On March 16, France announced a nationwide lockdown as a result of the growing concern related to COVID-19. That day, 6,473 active cases of COVID-19 were found in the country; five days later, this number roughly doubled, reaching 12,310. Across the ocean in China, on March 16th there were 8,967 while five days later there were ostensibly 5,353. These figures highlight the fact that the epicentre of this virus has moved from China to Europe.
Owed to highly monitored and enforced lockdowns across its country, the number of new daily cases in China from March 1 to 21 decreased drastically. It is yet to be seen if the same thing happens in France following lockdown, or if the same will take place in other countries that impose such strict measures. Since COVID-19’s incubation period is anywhere from two to 14 days, it is too early to see in the data whether the quarantine in France is slowing the growth in new cases. More concerning, however, is how many seem to expect that economies will reopen and rebuild following a period of lockdown, without further outbreaks. Instead, after this virus is over—or at least until a mass produced and exported vaccine becomes available—it may be a different world altogether. Even if COVID-19 is defeated, we will think differently about pandemics and globalization—the benefits of offshoring strategic industries seems much less compelling today than it did one month ago. COVID-19 has already facilitated the loss of trillions of dollars in the global economy, and without immediate and strict containment measures, perhaps soon millions of lives.
A few general observations of how COVID-19 may ultimately change the way we live and how our economies function; reflections from lockdown in France:
Twitter has proved its worth. Assuming you follow reliable experts in the space, the information on Twitter is both of higher quality and more timely than traditional media. In public emergencies, it was expected that social media may have the opportunity to shine; based on current experiences, it seems that this may be the case. In fact, the techy crowd on Twitter were calling this one early—some even shorted the stock market before the nosedive. Recently, measures have been taken in the EU to tighten rules on short selling.
While we have estimates, we lack certainty about the virus. We do not know how contagious COVID-19 really is. The current estimate going around is that one person infects roughly 2.2 others, but this depends on behavior and in many ways, is little more than a guess. We also don’t really know the typical mortality rate—estimates range between 1-5% on average, but can swing depending on the capacity of the healthcare system. We do not know what the mortality rate looks like after hospitals and healthcare systems are overwhelmed, as they are likely to soon be in many nations. In Wuhan, the death rate was 17% before new hospitals were built to cope with the surge of cases. In Italy, where the healthcare system is on the brink of collapse, the mortality rate covers around 7.7%. Lastly, we simply do not know how many people have the virus, how many are asymptomatic, or how the know the virus will mutate over time—there are two strains, already.
Wealthy nations are focused inwards, but the developing world is also in trouble. There is some evidence that warmer weather slows COVID-19, but warm weather alone is not a guarantee, or we would not have seen outbreaks in countries like Malaysia. It is hard to imagine how the virus will be prevented from spreading widely in countries like Indonesia, Nigeria, or India. Struggling healthcare systems in these nations can be quickly overwhelmed, which will place millions at risk.
Officials around the world are continuously shifting and reshaping plans—there is no silver bullet. Experts agree that it is no longer possible to simply “stamp out” COVID-19—that horse has sadly left the barn. As of March 21, there were 301,746 cases spread across more than 185 countries. Since at this point the spread of the virus cannot be stopped, the words on everyone’s lips is “flatten the curve”. In other words, many or most people are going to get it, but we can spread the cases across a longer time period. While now the best option for many countries, we should keep in mind that the curve would need to get awfully flat for healthcare systems not to be overwhelmed. In the process of flattening the curve, we also run the risk of flattening the economy. This is a macabre trade off.
Case: Ventilators in Canada and COVID-19
Example 1: 6 months of flattening
Some quick math. While it is not known for sure, it is thought that Canada has approximately 6,000 ventilators in total across the country. To be highly conservative, suppose all of these are idle. If 50% of Canadians end up with the virus in the next 6 months, and 1% require a ventilator, each using it for one week, a back-of-the-envelope calculation shows a demand for ventilators that far outpaces supply. Assuming a normal distribution to keep things simple across this period, demand exceeds supply partway through this 6-month period. Since the shape and duration of the distribution is assumed, the timing of the point where demand outstrips supply is not the important part—in fact, this imbalance may come earlier and be steeper than expected. The more important takeaway here is that given these assumptions, there are not enough ventilators if half of Canadians get sick over the next 6 months, as is currently expected.
Example 1: 12 months of flattening
What about if we commit to flattening the curve for longer? In such a circumstance, which would see the effects of the pandemic spread out over a 12-month period, supply of ventilators will still not meet demand. Still, in this scenario, fewer people would need to go without ventilators and more time will be allotted to build new ones, alongside potentially even developing alternative treatments. To put it plainly, the shorter the pandemic, the more deadly. The steps necessary to flatten the curve over the next year would require significant changes to our way of life. This includes widely-employed and monitored social distancing efforts, bringing with them potentially devastating impacts to small businesses and the economy as a whole—and all of this may need to last longer than currently estimated or than is perhaps possible. The economic and human costs of keeping international borders closed and workers quarantined for months on end would be immense, and while economic stimulus packages help, maintaining wages and economic activity via government spending while production falls is a sure-fire way to generate stagflation. “Printing more money” with fewer goods to buy means inflation.
In short, the situation is serious. It will be a true test of our agility and capacity for compassion and cooperation as global citizens. At once, we have to flattening the curve, continue vaccination research as well as research and development for alternative treatments, ensure supply chains of critical resources, all the while enabling the economy to continue to function, if only at basic levels. This will undoubtedly prove a mighty challenge for Canada and every country around the world. I do not envy the role of those who will need to guide us through the COVID-19 Pandemic of 2020, but I maintain hope that we will emerge more collaborative, more resourceful, and hopefully more prepared than before.Ryan McLaughlin is a Senior Economist & Research Analyst at the Information and Communications Technology Council of Canada (ICTC), a national centre of expertise on the digital economy. At ICTC, Ryan works on analysing labour market information, statistical and econometric analysis, as well as economic forecasting. Ryan has contributed to ICTC reports on topics such as blockchain, artificial intelligence, 5G mobile technology, as well as papers focused on forecasting the digital economy within the provinces and across Canada. Ryan is currently spending a year abroad in France, where he hopes to perfect his French language skills and gain valuable new experiences.
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