Economists view on a pandemic.
Part 2
Many people think that this will be the greatest crisis in our memory. But it is true to think that this is not an economic crisis, but a crisis of the health system. There is no reason for an economic crisis! We are deliberately introducing the economy into an “artificial coma,” because it cannot exist unless the health crisis is resolved. This is not the case when the medicine cannot be worse than the disease.
The current situation is not a recession because the property market is overheating, or because investments were made in useless areas, or because people do not want to consume, etc. On the contrary, people want to consume and produce, but at this moment, we are forced to stop the economy to survive.
According to the experience of China and the forecasts of the economists, the fall of the GDP will be from 15 to 20% per year for different countries with their amendments. These are the numbers that each country can survive without serious loss. When the health crisis ends, an economy that was in “sleep” mode will quickly gain momentum and return to its previous levels.
Summarizing the economists’ conclusions, the forecasts are quite optimistic if the health crisis is resolved quickly. Here, the state must not save money and throw all the money exactly to maintain the medical sphere.
Unemployment is forecast at 10%, and the state is interested here for the first time so that people don’t find jobs faster, but stay home as long as possible. Therefore, a significant part of the funds will also go to provide the population and small businesses that cannot function fully during the quarantine period.
From the economists’ point of view, the current crisis is even a good one. Now all the strongest minds in humanity are destined to solve this problem. Scientists, executives, technologists, doctors, epidemiologists, politicians – all try to find optimal solutions and generate fantastic ideas that sometimes drive the economy as a whole.
Many switched to remote work, revised their management models and activity schemes. Technologies have taken a step forward, and there are now significant successes allowing two patients can be ventilated with one device at the same time. Many companies have reoriented themselves to producing virus tests and their cost has plummeted. This means that it is possible to diagnose not only clearly infected patients, but at an earlier stage to make random samples from several thousand people at a time, and therefore we will know much more about the virus. Technologically, it was possible to measure the temperature of people without direct contact in offices and on the streets.
It is clear that this situation is not forever. Looking at the regulatory tools, a full launch of the economy will be possible in 2-3 months, as we see in China. Scientists predict the recession of the global pandemic not before the end of 2020.
What awaits us? In 2-3 months, everything will gradually return to normal, people will go to work, children will even be able to go to school, gradually they will try to open cafes, bars and restaurants. Not all at once, but with limited assistance, and monitoring the results of the epidemic. If this again causes an increase in infection, then the measurements will be adjusted.
Large crowds will still be banned. Today, the main music festivals are officially cancelled: Eurovision, Coachella and Burning Man. The 60th anniversary of the EURO 2020 and the 2020 Summer Olympics in Tokyo have moved.
Many tourists are concerned about the question of how soon air communications will be restored. Here I did not find a definitive answer in any of the sources studied. Experts say that keeping the planes cheaper in the air than on the ground and, as soon as possible, the planes will fly even with partial passenger occupancy. Another thing is if each country will be ready to open borders and let tourists in, so as not to provoke a second wave of the epidemic. In fact, according to the results, each country will have its own success in fighting the virus. And the more you advance, the more successes will be different. Moreover, by allowing foreigners to enter, this will reduce the incentive to comply with the measures of the citizens of this country. The epidemic will stop when each country takes control of the situation or when the majority of the population becomes ill and will recover.
Therefore, we wait and observe.