Covid 19 is a new infectious viral disease. A severely acute respiratory illness (caused by coronavirus known as SARs-Cov-2), it is transmitted through air droplets from person to person. Symptoms include fever, a cough, and difficulty breathing. The virus was first discovered in Wuhan, China, and by the time it came to public attention it had already spread across the world, quickly turning into a worldwide pandemic. This is in contrast to the SARs virus outbreak of 2002 (SARs-Cov), which was contained in Asia.
The elderly and those with underlying health conditions are particularly likely to develop severe health problems with fatal consequences if they contract Covid 19. Allowing herd immunity to develop through natural means, whereby the disease spreads until a significant proportion of the population becomes immune, would result in many deaths. Scientists are instead working towards a vaccine to achieve herd immunity.
Once it became clear that the disease was easily spread through human contact, governments across the world quickly imposed movement restrictions to limit its spread. The harshest measures require people to stay indoors and minimise contact with others, known as a lockdown. This has resulted in adverse economic and social consequences.
The number of cases of coronavirus worldwide. Source: Johns Hopkins University.
Effect on the economy
Businesses have been particularly hard hit by the pandemic due to the lockdowns taking place worldwide. In the retail sector, consumer spending relative to January 2020 was down by 30%, before gradually increasing as stores were reopened. According to the Altman-Z score, 33% of companies that were in good standing in 2019 are now considered to be in a grey zone or experiencing stress. The hospitality sector in the UK, for example, has suffered from extensive restrictions requiring them to close or only open during limited hours.
It is difficult for businesses to plan during a crisis, and employee layoffs are a by-product of managerial fears in response to the pandemic. For example, in the United Kingdom the government has made attempts to stem the tide of unemployment through a ‘furlough’ scheme, whereby the government pays some of the employee’s salary in situations where there would otherwise be a risk of redundancy. The government scheme came into force in the United Kingdom in March 2020, at great expense for the government, who are spending an estimated £14 billion per month to support it. Following the introduction of further coronavirus restrictions in the United Kingdom, the scheme has been extended until 31 March 2021.
As lockdowns took hold, the stock markets began to see volatility from March 2020 onwards. For example, the UK FTSE 100 was particularly affected, dropping from a share price average of over 7500 in February 2020 to just under 5000 on 23rd March 2020. It is currently at 6400, in part buoyed by hopes of a vaccine. The Dow Jones, NASDAQ 100 and S&P 500 saw similar movements and it is likely that markets will continue to be jittery until the pandemic is over.
According to the Office for National Statistics, the UK saw a GDP drop of 19.5% in April 2020, improving slightly thereafter and by August it stood at 2.1% growth. This growth is 9.2% below the February 2020 level. World GDP is projected to drop in 2020 by 4.9%, according to the International Monetary Fund.
International trade has also been badly affected by the pandemic in the major economies. According to the World Economic Forum, China saw a severe drop in exports, from over $180 billion in January to under $80 billion in February. It has since recovered and now stands above $200 billion. The US and Germany also saw a fall in exports from $120 billion in January to $80 billion, with these countries taking longer to recover.
Impact on working practices
In developed nations with internet access, another effect of the pandemic has been an increase in remote working for employees. For employees, an advantage of home working is the reduction in time spent commuting, and there are also advantages for those with child-care responsibilities. The costs to employers of renting and maintaining office space could be saved and this has generally led to a wider discussion as to whether remote working could continue after the pandemic.
However, working from home is not without its drawbacks. High level negotiations are often better conducted in person and collaborative projects are slowed down by remote working. Whilst technology such as Zoom and Teams virtual meetings are now in wide use, spontaneous idea exchanges often occur in person. Rapport with colleagues is absent and isolation has increased. There is also the issue of not being able to ‘switch off’ from work, with employees working during the time they would normally be commuting and into the evening hours.
The pandemic has had an impact on the mental health and social lives of those living under lockdown. With increased time alone, many are experiencing loneliness and the adverse mental health effects of isolation. According to the Office for National Statistics, in the UK over two-thirds of people surveyed said that they were worried about the effect that coronavirus was having on their life and over 4 in 10 adults said their well-being had been affected by the virus. 57% percent of those surveyed said that they felt stressed or anxious.
Those renting in inner cities in small apartments have had financial issues to deal with as well as a lack of space, and according to the ONS one in eight Britons lack access to a private or shared garden. The lack of easily accessible outdoor space can have a detrimental impact on wellbeing.
The Royal College of Psychiatrists has also warned that they will likely see a ‘tsunami’ of mental illness patients and that mental health services in the UK could potentially become overwhelmed by cases. Such cases are coming through as emergencies, as patients wait until they are at a crisis point before accessing mental health services. 43% of psychiatrists surveyed reported an increase in their urgent and emergency caseload.
Developing countries and Covid-19
There are also concerns for poorer countries during the pandemic. These countries are vulnerable to the coronavirus due to overcrowded living conditions and poor sanitation. Hospitals in African countries, for example, have less access to personal protective equipment (PPE). As of April 2020 there were just 2000 ventilators serving hundreds of millions in 41 African countries, according to the World Health Organisation, and 10 African countries had no ventilators at all. These countries will also have more difficulty accessing vaccines once produced, as richer countries have the means to develop, buy and store them. The World Bank has approved $12 billion in financing to this end and the World Health Organisation is seeking to ensure fair access to the vaccines world-wide.
The economic prospects for these countries, who were already struggling, has worsened as a result of the pandemic. For this reason the World Bank has called on wealthier nations to temporarily suspend the debt obligations of countries currently facing hardship. Over 70 countries are currently eligible for the debt suspension and participants include Cameroon, Myanmar and Tanzania. The UN predicts that Mali will see a drop in GDP of more than 80 percent, with an additional 800,000 people living in poverty, whilst in Afghanistan it is predicted to drop by 7.4 percent. Poverty levels are expected to rise in Pakistan by 50 million to a total of 125 million, whilst in Lebanon poverty levels could reach 50 percent.
A hunger crisis is also deepening as the pandemic continues. The UN World Food programme has warned of a looming hunger impact from Covid-19, affecting Africa as well as countries in Latin America and the Caribbean, the Middle East and Asia. The pandemic has disrupted imports and supply chains for food and labour shortages in the agricultural sector could also affect harvests. Yemen, for example, was already receiving food aid before the pandemic and millions are now at risk of starvation as the pandemic has exacerbated the situation.
The UN in July 2020 put forward a Covid-19 Global Humanitarian Response Plan in recognition of 63 countries that would not otherwise have the financial means to support their economies through the pandemic. At $10.3 billion, the funding appeal covers health and non-health measures. Health measures include cover tests, PPE, essential health care services and mental health services. Non health aspects include water, sanitation and hygiene supplies, food and agriculture assistance, distance and home based learning support, and community engagement. Protection services for refugees, internally displaced persons, women’s sexual and reproductive health, gender based violence services, and logistical support are also funded under the scheme.
The pandemic has seen the world’s scientists coming together to find a vaccine in the hopes of achieving herd immunity amongst the population. This would mean an ‘epidemiological end point’ for the pandemic. According to the World Health Organisation, there are over 100 vaccines currently in development, with most of them at the human trial stage. The UK has just approved a vaccine developed by the pharmaceutical companies Pfizer and BioNTech, whilst another pharmaceutical company, Moderna, is currently seeking US and European approval for its vaccine. Roll-out of these vaccines will take some months and their effects will likely be seen later in 2021.
Whilst the world awaits the vaccine, countries remain either in lockdown or under similar restrictive measures. There have been protests against what is perceived as a curtailment of civil liberties due to the strict nature of the restrictions. Meanwhile, the economy continues to be affected whilst populations across the world keep their distance from each other.
The pandemic is one of the biggest threats to humanity aside from war and conflict. Never before has science had such power in society. We are all now acutely aware of the spread of disease and our daily lives are all affected. 2020 was the year of coronavirus, but 2021 might be the year of the cure.