The Covid-19 pandemic not only brings with it a global health crisis, but also an economic crisis, the likes of which the world has never seen. Businesses have closed down indefinitely, people have stopped spending money and central banks across the world are printing money in the hope that the unemployed will weather this unprecedented storm.
The Dow Jones has plummeted from its record heights of nearly 30,000 points in late February to below 20,000 points. This sort of crash has never been seen; not during the Great Depression of 1929 nor during the depths of the 2008 financial crisis. It has left investors and governments scrambling in order to minimise losses and wondering how low could the Dow go? The answer to this question is simple; nobody knows. Even during WW2, many businesses remained open.
It remains to be seen whether central banks can continue printing money in the hope of stimulating the economy, or if this will lead to inflation. One must beg the question, where is all this money coming from? In the words of Leo Varadkar, “the cost of this will be great.”
For now, staying indoors and social distancing is the consensus and right thing to do, but there will come a time, in weeks or in months, when many will ask, is the cure worse than the disease? When the economy falls, so do people. There are a plethora of very real consequences associated with recession; suicides surge, unemployment ravages working class communities and people’s quality of life dramatically falls. Many have argued that the aim shouldn’t be to suppress this virus,as that would be impossible. What we can do is increase the number of ICU beds and ventilators. Then, when an antibody test is developed, people who have had the virus can gradually go back to work.
In terms of the economy, the antibody test will be almost as important as the vaccine. It will provide a level of certainty to people, which will hopefully mitigate a number of the disastrous economic effects that the Covid-19 pandemic will certainly entail.
Patrick Doherty – Business Editor