would cost the world economy an estimated $500 billion per year, or 0.6% of the world’s income.
At the same time, we got to mind another nagging issue that perhaps paved the way for many of the new viruses and illnesses we see today. The culprit is climate change.
Also, should another global pandemic hit the world, poorer countries will probably bear the burden. It would also cause a loss of 0.3% in annual income for high-income nations. There would be, however, a more significant loss of 1.6% in lower-to-middle income nations.
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the yuan and the Australian dollar is under pressure. Nevertheless, analysts say that the 2002-3 SARS epidemic didn’t have a lasting market impact.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.