Li Wenliang was a 34-year old Chinese ophthalmologist
who blew the whistle on the outbreak of the Coronavirus at the end of December
last year. He contracted the disease
while curing his patients and was admonished by the local authorities in the
city of Wuhan where he worked not to spread “false information”. On a cold day
of February, Dr. Wenliang died, the first medical professional to die from
the new virus. Four months into the contagion, the virus has travelled to all
continents affecting at least 80 countries and killing in the thousands
(primarily in China where the outbreak started). China’s central government in
Bejing has done a great job since then to contain the spread of the epidemic by
isolating Wuhan and its entire province of Hubei, home to nearly 60 millions
people and by sharing its first-hand information with the rest of the world.
Still, despite the good efforts of the Central Government that will go on
records as a best-ever in terms of rapid deployment response by the Chinese
authorities, the contagion could not be halted as it had already overstepped
Hubei’s province limits, infecting with the new virus numerous areas of Mainland
China and crossing over to Japan and South Korea. It was only a matter of weeks
before South East Asia and Europe got hit by the Coronavirus and the World
Health Organization began to caution against the risk of a pandemic.
We shouldn’t act surprised, though. Naked truth? The
international medical community already issued a warning in late December 2019
that the peak of the contagion would have been occurring in March 2020. That
day, I back-of-the-napkin calculated that by the time the contagion is over the
world will have had a death toll of 20,000 as new clusters of disease begin
mushrooming in different countries at different times. The
“rolls-and-extensions” type of diffusion complicates the job of the authorities
and of the medical personnel as each cluster of contagion has its own time
cycle starting with the 14-day incubation period so the situation on the map
morphs continuously until a peak in the single cluster is reached.
The first few countries to have been deeply affected by
the contagion outside China where the virus emerged were Japan, South Korea,
Italy and Germany (where the so-called patient “zero” in Europe was recently
identified by the German medical researchers). But why did the virus spread to
these four countries immediately and (apparently) not to others? While it is
difficult to point towards a single reason for this occurrence, it is likely
that international trade and global business played an underlying pivotal role
in the diffusion of the virus to these four large economies. It is common
wisdom that diseases travel fast these days and the coronavirus is no
exception. But it is strikingly interesting to
highlight how these four countries represent (together
with China) five of the most powerful manufacturing countries in the world.
China, Japan and South Korea in Asia, Germany and Italy in Europe are
manufacturing powerhouses and their combined production account for about half
of the global industrial output. So there is a correlation between industrial
production and spread of the virus as these five countries together have strong
intertwined commercial relationships, substantial exchange of products and
services, myriads of entrepreneurs, traders, investors and employees travelling
back and forth (actually, commuting)
between and across two or more of these countries on an ongoing basis. Italy is
home to one of the largest Chinese communities in Europe and so is Germany. Hence, it should come as no
surprise that the large industrial economies of Japan and South Korea, de facto
bordering China, and Italy (the first country in Europe to experience a severe
outbreak) and Germany were affected early on. Now with the contagion spread at
the four corners of the globe, the infection hit over 100,000 people taking the
death toll at 3,400 deaths at time of print. The good news from China is that
the virus epidemic appears to have receded so the government ordered the shut
down of the two temporary hospitals built in haste in Wuhan though now the
U.S., other leading European economies like France and Great Britain, as well
as Iran, Saudi Arabia and other countries are beginning their own rollercoaster
with quick diffusion of the contagion within their country borders.
All the while, the burden on the economies of the
affected countries begins to take its toll. Extented periods of business
shutdown or slowdown, with schools closed, shopping malls and movie theaters
deserted and food consumption to minimum levels, hit the national economies of
the first G-20 countries which were the first ones to experience the outbreak
while they were already busy weathering scenarios of recession and growth
slump. The financial markets burned to-date USD 1.4 trillion (equivalent to
Spain’s GDP) and my calculations put the total cost from the pandemic globally
to USD 6 trillion by the time we will have reined in the virus because there is
a lash-out effect lasting at least 18 months after the crisis is over due to
supply chain’s structure. Granted, it will be over and production will resume
stronger than before but are we sure that we have done all we could to contain
the damages?
I beg to differ.
First, the Coronavirus is the third same type of virus
dealing the world a harsh blow in the last two decades, following SARS of just
a mere few years. The current outbreak means that we must expect a
recrudescence of the same viral root in the not so distant future and it shows
that had the international community kept higher the alert on the public
perhaps the capital markets would have continued to invest in the development
of a vaccine. What happened after SARS, instead, was that as soon as the
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