Lockdowns and containment policies are expected to have a massive impact on GDP across the globe, with many countries introducing bailout measures to prevent economic meltdown.
For decades constant economic growth has been considered a requisite indicator of economic health globally.
The outbreak of the Covid-19 virus has forced many countries to accept that they are in the midst of a global downturn, which may reach the proportions set by the 2008 crisis.
In China, officials were quick to realise that they could not balance economic growth with containment of the coronavirus. The epidemic has killed more than 3,200 people there so far.
“China has just shown itself to be very, very willing to sacrifice their economy to prevent a resurgence in infections,” said Emily Fend, NPR’s China correspondent.
Beijing has locked down much of the country to stop the spread of the disease and has reported no new cases for the last two days.
But China was in a state of denial at the start of the pandemic, detaining whistleblower doctor, Li Wenliang, who dared to report that the then unknown virus, later named as Covid-19, could spread out of proportions across the country.
Out of fears that Wenliang’s warning shots could hit China’s economic growth narrative, Beijing accused the doctor, who later passed away from the virus infection of “spreading false rumours”.
China is not alone in its early denialism with both British and American governments acting slowly amid the threat. US President Donald Trump, for example, dismissed the virus as less than “a seasonal flu”.
“So last year 37,000 Americans died from the common Flu. It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!” Trump tweeted last week before the deadly pandemic claimed the lives of more than 100 Americans.
Britain's Boris Johnson was equally dismissive about the pandemic initially, resisting the example set by other European states, which implemented lockdown measures.
However, when groundbreaking research showed that not implementing quarantine measures would lead to at least a half million deaths in Britain and 2.2 million deaths in the US, both administrations announced U-turns.
Faced with economic devastation as businesses shut down and workers stay at home, the Trump administration is mulling a stimulus plan worth $1 trillion, while Johnson has announced similar measures for businesses as London prepares for a complete lockdown.
“Capitalism must expand or lapse into crisis. But an economy dependent on perpetual growth must, at some stage, come into conflict with the limits of the natural world,” wrote Jeff Sparrow, an Australian columnist, for The Guardian.
“The characteristic ineptitude of today’s politicians – the deep rottenness pervading our societies – reflects, in part, the impossibility of squaring that circle,” Sparrow concluded.
Such critiques not just of the governments’ response but also their underlying economic systems is becoming increasingly common.
“To start the coronavirus meltdown narrative with Trump's efforts to deliberately play down the risks we faced, which hobbled the U.S. response and will lead to potentially thousands of deaths, is to miss the reality that this systemic failure has been decades in the making,” wrote Bob Hennelly, an American reporter, referring to the country’s growth-focus economic model.
"Looking at the Center for Disease Control's own press releases we see as of Jan. 17 they publicly acknowledged they were following this virus in China,” said Richard Wolff, an economist teaching at the New School.
“What we have seen since is this ad hoc, last-minute, under-the-gun response with one eye looking out for the interests of the profit making medical industrial complex and the other eye looking out for the re-election of the President," Wolff added describing the Trump administration’s response.
Given the central importance of the British and American economies in the global order, any trouble there could mean havoc elsewhere.
According to the Organisation for Economic Cooperation and Development (OECD), if the outbreak worsens in the upcoming days, global growth might be cut in half as big economies like the US and China fall into recession.
They might be too big to fail.
But who could rescue them?
“The big G-7 economies, notes Fitch Ratings agency, are among the weakest countries in terms of public finances; the countries that are in the best shape, budget-wise, are also the smallest and can make the least contribution to a global turnaround,” Foreign Policy reported.