Economic Implication of a Novel Disease Outbreak

Over 200 years ago, ­Alexander von Humboldt, an influential 18th-century scientist, once explained the fundamental idea of nature stating that the world is a single-interconnected organism. A tiny variation in its ordinary workings bears the possibility of causing large ripples in other parts of this one whole organism. With over 7,00,000 affected people, more than 50,000 deaths and a looming recession, the 2019–20 novel coronavirus disease (COVID-19) outbreak is nothing but a harsh reminder of the supremacy of nature and the fallibility of contemporary economic thought.

The world has seen significant progress in healthcare services and economic preparedness since the Spanish flu pandemic of 1918, which infected ­approximately 500 million worldwide, a quarter of the global population, of which about 50–100 million people lost their lives. This was followed by the Asian flu (H2N2) pandemic of 1957–58, the 1968 Hong Kong flu (H3N2), 1977 Russian flu and the 2009 H1N1 pandemic. While most of these novel outbreaks have been meticulously fought and successfully contained within spatial and temporal boundaries, the ripples created in the economic continuum have been substantial, with major implications in the form of sudden loss of intangible human capital (Cohen 2002), recessional tendencies (Garrett 2007) and deficit spending pressure on low- and middle-income economies (Abegunde et al 2007). Much akin to these previous epidemics, current global evidence forecasts significant economic impacts ex post the current COVID-19 outbreak. Therefore, we begin with a review of the economic cost of a novel disease outbreak followed by a note on the current ventilator crisis, interventions to manage the pandemic and the conclusion.