COVID-19 and its effects on the UK economy - Mahir Mujtaba

“Severe Acute Respiratory Syndrome Coronavirus 2”, more commonly know as the COVID19 or coronavirus, is an infectious respiratory disease which is part of the coronavirus family. In recent weeks, this disease has been a cause of global panic, with the world health organisation declaring a state of emergency. This has been caused due to its infection nature and also as this specific disease has never been seen before. There is currently no know vaccine to treat people infected by COVID-19. Like other coronaviruses of its kind, COVID-19 is a zoonotic disease (an infectious disease transmitted from animals to humans), and thus, this is how it is thought the virus came to affect humans.

The virus itself was first identified in December 2019 when a mysterious new illness emerged in Wuhan, China. The source of this outbreak has since been believed to be a “wet market” in the city of Wuhan (The Huanan Seafood Wholesale Market). Wet markets are traditionally places that sell dead and live animals out in the open’. Due to the close proximity of live and dead animals as well as the lack of hygiene standards, as a result, the market posed an increased risk of the zoonotic disease jumping from animals to humans.

It is yet to be identified the animal which caused this outbreak, however, scientists have their suspicion that bats were the original host of COVID-19, just like SARS coronavirus. Although bats we not actually sold at this market in Wuhan, it is thought they infected livestock with the disease, such as chickens. This is not the first case bats were recorded to have such a deadly disease, it had also been discovered they were hosts to a number of other diseases such as Ebola, HIV and rabies. Despite this, there are many different animals which are yet to be discovered to have maybe transferred the disease to humans.

Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death. Despite this, in some cases those infected may be asymptomatic, meaning that no visible symptoms are presented.

The virus itself can be transmitted in a number of ways; this includes the exchange of bodily fluids. In addition to this people can also get the disease through direct contact with an infected individual’s mucus or saliva on surfaces or in the air. According to scientists, coughs and sneezes can travel several feet and stay suspended in the air for up to 10 minutes. As a result, this is a prime way to transmit the disease. It is still unknow however, how long the virus can survive outside a host organism, this could range from a few hours to months like in other viruses. Recent data from the WHO (World Health Organisation) has revealed that the average number of people infected by an individual suffering from COVID-19 is from 1.4 to 2.5 which is very similar to that of the Ebola virus.

Since it was first discovered in 2019, there has been a huge spike in the increase of those suffering from the virus. As of March 2020, there have been 92,798 confirmed COVID-19 cases, of which 3,164 people have died and 48,469 have recovered. This death toll has well surpassed that of SARS and MERS (other types of coronaviruses). Despite this it has been indicated by preliminary findings that the virus appears to be less fatal than SARS . Although scientists have lots of new information on COVID-19, it is too early and there is also too little information to compare exactly how deadly the virus is compared to other diseases such as the flu, which in recent newspaper articles has been said to be more deadly than the ‘coronavirus’.

According to scientists, the predicted death rate of the COVID-19 for the virus is around the 1% region. However, despite this prediction, there are a number of different factors which may affect an individual’s survival chance. This includes the age, sex, health state and the health system the individual is in. The Chinese centre for disease control and prevention have recently released statistics showing that the majority of those who died from COVID-19 were elderly and suffered in almost all cases a pre-existing health condition. Despite the 2.3% of all confirmed cases dying in China, the fatality rate of those 80 years or older was much greater than that at 14.8%. This shows that by having a weaker immune system or pre-existing condition, the chance of fatality is much higher.

International governments as a whole have been very effective in slowing down the spread of the virus to minimise the number of deaths until a vaccine is developed. This has been seen recently in the quarantining of the passengers of the diamond princess cruise. This method was used as those infected only show visible symptoms of the illness after 14 days, and thus by quarantining were able to both determine those infected and also reduce the spread of the disease. In addition to this, civilians have taken matters into their own hands. This has been seen in China, where many fearing they may contract the virus have been wearing masks to protect themselves. In Wuhan as well, citizens have developed their own greeting to reduce direct contact and thus the spread of the disease.

Despite these precautions it is unknown how many more people will become victim to this terrible disease and how long it will take for a vaccine to be developed, though scientists have predicted at the least a year. This problem may escalate and by then may be a pandemic as new and mysterious cases of the disease appear across the globe.

Economic effect of COVID-19

In recent weeks around $6 trillion dollars in wealth was erased from the stock market last week due to a escalate in fear of COVID-19 inflicting damage on the global economy. In particular individuals feared that efforts to contain the virus would slow down or even halt economic growth and also cut profits from different corporations. This caused a mass sell-off of stocks When all this occurred, the SP 500 suffered its worst week since the financial crisis. Despite this huge decrease, not many people where effected due to the fact that not many individuals own stock.

Although this may not have impacted the global economy that greatly, there are a number effects economists will predict will occur due to the virus. Some examples of these economic issues include recession, unemployment as well as inflation.

Due to the virus the production of goods and services produced in China are predicted to decrease and thus also the supply. This is known as a supply side shock. As a result, shortages will occur as the demand of the product well exceeds that of the supply. Firms want to eliminate these shortages by getting rid of those less willing and able to buy the product, and in the process selecting the buyers most willing and able to purchase the goods. Consequently, a raise in the price of the product occurs for this desired effect to occur. As a result of this supply side shock, this causes an increase in the cost of production for UK firms receiving imports from China and thus decreasing profit margins for the firms as they have to endure higher costs to produce.

Furthermore, there is a fall in the quantity of short run aggregate supply (SRAS) as the profits are not adequate to incentive firms to supply goods. Shortages are then created due to aggregate demand being greater than SRAS. This time UK firms must increase prices to get rid of the shortages. This increases the general price level. This is known as inflation which is very problematic for the economy. In particular cost-push inflation occurs as firms increase prices to protect their profit margins against the increasing cost of production.

In addition, as a result of the decrease in supply, there is a consequent decrease in output, which is known as a recession. This is catastrophic for an economy and can lead to real human suffering due to standard of living falling as incomes decrease. This decrease in output can be even more problematic due to the fact the demand for labour is derived from the demand for goods and services. Because of this relationship as well as the fall in supply, less labour is demanded by firms, and thus demand-deficient unemployment is created as there is a lack of demand. This can problematic for the government in a number of ways as more money must be spent on benefits by increasing national debt or taxation as well as decreasing the economies productivity.

Thus, as well as posing a serious health threat, COVID-19 also presents number of serious potential economic problems which could be fatal to economies across the world. Because of this more effort must be put in by countries across the globe to present a working vaccine for the virus before it causes serious economic issues and increases further human suffering. 36