The fear that the coronavirus outbreak has caused can be difficult to understand in places where the outbreak has been relatively small. And yet, it is right there and impossible to ignore.
For some of us, it is not so much fear as the understanding that it makes very little sense to take chances, regardless of how remote poor outcomes from those risks might be.
In the province of British Columbia, where I live, there have been eight cases of Covid-19 and across Canada there have been 37 as of March 2. Canada’s population is almost 38 million. It means that, as of today, the chances of coming across a person with a confirmed infection are literally one in a million.
And yet, those numbers are too high. It’s not that the virus is scary. It is not really that terrifying. For most people, COVID-19 will manifest itself as a mild flu. By comparison, there are more than 12,000 cases of influenza in the country every year and more than 3,500 deaths.
Still, this tiny chance of contracting this disease is a concern.
Even with this massive disparity in numbers, people are not afraid of the flu the way they are of COVID-19. Just this week, it was quite difficult to find hand sanitizer in drugstores and supermarkets. Some retailers reported huge upticks in sales after the country’s health minister advised people to stock up in case of an outbreak.
At a practical level, the quarantines are more of a concern. Yes, it is not fear of the virus but fear of being stuck at home or in some army base for a couple of weeks that seems to be scaring people.
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*As of 2 March, the number of cases in the U.S. topped 100 and two deaths have been reported.
The efforts to prevent a wider outbreak of the disease are certain to affect the economy.
Consider some very practical decisions that people might make. Just this week, we cancelled plans for a trip during our son’s spring break, not out of fear of the virus, but out of a much simpler consideration: why take an unnecessary chance?
If several other million families make similar decisions, spending will certainly drop and economic growth will take a hit. Is this a bad thing?
The Organisation for Economic Co-operation and Development (OECD) suggests a range of possible economic outcomes from the coronavirus outbreak. Depending on the outlook, the outbreak could cut between 0.5% and 1.5% from global economic growth in 2020.
The outlooks range from a short V-shaped impact, with a short downturn in China and a gradual but relatively rapid recovery. For China, that would mean that GDP growth falls to about 5% this year and bounces back next year. What has happened to date is the shutting down of entire cities, factory closures, cancelled events, drop in tourism, etc suggests that this slowdown has already happened.
The more severe scenario is a domino effect, with China being the first piece to fall down and causing a cascading effect that cuts 1.5% from global GDP growth this year.
It isn’t hard to see how this worst-case scenario could easily come to pass.