Global economy may be on track toward $21 trillion in economic damage due to COVID-19

As many nations begin to recover and others remain in the midst of a pandemic caused by COVID-19, the global economy may be on track toward $21 trillion in damages in 2020 alone, according to new research by the Australian National University.

In the study, six new scenarios were detailed regarding the impact the novel coronavirus would have on the global economy. The scenarios would be based on whether confirmed cases of the virus could be contained by mid-2020 or if its spreading continues in waves over the next few years, affecting businesses and establishments.

But as researchers point out, even under the best of circumstances, the novel coronavirus could very well cause up to $14 trillion (USD) in damage worldwide. That total would increase profoundly if ongoing waves are felt over the next few years.

“Our modeling shows that if the virus isn’t contained or if we have ongoing waves, the economic losses will climb quite steeply. The more waves we have the more losses we can expect,” researchers stated in a news release.

“By our fourth scenario, which sees two waves of COVID-19 in 2020 and another two in 2021, the loss rises to U.S. $21.8 trillion. There is no doubt that COVID-19 is a significant negative shock to the world economy, and our modeling makes that clear.”

In the hypothetical worst-case scenario, researchers speculate that four waves of the coronavirus over a span of five years could bring the worldwide total losses to nearly $35 trillion.

“The current experience with the COVID-19 pandemic has revealed deep problems in existing institutions at the supernational level and within countries,” Warwick McKibbin, co-author of the study, stated.

“While policies need to be designed and implemented at the national level, for most foreseeable problems, there needs to be greater cooperation across countries,” McKibbin added. “COVID-19 shows the folly of isolationist politics and policies when the natural world ignores artificial boundaries.”

Image courtesy of AICD
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