Coronavirus effects heighten fears of recession in the world economy. Stock exchanges have had a difficult week around the world and, in Europe, the recession seems inevitable. The paralysis in China weighs on domestic growth because the supply chains of multinationals need components made in Chinese factories to guarantee their production. Consumption in western countries will be strongly affected. Tourism, air transport, leisure are already suffering the consequences.

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CORONAVIRUS AND ITS IMPACTS ON THE WORLD ECONOMY
Fernando Alcoforado*
The Economist article of 27/02/2020, under the title The pandemic- The virus is coming,
informs that the coronavirus (covid-19) that reached China in the beginning of December
will spread worldwide and that about 25-70% of the population of any infected country
can catch the disease. China's experience suggests that, of the cases detected,
approximately 80% will be mild, 15% will need hospital treatment and 5% will require
intensive care. Experts say the virus can be five to ten times more lethal than seasonal flu,
which, with a mortality rate of 0.1%, kills 60,000 Americans in a bad year. Worldwide,
the death toll could be in the millions.
According to The Economist, all of these results depend heavily on what governments
do, as China shows. Hubei province, the source of the epidemic, has a population of 59
million who have seen more than 65,000 cases with a mortality rate of 2.9%. On the other
hand, the rest of China, which contains 1.3 billion people, suffered less than 13,000 cases,
with a mortality rate of just 0.4%. Even before it spread outside Hubei, the Chinese
government imposed the largest and most draconian quarantine in history. Factories
closed, public transport stopped and people stayed inside home. Without this measure,
China would have recorded many millions of cases and tens of thousands of deaths.
For The Economist, the WHO - World Health Organization praised this action by China.
This does not mean, however, that it is a model for the rest of the world. All quarantines
come at a cost not only in lost production, but also in the suffering of those who will be
locked up. As China seeks to resume its economy by relaxing the quarantine, it may well
be hit by a second wave of infections. Even though many countries cannot exactly copy
China, their experience contains three important lessons: 1) informing the public; 2) delay
the spread of the disease; and, 3) preparing health systems for an increase in demand.
According to The Economist, the best time to inform people about the disease is before
the epidemic. One message is that fatality is correlated with age. If a person is over 80,
he is at high risk and if he is under 50, no. Now is the time to convince people with 80%
of mild cases to stay at home and not rush to a hospital. People need to learn to wash their
hands frequently and avoid touching their faces. Companies need to adopt action plans
that allow, if possible, their workers to work from home and that some of them replace a
vital worker who is sick or caring for a child or parent. The model is that of Singapore,
which has learned to deal with sars virus, another coronavirus that shows that clear and
early communication limits panic.
The Economist reports that China's second lesson is that governments can slow the spread
of the disease. Flattening the peak of the epidemic means that health systems are less
overloaded, which saves lives. If, like the flu, the virus is seasonal, some cases may be
delayed until next winter. Until then, new vaccines and antiviral drugs may be available.
Governments need to prepare themselves and, also, people for the time when they will
have to include canceling public events, closing schools, scheduling working hours and
so on onwards. Given the uncertainties, governments must be guided by science.
International travel bans seem decisive. Likewise, if the disease has spread widely, as in
Italy and South Korea, entire city quarantines offer little protection at a high cost.

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Finally, The Economist reports that China's third lesson is to prepare health systems for
what is to come. Hospitals need supplies of clothing, masks, gloves, oxygen and drugs.
They need a scheme for how to book wards, how to deal with employees falling ill and
how to choose patients to be cared for if they are overloaded. By now, this work should
have been done.
Text by El Pais under the title Qual seria o custo econômico de uma pandemia mundial?
O armagedom em potencial dos vírus (What would be the economic cost of a global
pandemic? The potential armageddon of viruses), available on the website
<https://brasil.elpais.com/brasil/2016/07/28/economia/1469723677_088744.html>,
informs that bacteria and viruses await their chance to kill hundreds of thousands of
people and devastate the planet's economy. HIV, unknown decades ago, killed more than
30 million human beings. Meanwhile, Ebola, without effective treatment, has caused
11,310 deaths and losses of 2.8 billion dollars in three African countries that have fragility
as the main component of their GDP. These resources represent almost a third of the
approximately 7 billion dollars that, according to the World Bank, cost the global fight
against the disease.
According to El Pais, the WHO estimates that a moderate to severe pandemic would cost
US$ 570 billion. Nevertheless, an extremely serious epidemic, such as the black plague -
the greatest plague in history, which buried 200 million people in the 14th century - would
cut 5% of GDP. That is, about 4 trillion dollars. The threat seems close. WHO published
last year a list of eight diseases (ebola, sars, mers, marburg, Crimean-Congo hemorrhagic
fever, Lassa fever, Rift Valley fever and the Nipah virus) that threaten to become an
epidemic along with three (chikungunya, zika and an unnamed Asian fever) that are a
near danger. Although the main threat is a flu [influenza] pandemic, defends Tony
Barnett, an expert at the London School of Hygiene and Tropical Medicine. Note that
WHO has not included Coronavirus (covid-19) in this publication, which has recently and
unexpectedly appeared.
For El Pais, in 2050 there will be 9.7 billion people. Cities will be more populous, and
society will mix poverty, a lack of basic infrastructure, such as water supply and
sanitation, and social inequality. This is an ecosystem favorable to new (and old) viruses
that will spread easily. In the first decade of this century, more than two billion passengers
travel for year by plane, compared with about 68 million in the 1950s that facilitates the
global pandemic. In order to prevent current and future risks, WHO has created a US$
500 million fund to be used in outbreaks of infectious diseases that tend to become
pandemics. It is, however, a palliative. There will undoubtedly be new outbreaks because
these resources are insufficient. That is why it would be more important to invest in health
infrastructure, in a disease surveillance system, in developing and distributing preventive
measures, such as vaccines, argue Daniel Cadarette and David Bloom, professors at the
Harvard School of Public Health.
According to El Pais, it is exactly antimicrobial resistance that threatens people's lives
and the world economy. A study funded by the NGO Wellcome Trust reveals that if no
measures are taken by 2050 against the resistance of these viruses, 100 billion dollars in
productivity and 10 million lives per year will be lost. There will be more deaths than
those caused jointly by cancer, diabetes, AIDS, diarrheal diseases and traffic accidents.
This threat is so serious that in September it will be discussed in New York at the UN

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General Assembly. In addition, there is another profound damage that is to take children
out of school, make people avoid public places and workplaces, even if there is little risk
of becoming infected. Research has shown that changing habits and avoiding work, travel
or sightseeing during an epidemic can cause substantial economic losses. Sars - which
was a traveling virus - reduced East Asian GDP by 2% in the second quarter of 2003.
Fear of illness paralyzes life and also the economy. Millions of human beings are left to
luck itself. It is, however, something that has a solution. Achieving minimum universal
health coverage would require the addition of US$ 100 billion to US$ 130 billion in
official development assistance. A possible solution would occur if all low-income
countries increased their tax resources by 20% by recovering the money hidden in tax
havens and eliminating exemptions for multinationals that would reduce the need for
resources to achieve universal coverage that would go from 100 billion dollars to $ 28
billion, explains Rafael Vilasanjuan, director of Global Analysis and Development at the
Institute of Global Health in Barcelona (ISGlobal). This difference could be covered by
the World Bank or UN budget.
Coronavirus epidemic affects global supply chains, shakes stock markets, brings down
oil prices and raises concerns about the slowdown in the Chinese and global economy.
The advancing epidemic of the new coronavirus around the world has caused havoc in
global markets and raised concerns among investors and governments about the impact
of the spread of the virus on global supply chains, corporate profits and the growth of the
global economy.
Although the largest number of confirmed cases and the main impacts are still
concentrated in China, fears of a pandemic have intensified with authorities around the
world fighting to prevent the spread of the virus, which has already been reported in about
50 countries, causing interruption of production and consumption in China, and also the
stoppage of some activities in countries like South Korea, Iran and Italy. WHO today
raised (2/28) the risk of the coronavirus epidemic in the world to 'very high'. The prospect
of a pandemic, following the spread of the coronavirus in Iran, South Korea and Italy,
brought panic to all countries in the world. Brazil has 182 suspected cases of coronavirus,
according to the bulletin released this Friday (02/28) by the Ministry of Health. The new
balance does not bring new confirmations. There is only one positive case. The survey
also points out that another 71 suspicions have been ruled out since the monitoring began.
Coronavirus effects heighten fears of recession in the world economy. Stock exchanges
have had a difficult week around the world and, in Europe, the recession seems inevitable.
The paralysis in China weighs on domestic growth because the supply chains of
multinationals need components made in Chinese factories to guarantee their production.
Consumption in western countries will be strongly affected. Tourism, air transport, leisure
are already suffering the consequences. A global recession is approaching. In Europe, this
seems inevitable.
China's global economy and China's GDP (Gross Domestic Product) are expected to grow
less than expected in 2020. The IMF projection is for a 5.6% growth rate for China in
2020. In 2019, China's GDP slowed to 6.1%, the lowest growth in 29 years. The outbreak
represents a major upheaval in the Chinese economy, as it has closed factories and stores,
quarantined entire regions and left many citizens locked in their homes for fear of
contagion, thereby reducing consumption and economic activity. It is worth remembering

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that China is the second largest economy in the world, with a share in global GDP of
around 16%.
Chinese exports of intermediate goods in the electronics segment account for more than
10% of the global production of these products. Smartphone production in the first quarter
of 2020 may fall 12% compared to the same period in 2019. Other types of devices, such
as monitors, TVs and notebooks are also expected to decrease by millions of units in
production. Dozens of multinational companies have started warning their shareholders
that the outbreak will affect their finances, including companies like Apple, United
Airlines, Mastercard, Toyota, Danone and Diageo.
In Brazil, the production of cell phones was suspended. The LG factory in Taubaté (SP)
and Samsung and Motorola units in the Campinas region had production suspended, due
to the lack of electronic components that should come from China. China is the main
source of components in Brazil. The country is one of the main sellers of chips, integrated
circuits and other parts and pieces that will become cell phones, washing machines,
televisions and several other electronics in other countries. According to information from
the Brazilian Association of the Electrical and Electronic Industry (Abinee), half of
Brazilian companies already have problems in receiving materials from China. On the
Brazilian export side, the main impact has been on the prices of the main commodities.
Soy, oil and iron ore prices have declined in the face of fear of a slowdown in the world
economy.
* Fernando Alcoforado, 80, awarded the medal of Engineering Merit of the CONFEA / CREA System,
member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional
Development by the University of Barcelona, university professor and consultant in the areas of
strategic planning, business planning, regional planning and planning of energy systems, is author of the
books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem
Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os
condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de
Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora
Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos
na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social
Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG,
Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica,
Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate
ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores
Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no
Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba,
2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV,
Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua
convergência (Associação Baiana de Imprensa, Salvador, 2018, em co-autoria) and Como inventar o futuro
para mudar o mundo (Editora CRV, Curitiba, 2019).