This brief examines the spread of the SARS-CoV-2 N virus, and the outbreak of the COVID-19 disease, over the period from 6 March to 15 April 2020.
The centre of gravity has shifted. An outbreak that started in Wuhan, in Hubei province in the People’s Republic of China (“PRC”), has since January 2020 spread across the world, to become a global pandemic.
The worst outbreaks to date have been in Wuhan, Italy’s northern regions, Spain, France, the United Kingdom, Iran, and the United States. New York state has been especially hard hit, and the US will remain at risk for some months ahead; in that context, a desire to “blame China” is growing.
A further concern is that the number of cases in developing countries is rising; these states have much weaker healthcare systems. Attention thus seems likely to shift towards Africa, the poorer states in Asia, and Latin America, as a failure to control the outbreak in these states threatens re-infection elsewhere.
Another threat stems from the economic impact of the outbreak, with a huge decline in economic activity around the world, which brings major implications for social stability, financial crises and nationalist economic policymaking in the months ahead.
- The government of the People’s Republic of China (“PRC”) claimed that the outbreak in Hubei has stabilised. According to its statistics, the number of local infections has dropped substantially. Businesses are resuming activity gradually. The PRC government also approved human trials on two vaccines. Separately, US research revealed that the initial outbreak in Wuhan was twice as contagious as previously suggested; each COVID-19 carrier infected on average 5.7 people.
- Discrimination against foreigners in China is worsening, as the government seeks to divert ire towards outsiders. Africans in Guangzhou said that they became targets of suspicion after a recent cluster of infections linked to a Nigerian community, which has induced alleged mistreatment by virus prevention officials. Some claimed that they were evicted, and turned away from hotels. The Chinese ambassador in Nigeria denied the accusations, but such racist treatment of Africans in Guangzhou is a longstanding concern.
- The Chinese economy reportedly declined by 6.5% in the first quarter of 2020, compared to a year earlier. Unemployment has risen substantially, to about 6.2% on official numbers, although unofficial estimates believe the numbers are much worse. The slowdown has raised serious doubts as to whether the government can meet its ambitious target of eradicating poverty this year. A key question is how badly a steep slump in overseas demand will affect the manufacturing sector.
- The situation in Hong Kong appears to be stabilising, as the city recorded single-digit increases in cases for four consecutive days. Hong Kong, so far, has seen 1,017 cases in the outbreak, and four deaths. That number had risen from 149 cases on 15 March, in part owing to the arrival of people repatriating from Europe and the US. This stabilisation suggests that policies implemented by the local authorities, based on the collection of data, rapid contact tracing work, and bans on travel, are proving successful.
- Hong Kong’s Financial Secretary, Paul Chan Mo-po, stated that the economic impact of the pandemic would be worse than the SARS outbreak; the unemployment rate, already at a nine-year high, is likely to rise, and the fiscal deficit may climb to 9.5% of GDP, or more. Jitters have also arisen about the vulnerability of the Hong Kong dollar peg to the US dollar, about the property market, and about the sturdiness of the financial sector. However, the education authority announced that the Hong Kong Diploma of Secondary Education Examination (“HKDSE”) will go ahead on 24 April 2020.
- Taiwan’s performance in managing the outbreak has won plaudits from the international community, heightening the debate about whether the Republic of China should be granted membership to the World Health Organisation (“WHO”). Not yet, though; Taiwan’s Health Minister Chen Shih-chung criticised the WHO for “dereliction of duty”, after WHO Director-General Tedros Adhanom claimed that he had received racist attacks from Taiwanese people. In the interim, the economy is suffering; GDP may fall 4% in 2020.
- Japan is considering whether to expand its state of emergency, declared on 7 April, in response to demands from prefectural governments. In the interim, attacks on the government intensified. Prime Minister Shinzo Abe was criticised for prioritising the economy, and the now-postponed Tokyo Olympics, over the safety of citizens; his overall approval rating dropped to about 40%. Shortages of anti-viral disinfectants also prompted the government to approve the use of high alcohol liquor as a substitute.
- More signs that South Korea had the outbreak under control emerged. Schools reopened, and a parliamentary election was held on 15 April. President Moon Jae-in’s ruling party won a landslide victory, with voting turnout at about 66%, its highest level in 28 years. The IMF predicted declines in GDP of 1.2% in 2020, a much lower decline than other economies, in part thanks to Moon’s high spending policies, which were in place ahead of the crisis.
- The number of cases in Singapore has grown rapidly, rising from about 1600 cases on 6 April, to 3,699, as of 16 April 2020. This climb has come about owing to an outbreak amongst foreign workers of about 350,000 manual labourers, many from Bangladesh. These workers sleep in crowded and often unsanitary dormitories, where conditions are rife for the spread of the virus. The outbreak amongst foreign workers has masked a further rise in community transmission. As such, Singapore’s government implemented a “circuit breaker”, entailing rules that oblige people to stay at home. The economic outlook worsened markedly, with expectations of a 4% or more decline in in GDP in 2020.
- Malaysia’s government extended its lockdown to 28 April 2020. The number of cases has now reached 5,072, but appears to be slowing, with daily numbers of new cases falling below three digits. The largest number of cases is in Selangor (1,316), Kuala Lumpur (926) and Johor (601). Penang had 250 cases, as of 16 April. The government also issued statements threatening “stern action” against media misreporting, aimed at stemming criticism of the government.
- Australia is relaxing lockdown policies. The Australian government called on schools to reopen, and for the relaxation of other measures. The moves highlighted how strict restrictions on travel have insulated the country from the virus. However, the sustainability of such a stance is not clear, given the likelihood that the virus will circulate for many months to come. In the interim, the economy is slowing; Australia’s GDP may decline by 6.7% in 2020. New Zealand has retained restrictions, and its economy may shrink by 7.2%.
- The situation in the United Kingdom continues to pose challenges. Case numbers rose to 98,427, with perhaps 12,868 deaths, but the authorities believe that the outbreak is peaking. The higher proportion of deaths probably relates to the UK’s weakness at testing, meaning the degree of infection is higher than reported; certainly, the number of deaths in care homes hints at as much. The UK Prime Minister Boris Johnson has now left hospital. A key question, though, is when the UK government will relax lockdown provisions, given the growing damage to the economy, which will decline by 6.5% in 2020; unemployment may rise as high as 10%.
- The European Union’s finance ministers failed to agree a mechanism aimed at pooling debt, owing to opposition from Germany and the Netherlands, but did promise some EUR540 billion in loans. These steps mean that risks still emanate from the lack of a fiscal transfer mechanism amongst Eurozone states, even as debt levels are rising. Public debt may reach 155% of GDP for Portugal, 135% for Spain and France, and 175% for Italy.
- Italy’s government prepared to ease some of its strict social isolation measures. The rise in cases has fallen to about 525 a day, well below the height of the outbreak. The number of cases now stands at about 128,948, with 15,887 deaths. However, concerns are now growing about Italy’s economy, not least owing to its weak fiscal position. GDP may fall by 8% in the first half of 2020.
- France reported 147,863 cases, and 17,167 deaths, as of 15 April. The government maintained its lockdown, which has received criticism as amongst the most aggressively policed in Europe. This stance has led to a precipitous fall in the popularity of President Emmanuel Macron, who argued with nurses publicly about shortages of equipment. Plans are for schools to re-open in mid-May, but the French economy may decline by 8% in 2020; in response, the government has promised more than EUR100 billion in supportive spending. Separately, a row broke out with Beijing, after a Chinese diplomat accused France of leaving its old people to die – a reference to a move to ask older people to sign a “waiver of emergency care”. Naturally, the row prompted attention in France on the origin of the crisis in Wuhan, and criticism of China’s initial response.
- Germany has seen 134,753 cases, and 3,804 deaths. The lower death rate probably relates to an effective testing regime, which more accurately tracks the number of those infected, and a strong healthcare system. The German government is now relaxing constraints on economic activity, allowing smaller shops to open; schools will re-start in early May. However, other restrictions will stay in place. The loans extended to needy businesses have also stoked a perennial debate about debt.
- The Spanish government reported 177,633 cases, as of 15 April, with 18,579 deaths. The numbers rose by about 5,000 on 15 April, accelerating after a period of relative decline. The government stated, though, that Spain has probably passed the peak of the outbreak, and that pressure on hospitals and emergency services has lessened. Prime Minister Pedro Sanchez added that he would extend the state of emergency beyond 25 April, and will implement a EUR100 billion stimulus package, with attention to the poorest families. Expectations are that GDP will fall 8% in 2020, in line with Portugal (down 8%).
- US President Donald Trump stated that the US had passed the peak of the outbreak, as infections in New York, the most-affected state, fell; those in other states are flattening. Trump planned to announce guidelines for states to reopen. In the interim, the economy has declined precipitously. 16 million people have filed unemployment claims since late March, and retail sales have fallen 8.7% in March, the biggest slump on record. The government has offered USD2 trillion in emergency spending, but a severe slowdown seems certain.
- President Trump said the US is investigating whether COVID-19 originated from a biological lab in Wuhan. However, General Mark Milley, chairman of the Joint Chiefs of Staff, stated US intelligence indicated that COVID-19 likely occurred naturally. Certainly, most scientists believe in a zoonotic origin. This dispute is thus more emblematic of a propaganda war between the US and China, than of any sound debate.
- US Secretary of State Mike Pompeo urged the Chinese government to share COVID-19 information transparently, in a call with senior Chinese official Yang Jiechi. Separately, the US accused the WHO of being too close to PRC. In particular, analysis of its early statements relating to the outbreak in Wuhan highlighted how closely WHO claims tracked those from the PRC government. US President Trump has announced that the US intends to withdraw funding to the WHO as a consequence of the above and obvious internal political considerations.
- Much scientific research has focused on identifying what proportion of the population has already had the coronavirus, so as to establish whether any population is close to acquiring “herd immunity”. The findings, so far, are sobering. A heavily infected town in Germany close to the Dutch border, Gangelt (known as Germany’s Wuhan), has shown infection rates – based on antigenic testing – of no more than 15%; a Colorado county has shown rates of 1.5% only. These rates are well below the 70% or so needed to establish community immunity, meaning that the virus will continue to circulate for some months.
- The policy implications of these findings are significant. Governments may have to prepare for a lengthier outbreak, or for recurrent waves of infection, at least until a vaccine becomes available (perhaps in a year to eighteen months). Social isolation measures may remain in place for some time, or could be re-established at short notice in certain forms. Some states are also considering the use of “immunity passports”, akin to the colour coded apps in use in the PRC. These “passports” would allow for those who have had the disease to work, but would limit the freedoms of those who had not. The use of such measures would also rely on monitoring of mobile phone and other data. Such actions will present serious concerns about privacy and discrimination, if implemented.
- The global economy has gone into freefall. The IMF projected that the global economy would show the biggest decline since the 1930s, shrinking by 3% in 2020; global output per head will decline by 4.2%. 90% of all states’ economies will shrink in 2020, compared to 62% in 2009. Unemployment levels are rising rapidly, as is public debt. Worryingly, these assessments did not take account of the risk of multiple waves of infection.
- Supply chains have suffered severe exogenous shocks, with implications for product deliveries. Some attention has focused on food supplies, with farmers dumping crops that they cannot bring to market, or failing to harvest owing to a lack of labourers. A further concern is that the pandemic has highlighted states’ reliance on external suppliers for key products, notably the PRC; efforts to bring these supply chains closer to home will follow.
- Economic weakness could result in waves of social unrest in the coming months, not least as those most affected by various lockdowns are low income groups. Any rise in food costs will have major implications for major grain importers, such as Egypt, and for the poorest states, such as those in Africa. The extraordinary increase in state spending in the developed economies also seems liable to result in greater acceptance of state intervention, implying at a shift to the left, but could also presage debt crises.
Practical Health Advice
As the spread of the virus is increasing worldwide, and healthcare systems are coming under increasing strain, it is essential to take sensible precautions, which include:
- Wash hands regularly with soap and water for 20 seconds, or use an alcohol-based hand rub.
- Wash hands when returning home, and prior to eating.
- Avoid contact with the eyes, nose, and mouth.
- Cover mouth and nose with a tissue to cough or sneeze, immediately discard the tissue, and wash hands. Cough into the elbow if a tissue is not available.
- Wear a mask, if ill and in public.
- Wash hands before wearing a mask, and do not touch it during use. When removing a mask, avoid touching the front, and discard it in a closed bin.
- Practice social distancing – avoid social gatherings, and maintain a distance of six feet if out in public.
Personal Health Suggestions
In addition to these precautions, the following practical measures may help to reduce your personal exposure to the virus:
- Limit trips outside, even if still permitted in your area.
- Wash your hands as soon as you get home, before touching anything.
- Order groceries and daily necessities online.
- Stock up on non-perishable goods.
- Avoid handling cash – use cards or contactless payment methods where possible.
- Stagger working hours.
- Vary necessary travel to off peak times.
- Clean and disinfect surfaces around your home and workplace – including door handles, computer keyboards, toilets, and taps.
- Clean your mobile phone regularly.
- Avoid crowded locations – especially “choke-points”.
If you are currently under lockdown or home quarantine, try to keep to a routine, and take daily exercise to maintain your physical health.
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