After the outbreak of the new Corona virus, around the world, the fall of markets and the reduction of analysts' expectations of growth, the possibility of incurring the global economy's losses becomes clear. The Chinese regions hardest hit by the virus, in Hubei Province, are home to an enormous number of companies, which supply about 56,000 multinationals. Many of these multinationals are already suffering from supply disruptions, as vital manufacturing materials are being delayed from China. The impacts are likely to reach technology giants, pharmaceutical companies, heavy industry companies, and other sectors.
Finally, the situation in China appears to be under control. After floundering in the initial reaction, the government is rushing to reopen factories and expand manufacturing to meet global demand. Employers are said to offer paid travel tickets to persuade workers to return to factories and offices; however, these efforts are likely to fail due to worker hesitation and lack of confidence in Chinese enterprises. Even if China can resume the normal level of business, supply chains may take a long time to catch up.
General health problem
However, governments and international organizations have treated the outbreak as a public health problem, rather than a larger social problem whose causes and consequences will affect everything, including finance, insurance, tourism and agriculture. Almost all types of disasters call for multiple sectors to respond and prevent. While firefighting teams fight forest fires, for example, building measures and insulators reduce the possibility of fire, primarily, and alarms provide early warnings to those at risk. When a hurricane threatens a country, local authorities evacuate people days before the storm strikes. In both types of disasters, a variety of actors, public and private, are ultimately responsible for the costs. Epidemics are unique in that they are treated almost exclusively as a public health threat, with little prevention effort and no cost-sharing mechanism across the affected sectors.
The real cost
An outbreak of the Corona virus will cause more damage to countries and local economies than to global markets or international trade. The last two weeks have seen massive selling in stock markets around the world, indicating that the economic impacts on a global scale are likely to be drastic, but may be short-lived. The markets were hit during the SARS epidemic in 2002 and 2003, but recovered quickly. The same applies to the aviation industry, which has suffered losses in East Asia as a result of SARS, but soon resumed the upward trend that continued until early this year. Indeed, two factors make the corona outbreak possible, at present, more negative impacts than the SARS-linked virus, as China’s share in global manufacturing and tourism markets is greater today than in 2003, and the emerging virus appears to be spreading. Across the border, much faster than Sars did.
But whether or not SARS or previous epidemics are proven to harm the global economy, or not, its effects on countries are certain to be severe and lasting. Epidemics cause long-term damage to economies, as well as to people's health and productivity, by diverting resources from non-emergency health care, as well as from other public goods and services.
Long-term damage
Epidemics cause long-term damage to economies, as well as to people's health and productivity. The Ebola virus, the health care sector in Africa, has caused a drop in the healthcare workforce in Liberia, leaving human resource gaps still present to this day. The closure of schools for months suspended education and left children vulnerable to exploitation, which caused an increase in sexual violence. But the story of the Ebola outbreak in West Africa should not be the same as future epidemics. Although it is impossible to predict the date and location of infectious diseases in the future, there are ways to reduce their frequency and the risks they cause. National governments and international bodies can take measures to prevent the worst from happening, to channel funds where they are needed, and to share costs if the epidemic is unavoidable.
Response and prevention
Our non-profit organization EcoHealth Alliance has warned for years that the emerging coronavirus may pass from bats to humans in Asia. Over the past 60 years, the majority of new zoonotic pathogens have emerged as a result of changes in agricultural or food production practices, land use, or from interactions with wildlife. There is a need for a more effective preventive strategy that will strengthen and harmonize national and international laws and standards governing land use, ensuring that high-risk agricultural and food production practices are made safer.
In most parts of the world, food systems in particular are in urgent need of modernization. Hundreds of millions of people, in developing countries, depend mainly on live animal markets for food. These markets are a major source of emerging epidemic threats, such as influenza, and are accused in both SARS and the current Corona virus outbreak, so reducing the number of animals Live food moving in the food market will reduce the risk of future infectious diseases.
In this context, China took a positive step after the authorities linked the emerging coronavirus to a wildlife market in Wuhan. On February 24, the government strengthened the Wildlife Protection Act, to ban wild animal trade and consumption. China’s wildlife industry is valued at $ 74 billion, and new and stricter regulations will undoubtedly harm many companies, but the cost is likely to be exorbitant compared to the outbreak of the current Corona virus, which has already lost China about $ 196 billion.
Direct resources
Preventive measures are important to prevent the economic and security damage that infectious diseases can cause, but governments and international agencies must complement such programs with contingency plans to direct resources where they are needed, and share costs, during an epidemic. The World Bank has provided a tool for this purpose, the Epidemiological Emergency Financing Fund, which provides private sector-backed insurance designed to support poor countries, if affected by widespread epidemics. The emergency plan is a good first step, but it is designed for financial assistance, regardless of whether the countries concerned have taken preventive measures or not. Like car insurance, pandemic insurance products should be priced according to the customer's risk, which must depend in part on the ability of any country to demonstrate that it is taking preventive measures.
One option is to create a separate international fund to respond to the epidemic from the taxes of industries with inherent risks, such as producers and sellers of live animals, firewood and mineral extraction companies, etc. The United Nations has mechanisms for responding to epidemics and treating epidemics as real disasters requiring a more unified international response. The outbreak of infectious diseases should be dealt with under the Sendai Framework for Disaster Risk Reduction, a global agreement signed by national signatories to disaster risk reduction plans. This would help countries address the root causes of communicable disease threats, rather than treat them as simple cases. The United Nations must make epidemic risk management a priority in its activities. It must routinely claim "risk assessments" to evaluate proposed development initiatives, and it should include the risks of the emergence of infectious diseases among those assessed.
If the process is done correctly, epidemic prevention and response will be normal, and the diagnosis and treatment of routine diseases will become faster and more accurate, day after day. Over time, there will be fewer requests for emergency funds, societal unrest as a result of outbreaks of communicable diseases, and confidence in health systems increases. Indeed, epidemics are spreading more than diseases, threatening the health of entire societies and economies, and treating them as health crises only, will lead to a period of panic, apathy and ineffective response.
Catherine Maclababa and William Karish: two experts and consultants at EcoHealth Alliance
- It is said that employers offer paid travel tickets to persuade workers to return to factories and offices; however, these efforts are likely to fail due to workers' hesitation and lack of confidence in Chinese enterprises. Even if China is able to resume the normal level of business, supply chains may take a long time to catch up.
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One billion dollars is the value of China's wildlife industry.
Hundreds of millions of people, in developing countries, depend mainly on live animal markets for food. These markets are a major source of emerging epidemic threats, such as influenza, and are accused in both SARS and the current coronavirus outbreak.