A global problem requiring a global solution

Pedestrians wearing protective masks ride an escalator near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease (COVID-19), at Lujiazui financial district in Shanghai, China, 17 March 2020 (Photo: Reuters/Aly Song).

Authors: John WH Denton, ICC and Peter Drysdale, ANU

The rapidly escalating coronavirus pandemic is, first and foremost, a public health emergency. But as the virus spreads and governments take dramatic actions to curb the disease, it is also rapidly causing a global economic crisis. A prolonged outbreak — with reduced demand, disturbed supply chains and increasing uncertainty — could lead to widespread job losses and businesses closing down and cause other second-order economic effects. The pandemic has undoubtedly become the greatest health and economic crisis in modern times.

The economic impact of the disease will importantly depend on how successfully societies can collectively contain transmission by drastically pruning contact networks. Absent swift and effective action, the number of deaths and infections will grow dramatically, health systems will become overwhelmed, businesses will struggle to function and the global economy will suffer major consequences. Given the tight correlation between economic performance and health (life expectancy), the more the economy suffers, the worse the long-term health impacts will be.

While governments are taking increasingly drastic domestic measures, they must also not neglect the international dimension. If the rapid spread of coronavirus makes one thing clear, it is that what happens abroad can have major impacts at home. Australia’s economic fortunes, for example, are not only contingent on how the virus spreads locally but also on how our major trading partners and the global economy fare. And in our hyperconnected world this is true for every country: all have a major stake in effective health and economic measures taken in other countries and cooperation that makes that possible.

In this context, the leaders of G20 countries should urgently agree on a comprehensive global action plan to address the COVID-19 outbreak. While the G7 is convening an emergency video conference meeting to discuss a coordinated response, the G20 …continue reading