How much a major global pandemic could wipe from South Africa’s economy

As the world waits for the outcome of the World Health Organisation’s (WHO) urgent meeting on the Wuhan coronavirus outbreak, the virus has spread to all 31 Chinese provinces, infecting 7,800 people and killing 170.

The WHO meeting will decide whether to classify the outbreak as a global health emergency, which will lead to greater coordination in fighting the virus on top of measures already in place by countries with the greatest exposure to it.

As many would have already seen in the marketplace, an outbreak on the level of the Wuhan coronavirus has wide-reaching implications for global markets.

The spread of the virus has sunk sentiment around emerging markets, causing investors to avoid risk – something which is factored into the price of the rand, among South Africa’s many local issues.

Aside from sentiment issues tied to markets affected by outbreaks of viruses and other diseases, data shows that there is a massive direct cost associated with outbreaks, not limited to the loss of life and productivity in any country where pandemics spread.

In 2019, the World Health Organisation (WHO) published a report – A World At Risk – based on the findings of its Global Preparedness Monitoring Board, which assessed the potential economic cost of a global pandemic.

Epidemics and pandemics devastate economies, the WHO said, noting that outbreaks in the last 20 years alone have cost the global economy upwards of $140 billion.

“Estimated costs of past events include: a loss of over $40 billion in productivity from the 2003 SARS epidemic; $53 billion loss from the economic and social impact of the 2014-2016 West Africa Ebola outbreak; and the $45 billion to $55 billion cost of the 2009 H1N1 influenza pandemic.”

Citing World Bank data, there are estimates that a global influenza pandemic akin to the scale and virulence of the one in 1918 would cost the modern economy $3 trillion, or up to 4.8% of gross domestic product.

The cost would be 2.2% of GDP for even a moderately virulent influenza pandemic, it said.

“The 1918 global influenza pandemic sickened one-third of the world population and killed as many as 50 million people – 2.8% of the total population.

“If a similar contagion occurred today with a population four times larger and travel times anywhere in the world less than 36 hours, 50-80 million people could perish.

“In addition to tragic levels of mortality, such a pandemic could cause panic, destabilise national security and seriously impact the global economy and trade,” it said.

Models in its 2019 report predict the annual cost of a global influenza pandemic would mean that South Asia’s GDP would drop by 2% (US$ 53 billion), and sub-Saharan Africa’s GDP by 1.7% (US$ 28 billion) – the latter equivalent to erasing a full year’s economic growth.

The WHO generated a map of how different countries would be impacted by a pandemic, expressed as a percentage of GPD.

For South Africa, the impact would be around 1% of GDP, which is around R55 billion at 2018 levels.

“Epidemics and pandemics disrupt trade and tourism, both of which are major global economic drivers and have provided a huge boost to African economies in recent years.

“The world has become closely interconnected in terms of value chains and population movement, and not only for rich countries,” it said.

We are ready

Minister of Health, Dr Zweli Mkhize on Wednesday (29 January) said that South Africa is on high alert for any traces of the Wuhan coronavirus, assuring that the country and its hospitals are prepared in the event that the virus reaches our borders.

Mkhize said that there are no reported or suspected cases of the virus in South Africa. There is active screening at the main ports in the country, and that officials have been adequately briefed on the matter.

The National Institute for Communicable Diseases (NICD) has also set up a dedicated team to run a 24/7 operation centre, which would activate an ‘alert mode’ if a case were to be detected.

Should a case be identified in South Africa, the individual(s) will be treated and quarantined, the minister said, with the National Health Laboratory Services offering 24-hour laboratory services to detect the virus, should there be suspicion.

Additionally, three major public hospitals – Charlotte Maxeke Hospital, Steve Biko Hospital and Tembisa Hospital – have been prepared to receive coronavirus cases should they occur.

Read: South African hospitals prepared for Wuhan coronavirus cases

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How much a major global pandemic could wipe from South Africa’s economy