The coronavirus pandemic has affected many industries – we have actively written about this in our blog. Several hundred million people around the world have lost their jobs. Global GDP has declined so seriously for the first time since the Great Depression. One and a half billion students worldwide were affected by the closure of schools and universities. The long-term economic consequences of the crisis in many countries have yet to be assessed.
Stanford University professor of history Walter Scheidel wrote for Foreign Affairs, an article comparing the economic effect of the Spanish flu that the world faced in the early 20th century and the current situation. Why a hundred years ago, the pandemic did not have such a serious impact on the economy, and what can recovery look like now?
How “spanish” influenced the economy
This may seem surprising, but the economic impact of the Spanish flu pandemic has been far less dramatic than the current crisis. In the United States, industrial production collapsed briefly, but recovered within a few months. The retail industry was practically not affected, the number of failed businesses did not significantly exceed the usual time. According to modern analytical data, US GDP in 1918-19. decreased by no more than 2%, the same can be said about the economies of Western European countries.
At the same time, according to some reports, the Spanish flu was more deadly than coronavirus. In the United States alone, he killed at least 550 thousand people – 0.5% of the total population. Adjusted for the increase in the number of inhabitants of the country, today such losses would result in a little less than 2 million deaths. However, outside the industrialized countries, the situation was even worse. In total, 40 million people died from the Spaniard, 2% of humanity – in today’s numbers, this would have been 150 million dead.
What is important: the Spanish flu, like the epidemic of cholera and other diseases, carried understandable risks for the inhabitants of the planet. At the same time, while the rich and the poor had almost the same risks of getting sick
What has changed today
Over the past hundred years, humanity has taken a big step forward. Antibiotics appeared, medicines for many diseases, social security systems were built, life expectancy and quality of life increased significantly throughout the world.
The growing standard of living also had side effects – for example, financial stratification. And during the new pandemic, it turned out that when states around the world are forced to shut down the economy and, in fact, destroy resources, the conditional rich and poor no longer face the same risks as they did a hundred years ago.
Today, there are people whose work is related to technology or, thanks to it, can be done from home, and those who are forced to face people face to face even at the peak of a wave of infection.
At the same time, the “value of life” in the world in any case has grown – both morally and economically. In the USA, this parameter is approximately $ 10 million. Therefore, authorities around the world are taking such strict quarantine measures and reintroducing them during outbreaks of infection.
What the recovery will look like in the end
The world a hundred years ago and now is too different. That is why, despite significant advances and successes in medicine and the economy, the consequences of the coronavirus pandemic will be longer and more severe than during a more deadly Spanish woman.
According to Bloomberg, many economists are gradually losing faith in the implementation of the scenario with a fast V-shaped schedule for the recovery of the global economy. Instead, they suggest a restoration in a torn rhythm. As a result, it will not be a chart in the form of a letter V, U or L. Here is how Deutsche Bank experts see this chart:
Such a schedule implies a gradual fall, and then recovery in several jerks – this will be facilitated by gradually mitigating quarantine measures. Also, the situation will be affected by a decrease in demand in the economy, as people will save more. Such a recovery scenario is one of the most likely.
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