With the COVID-19 coronavirus outbreak, the best countries can do for now is to expect the worst but hope for the best.
Thanks to the virus, United States and United Kingdom stock markets suffered their worst day since 2008 on Monday. This is despite central bank intervention last week: The world’s most powerful central bank, the New York-based Federal Reserve, lowered rates on Tuesday.
The markets briefly appeared to rebound before tanking again. Bond yields, a marker for economic growth and a pointer to recession, have also fallen precipitously. The West is not yet in a recession, but pundits expect one soon.
In the Caribbean
Sadly for the Caribbean, the world tourism industry — the region’s “bread and butter” — has taken a massive hit. Airlines are cancelling flights to specific countries, especially in East Asia. Some have already collapsed. The cruise ship business is deeply worried. Hotel and restaurant bookings are down throughout Europe. Jobs are being lost, and businesses are going to the proverbial wall.
Meanwhile, world leaders are in denial. In the US, coronavirus was unexpected. The virus now has started to spread there. And in both the US and UK economies, the supply-side economy has dis-invested in national health care over many years.
For the middle class and the uninsured in the US, an outbreak will bring real hardship, with medical bills running into the thousands and even tens of thousands of dollars.
In a country where half the population lives from paycheque to paycheque, coronavirus could put many families in dire straits and impact public and consumer confidence.
Length of crisis?
The great question is how long will this crisis last?
Estimates vary. The optimists expect the crisis to subside in two months. After that, they predict, the world economy will begin its lift towards growth that has temporarily been frozen. As fear and concern disappear, business and consumer confidence will be enough to return the world economy to growth.
Sceptics like this writer are unsure. They believe that no one knows how coronavirus will pan out, and that all assertions based upon speculation instead of hard science are invalid. The best one can do in the present circumstances is to simply “batten down the hatches,” place hygiene at the top of the priorities list, and hope this virus disappears.
The dark view
Pessimists, on the other hand, see a prolonged crisis that will see hundreds of millions of people around the globe infected, with millions of deaths. The world economy, they believe, will plunge into a long recession that could eventually become a depression, with broken supply lines causing world economies and whole countries to shut down and plunge over the precipice. In their view, this will be a recession without end, unlike 2008, which was manmade.
No one knows how this virus will behave. Already there are unconfirmed reports of a second strain. With coronavirus, the end of the crisis could depend on a vaccine being discovered and then made swiftly accessible to the global public.
Consequently, anyone who states that the worst is over is under a delusion.
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