How much is SARS-COV 2 worth? Between 2.700 and 5.000 billion dollars.
by Cristina Pastia Wednesday, 8 April 2020
Since January, there has been talk about the losses that the new coronavirus has caused the world’s economy. Estimations emerged every week but, until 1-2 weeks ago, the margin of error was huge. What changed? Each of the world’s greatest economies begin to announce a calendar of recovery.
<p>Industries already have a clear image of the losses by the end of March and the list of evaporated jobs takes shape on the background of numbers with 6 zeros. Of course that, even in these conditions, the numbers floated are still just estimations. They can be used only as a starting point in future analyses. However, all in all, the losses are inevitable and hard to take for any state on the planet. The efforts will be huge and the results of the relaunch programs are uncertain. At the question “How long will it take for the world economy to recover?”, the answer is not simple: the period of time oscillates, depending on who answers and on whose side they are, from 2 years to 40. So, the numbers below are the result of some estimations made for the entire year. Use them as such and let’s pray together that the analysts provided them wrong. Bear in mind that in this material, I did not use the losses on the capital market. After all, stock quotations are the result of some emotional mechanisms that have to do with psychiatry rather than with real economy.</p><p> </p><p><strong>Trillions wasted</strong></p><p>All over the planet, companies suffer. And sufferance, like in 2008, translates to unemployment and lost money. It was estimated that the losses, by the end of the year, will vary between 2.700 and 5.000 billion dollars. And more than 25 million people will have lost their jobs. 3 million more than the peak of the 2008 crisis. As far as the losses of the European Union are concerned, they estimate a drop of the European GDP by 4,2%.</p><p> </p><p><strong>THE WORLD ECONOMY UNDER THE SIGN OF COVID 19</strong></p><ul><li>The drop of the world GDP: <strong>2,8% </strong>(compared to 1,7% during the 2008 crisis)</li><li>The worth of the lost production: between 2.700 bil. USD and 5.000 bil. USD- the equivalent Romania’s GDP for 100 years)</li><li><strong>-25 mil. jobs </strong>(compared to 22 mil. during the 2008 crisis)</li><li>The drop of EU’s GDP: <strong>4,2% </strong>(EU’S GDP: 15.300 bil. Euro)</li></ul><p> </p><p><strong>Developed states are also the most affected</strong></p><p>The most important countries in the EU, from an economic point of view, are also the most affected. The present blockage and the scenario of a gradual recovery pushed the estimations to a level unprecedented even during the last world crisis. Each German could finish the year 9.000 thousand euro less contribution to the national GDP. Overall, the drop of this index will vary between 5 and 6%. In the case of Italy, Spain, or France, the drama is even bigger- it is estimated that the GDP of each state will drop by an average of 10%. And the overall number for these, Great Britain included, is disarming- almost 1.000 billion euro.</p><p><strong>Germany</strong> (GDP: 3.400 bil. euro)</p><ul><li>drop of GDP: <strong>5-6%</strong></li><li>(-150 bil. euro; 9.000 euro/ capita)</li><li>taxes and levies: <strong>-35 bil. Euro</strong></li></ul><p><strong>Spain </strong>(GDP: 1.245 bil. euro)</p><ul><li>drop of GDP: <strong>5-10%</strong></li><li>-150 bil. euro losses in the economy</li></ul><p><strong>UK </strong>(GDP: 2.400 bil. euro)</p><ul><li>drop of GDP: <strong>3,9%</strong></li></ul><p>In the case of our country, in the normal scenario of the present blockage, the overall losses could reach 22 billion euro. A small number in comparison to Western Europe but big if we think that it is as if the state would not cash in anything for a year. As a witty analyst said, good thing we ruined our country and economy in time, otherwise the damage would’ve been unbearable.</p><p><strong>Romania </strong>(GDP: 220 bil. euro)</p><ul><li>drop of GDP: <strong>7-10%</strong></li><li>Romania could lose 600 million euro a day in the case of a total blockage. At a blockage of only 60% in the economy, it would lose only 360 million euro a day. For two months, this would mean 22 billion euro.</li><li>Unemployment rate: 10%</li></ul><p>Funny thing, China seems to be the one which will lose the least- only 2% of its national GDP. I repeat, however, the warning regarding the estimations but I also add the uncertainties regarding the accuracy of the reports coming from this state. In the United States, the unemployment rate estimated to be recorded at the peak of the crisis is alarming: 37%! And to get an idea what a “trivial” cancellation of an auto show or of the Olympic Games. A loss of 200 million euro in the producing industry and for Japan minus 6 billion euro. As far as the tourism industry in Greece is concerned, county to which we are extremely attached, the number of disaster passes half a billion euro! </p><p><strong>China </strong>(GDP: 13.600 bil. USD)</p><ul><li>drop of GDP: <strong>2%</strong></li><li>(-136 bil. euro losses in the economy)</li></ul><p><strong>US </strong>(GDP: 19.400 bil. USD)</p><ul><li>drop of GDP: <strong>3%</strong></li><li>unemployment rate: 37% at the peak, 13% average</li></ul><p> </p><p><strong>“PUNCTUAL” DISASTERS</strong></p><ul><li>The cancellation of the auto show in Geoa: <strong>-200 mil. euro</strong></li><li>Aviation industry: <strong>-113 bil. dollars</strong></li><li>Airline industry: <strong>-250 bil. euro</strong> (-45% of the activity). Lufthansa canceled 23.000 flights, Air France reduced its operations by 90%</li><li>Premiere League (UK): <strong>-1,2 bil. euro</strong>, and the losses suffered during the first 5 European Championships will reach <strong>4 bil. euro</strong></li><li>The cancellation of the Olympic Games in Tokyo: <strong>-6 bil. euro</strong></li><li>Tourism industry in Greece: <strong>-522 mil. euro</strong></li><li>Business tourism: global losses of <strong>850 bil. euro</strong></li></ul><p> </p><p>By the time you are reading these numbers there are very few reasons for hope. Nevertheless, the resilience of some economies, combined with the dynamism of others, can eventually make a difference. There are, however, factors that cannot be quantified now. It will be important that in the end, ordinary people, the ones who work and from any company or state in this world, to have reasons to hope, to have reasons to go on. Because the CRISIS BILL has been payed by them too many times. </p><p> </p><p>(an article by Edward Pastia)</p>