1 00:00:01,440 --> 00:00:06,560 Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's stay one hundred 2 00:00:06,600 --> 00:00:10,720 Speaker 1: and seventy seven since coronavirus was declared a global pandemic. 3 00:00:11,760 --> 00:00:16,560 Speaker 1: Today's main story the pandemic has plunged the world into 4 00:00:16,560 --> 00:00:22,360 Speaker 1: a global recession. But what does a post COVID economy 5 00:00:22,360 --> 00:00:29,320 Speaker 1: look like? But first, here's what happened in virus News today. 6 00:00:33,000 --> 00:00:37,360 Speaker 1: Scientists at the University of Washington forecast that deaths from 7 00:00:37,440 --> 00:00:41,160 Speaker 1: COVID nineteen in the US are likely to more than 8 00:00:41,320 --> 00:00:45,800 Speaker 1: double by the end of the year. The researchers predicted 9 00:00:45,840 --> 00:00:48,720 Speaker 1: that the death toll would reach four hundred and ten 10 00:00:49,040 --> 00:00:56,040 Speaker 1: thousand by January one one, but they said that number 11 00:00:56,160 --> 00:01:01,840 Speaker 1: could be cut dramatically with certain precautions. If almost everyone 12 00:01:01,920 --> 00:01:05,560 Speaker 1: wears masks and governments with high death rates put social 13 00:01:05,600 --> 00:01:09,600 Speaker 1: distancing measures in place, more than one hundred thousand deaths 14 00:01:09,800 --> 00:01:13,679 Speaker 1: could be prevented in the US and seven hundred and 15 00:01:13,760 --> 00:01:19,640 Speaker 1: seventy thousand lives could be saved worldwide. Danish drug maker 16 00:01:19,840 --> 00:01:23,759 Speaker 1: Novo Nordisk is exploring whether a new class of medicines 17 00:01:23,959 --> 00:01:28,039 Speaker 1: that helps people lose weight and control diabetes also has 18 00:01:28,080 --> 00:01:34,120 Speaker 1: potential in fighting COVID nineteen. Research shows people afflicted by 19 00:01:34,200 --> 00:01:40,040 Speaker 1: obesity and diabetes often fare worse with the disease. Now, 20 00:01:40,319 --> 00:01:44,600 Speaker 1: new data shows g LP one, drugs, which help patients 21 00:01:44,640 --> 00:01:48,120 Speaker 1: keep blood sugar levels in check, could be a meaningful 22 00:01:48,200 --> 00:01:53,600 Speaker 1: therapy in helping people with diabetes battle COVID nineteen. According 23 00:01:53,640 --> 00:01:59,680 Speaker 1: to NOVO chief scientific officer Mad's Krogskard Thompson, he pointed 24 00:01:59,680 --> 00:02:03,480 Speaker 1: to it in the virus attacks cells that produced the 25 00:02:03,560 --> 00:02:10,320 Speaker 1: hormone insulin. Finally, the first peer reviewed data on Russia's 26 00:02:10,400 --> 00:02:17,000 Speaker 1: proposed COVID nineteen vaccine show it has promise. In early trials, 27 00:02:17,200 --> 00:02:21,240 Speaker 1: the drug induced an antibody response in all participants and 28 00:02:21,320 --> 00:02:26,360 Speaker 1: found no serious adverse effects. According to the first vetted 29 00:02:26,440 --> 00:02:32,160 Speaker 1: data on the controversial project, preliminary results from phase one 30 00:02:32,160 --> 00:02:35,959 Speaker 1: and two trials that were published Friday in the Lancet 31 00:02:36,040 --> 00:02:40,080 Speaker 1: Medical Journal showed the vaccine also produced a response in 32 00:02:40,200 --> 00:02:43,519 Speaker 1: T cells, a type of white blood cell that helps 33 00:02:43,560 --> 00:02:49,280 Speaker 1: the immune system destroy infection. Russian officials had previously made 34 00:02:49,440 --> 00:02:52,839 Speaker 1: broadly similar statements about the shot, but there had been 35 00:02:52,880 --> 00:03:02,240 Speaker 1: no review by outside experts. And now, for today's main story, 36 00:03:03,200 --> 00:03:06,960 Speaker 1: the global economy could lose up to twenty two trillion 37 00:03:07,040 --> 00:03:11,600 Speaker 1: dollars in twenty twenty alone due to COVID nineteen. That's 38 00:03:11,600 --> 00:03:17,240 Speaker 1: according to Australian economist Warwick McGibbon. He predicts that successive 39 00:03:17,280 --> 00:03:21,280 Speaker 1: waves of coronavirus infections will mean the world will continue 40 00:03:21,320 --> 00:03:26,040 Speaker 1: to count the cost of the pandemic for years. Bloomberg 41 00:03:26,120 --> 00:03:30,240 Speaker 1: Senior editor Jason Gale spoke with Professor McGibbon about his 42 00:03:30,360 --> 00:03:35,120 Speaker 1: dire forecasts. He explains that the pandemic will result in 43 00:03:35,320 --> 00:03:40,040 Speaker 1: lasting changes to the way we work, live and interact. 44 00:03:44,760 --> 00:03:47,680 Speaker 1: Warick McGibbon is a professor of public policy and the 45 00:03:47,720 --> 00:03:50,840 Speaker 1: director of the Center for Applied macro Economic Analysis at 46 00:03:50,880 --> 00:03:54,080 Speaker 1: the Australian National University in Canberra. It was to Warwick 47 00:03:54,160 --> 00:03:57,240 Speaker 1: who the World Health Organization turned to quantify the economic 48 00:03:57,320 --> 00:04:00,600 Speaker 1: cost of Sazzle Severe Acute Respiratory Center and when it 49 00:04:00,680 --> 00:04:03,760 Speaker 1: spread across the globe almost twenty years ago. Back then, 50 00:04:03,840 --> 00:04:06,280 Speaker 1: sickness and death were thought to be the biggest contributors 51 00:04:06,320 --> 00:04:09,440 Speaker 1: to a contagions economic cost because of their effect on 52 00:04:09,480 --> 00:04:12,800 Speaker 1: labor productivity. But Warrick and his colleagues found that the 53 00:04:12,840 --> 00:04:16,440 Speaker 1: behavior of people and businesses in response to pandemics are 54 00:04:16,560 --> 00:04:20,000 Speaker 1: bigger drivers. We found The conventional cost of STARS, which 55 00:04:20,040 --> 00:04:21,640 Speaker 1: was just how many people died and what was their 56 00:04:21,680 --> 00:04:24,120 Speaker 1: fort on income, was really quite small. But when you 57 00:04:24,160 --> 00:04:26,839 Speaker 1: took into account the change in people spending behavior and 58 00:04:26,880 --> 00:04:30,239 Speaker 1: the way capital was relocated around the world, we can't 59 00:04:30,240 --> 00:04:33,160 Speaker 1: be an estimate of about forty billion US dollars, which 60 00:04:33,200 --> 00:04:37,919 Speaker 1: is the official WHO estimate for the Stars outbreak. According 61 00:04:37,960 --> 00:04:41,360 Speaker 1: to Warwick's modeling, the COVID nineteen pandemic may cost more 62 00:04:41,400 --> 00:04:46,359 Speaker 1: than forty billion dollars a day. We estimate this outbreak 63 00:04:46,480 --> 00:04:48,920 Speaker 1: is going to cost tens of trillions to the world economy, 64 00:04:49,240 --> 00:04:52,680 Speaker 1: and it's actually not over even once his pandemic is through. 65 00:04:53,200 --> 00:04:55,760 Speaker 1: Work began looking at the coronavirus outbreak and what it 66 00:04:55,880 --> 00:04:59,120 Speaker 1: might cost back in January when it was just beginning 67 00:04:59,120 --> 00:05:02,560 Speaker 1: to spread into aw We wanted policy makers to understand 68 00:05:02,600 --> 00:05:05,360 Speaker 1: that if they didn't react to very quickly, that this 69 00:05:05,400 --> 00:05:08,800 Speaker 1: was going to be a very very dangerous and expensive disease. Potentially. 70 00:05:09,080 --> 00:05:12,080 Speaker 1: Ricks analysis has been updated to take into consideration the 71 00:05:12,080 --> 00:05:16,160 Speaker 1: actual spread since then. One of his models, the most pessimistic, 72 00:05:16,520 --> 00:05:20,240 Speaker 1: sees the accumulative cost of COVID nineteen topping thirty five 73 00:05:20,480 --> 00:05:25,320 Speaker 1: trillion dollars. I asked him what the biggest costs will 74 00:05:25,360 --> 00:05:28,599 Speaker 1: be with COVID nineteen number one. His international trade has collapsed, 75 00:05:29,000 --> 00:05:31,960 Speaker 1: and the movement of goods around the world has has collapsed. 76 00:05:32,520 --> 00:05:35,520 Speaker 1: The movement of people has collapsed. Very there's a lot 77 00:05:35,600 --> 00:05:39,440 Speaker 1: of human capital that's generated then distributed around the world 78 00:05:39,520 --> 00:05:42,159 Speaker 1: with people moving across different countries for different types of 79 00:05:42,240 --> 00:05:45,120 Speaker 1: jobs and that that's that's a big problem. For example, 80 00:05:45,120 --> 00:05:47,159 Speaker 1: in India, internally, we have a lot of people that 81 00:05:47,200 --> 00:05:49,680 Speaker 1: were working in the city's have lost their jobs, so 82 00:05:49,720 --> 00:05:52,159 Speaker 1: they've had to migrate back to the countryside and take 83 00:05:52,200 --> 00:05:54,839 Speaker 1: the disease with them. So this mobility of people and 84 00:05:54,920 --> 00:05:58,359 Speaker 1: goods is the biggest impact, he says. The second biggest 85 00:05:58,360 --> 00:06:02,520 Speaker 1: factor is the impact on confidence. People argue you shouldn't 86 00:06:02,560 --> 00:06:04,440 Speaker 1: have shutdowns because if you had no shutdowns, there's been 87 00:06:04,440 --> 00:06:07,240 Speaker 1: no economic loss. Well that's just not true. In our 88 00:06:07,400 --> 00:06:09,080 Speaker 1: study that we did, we looked at what happened to 89 00:06:09,080 --> 00:06:13,400 Speaker 1: electricity use in Australia. We had very fine data from 90 00:06:13,720 --> 00:06:16,320 Speaker 1: one of the electricity companies and we knew which which 91 00:06:16,440 --> 00:06:19,680 Speaker 1: groups of companies had been closed by mandate and which 92 00:06:19,760 --> 00:06:22,440 Speaker 1: were still operating, but their demand had shifted because of 93 00:06:22,480 --> 00:06:26,560 Speaker 1: people's own preferences, and overwhelmingly the change in economic outcomes 94 00:06:26,600 --> 00:06:29,640 Speaker 1: is caused by individuals changing their behavior, not because the 95 00:06:29,920 --> 00:06:33,080 Speaker 1: government mandated the shutdown. So the shutdowns are there because 96 00:06:33,120 --> 00:06:35,680 Speaker 1: there are a number of individuals that won't respond appropriately 97 00:06:36,320 --> 00:06:39,719 Speaker 1: to make the choice between do nothing and say the 98 00:06:39,720 --> 00:06:44,599 Speaker 1: economy is a false, false choice. Why it says the 99 00:06:44,600 --> 00:06:48,560 Speaker 1: loss of confidence is having impacts everywhere except in stock markets, 100 00:06:49,160 --> 00:06:52,400 Speaker 1: which in itself is an interesting problem, and that's I 101 00:06:52,440 --> 00:06:55,080 Speaker 1: think largely caused by central banks just flooding the world 102 00:06:55,080 --> 00:06:59,560 Speaker 1: with liquidity, and people are putting that liquidity into buying equities. 103 00:07:00,200 --> 00:07:02,680 Speaker 1: Plus some companies have done very well out of this. 104 00:07:03,080 --> 00:07:05,440 Speaker 1: In the meantime, he sees the current pandemic leading to 105 00:07:05,520 --> 00:07:08,520 Speaker 1: significant change. I think the shift to working from home 106 00:07:08,640 --> 00:07:11,520 Speaker 1: and the uptate of technology is the ever last. There's 107 00:07:11,520 --> 00:07:12,800 Speaker 1: going to be long lasting. There's going to be a 108 00:07:12,840 --> 00:07:15,240 Speaker 1: lot of industries that are going to be restructuring that 109 00:07:15,560 --> 00:07:18,200 Speaker 1: some industries that may cease to exist, especially if we 110 00:07:18,520 --> 00:07:21,760 Speaker 1: never get an effective vaccine. But the other structural shift 111 00:07:21,800 --> 00:07:25,400 Speaker 1: I think is they're just in time technology. They's just 112 00:07:25,480 --> 00:07:27,720 Speaker 1: in time processing that we developed with all of these 113 00:07:28,000 --> 00:07:31,400 Speaker 1: chains for production. That's going to change and I think 114 00:07:31,400 --> 00:07:33,080 Speaker 1: you're going to shift from just in time to just 115 00:07:33,200 --> 00:07:36,880 Speaker 1: in case. Unemployment has surged across the globe as nation 116 00:07:36,920 --> 00:07:40,200 Speaker 1: shutted large parts of their economies. Work estimates the world 117 00:07:40,200 --> 00:07:44,880 Speaker 1: economy has slump. Why tend to this is the biggest 118 00:07:44,960 --> 00:07:48,720 Speaker 1: shock since certainly bigger than the Great Depression for some countries. 119 00:07:49,160 --> 00:07:51,960 Speaker 1: With the structural shifts in the economy remain, a lot 120 00:07:51,960 --> 00:07:53,520 Speaker 1: of people aren't going to be able to use their 121 00:07:53,560 --> 00:07:56,040 Speaker 1: existing skills. You're gonna have to retrain a lot of 122 00:07:56,040 --> 00:07:58,320 Speaker 1: people to take up these new jobs. And we've had 123 00:07:58,320 --> 00:08:00,320 Speaker 1: a lot of automation, so even a lot of jobs 124 00:08:00,320 --> 00:08:04,760 Speaker 1: that were substituted away for either new techniques or machines 125 00:08:05,360 --> 00:08:07,440 Speaker 1: um and so those jobs won't come back. So you 126 00:08:07,480 --> 00:08:09,480 Speaker 1: could have a regular recovery, but it's probably not going 127 00:08:09,520 --> 00:08:12,880 Speaker 1: to have a job recovery. At the same time, says 128 00:08:12,920 --> 00:08:15,760 Speaker 1: that during the global financial crisis, the Group of Twenty 129 00:08:15,800 --> 00:08:18,720 Speaker 1: mobilized a very large fiscal response at the global level, 130 00:08:18,960 --> 00:08:22,080 Speaker 1: saving a lot of economic loss, but the Forum has 131 00:08:22,120 --> 00:08:25,280 Speaker 1: been much less active in responding to the current crisis. 132 00:08:25,960 --> 00:08:28,480 Speaker 1: There is no G twenty response at this point. The 133 00:08:28,560 --> 00:08:31,720 Speaker 1: leadership coming that came from the UK and came from 134 00:08:31,760 --> 00:08:33,800 Speaker 1: the US and came from Australia. It's just not there. 135 00:08:34,320 --> 00:08:39,160 Speaker 1: Suppose you actually coordinated a response so that countries like Brazil, Argentina, 136 00:08:39,559 --> 00:08:43,000 Speaker 1: Indonesia who need fiscal stimulus but can't because the financial 137 00:08:43,040 --> 00:08:45,320 Speaker 1: markets won't allow it. What if you had got them 138 00:08:45,360 --> 00:08:47,720 Speaker 1: the resources to do that and the whole world is 139 00:08:47,800 --> 00:08:51,200 Speaker 1: much better off? Wreck says a vaccine won't turn the 140 00:08:51,240 --> 00:08:55,680 Speaker 1: economic outlook around any time. Seen. I don't think you 141 00:08:55,679 --> 00:08:59,920 Speaker 1: can physically have a vaccine that's going to be adopted 142 00:09:00,080 --> 00:09:02,960 Speaker 1: or by six billion people over the next two years. 143 00:09:03,000 --> 00:09:05,880 Speaker 1: It's just practically impossible. So who's going to get it? 144 00:09:05,880 --> 00:09:07,880 Speaker 1: Where the elites will get it? Who's going to get it? Well, 145 00:09:07,920 --> 00:09:11,440 Speaker 1: the rich countries will get it. Um. So okay, if 146 00:09:11,440 --> 00:09:13,480 Speaker 1: there's a vaccine tomorrow and you can give it to 147 00:09:13,520 --> 00:09:18,080 Speaker 1: the wealthiest people in the country, why does that change 148 00:09:18,080 --> 00:09:21,080 Speaker 1: the economic outcomes? It doesn't. You've got to get it 149 00:09:21,120 --> 00:09:23,920 Speaker 1: into the into the population. You've got to get people 150 00:09:23,960 --> 00:09:27,160 Speaker 1: out there interacting again. You've got to get businesses moving again. 151 00:09:27,280 --> 00:09:29,920 Speaker 1: So you have to get a fair bit of quite 152 00:09:29,920 --> 00:09:32,600 Speaker 1: a lot of the population vaccinated before the economic costs 153 00:09:32,600 --> 00:09:34,680 Speaker 1: start to come down. You'll get you'll get a surge 154 00:09:34,679 --> 00:09:37,240 Speaker 1: in markets because people will say, oh, there's a vaccine, 155 00:09:37,240 --> 00:09:39,959 Speaker 1: and confidence will be restored. But it's hard to imagine 156 00:09:40,000 --> 00:09:44,079 Speaker 1: that the Dow can go much higher once a vaccine. 157 00:09:44,240 --> 00:09:47,839 Speaker 1: If a vaccine is forthcoming, it's already pumped up by 158 00:09:47,960 --> 00:09:51,320 Speaker 1: cheap money. As much as I enjoyed my chat with Warrick, 159 00:09:51,600 --> 00:09:54,680 Speaker 1: it didn't fill me with optimism. As Warrick says, we're 160 00:09:54,720 --> 00:09:57,760 Speaker 1: operating in a great deal of uncertainty, and that's why 161 00:09:57,760 --> 00:10:01,080 Speaker 1: the policy framework is extremely important. And that's why communication 162 00:10:01,160 --> 00:10:04,760 Speaker 1: is extremely important, because you can't predict anything to do 163 00:10:04,800 --> 00:10:07,480 Speaker 1: with this disease except that it's going to be unpredictable, 164 00:10:07,520 --> 00:10:11,840 Speaker 1: which is very helpful. Ah. No, we're all desperate to 165 00:10:11,880 --> 00:10:15,080 Speaker 1: know when we can safely return to our workplaces, when 166 00:10:15,080 --> 00:10:17,760 Speaker 1: our kids can return to the classroom, when we can 167 00:10:17,800 --> 00:10:21,440 Speaker 1: travel again. The reality is, for most of us, nothing 168 00:10:21,720 --> 00:10:24,720 Speaker 1: is certain, and if the pandemic is teaching us anything, 169 00:10:25,080 --> 00:10:41,600 Speaker 1: it's to embrace uncertainty or at least acknowledge it. That 170 00:10:41,960 --> 00:10:45,199 Speaker 1: was Jason Gale, and that's it for our show today. 171 00:10:45,240 --> 00:10:48,800 Speaker 1: For coverage of the outbreak from one bureaus around the world, 172 00:10:49,240 --> 00:10:54,120 Speaker 1: visit Bloomberg dot com. Slash coronavirus and if you like 173 00:10:54,160 --> 00:10:56,920 Speaker 1: the show, please leave us a review and a reading 174 00:10:57,200 --> 00:11:00,719 Speaker 1: on Apple Podcasts or Spotify. It's the best way to 175 00:11:00,760 --> 00:11:06,000 Speaker 1: help more listeners find our global reporting. The Prognosis Daily 176 00:11:06,120 --> 00:11:11,199 Speaker 1: edition is produced by Top for Foreheads Jordan Gaspoure, Magnus Hendrickson, 177 00:11:11,360 --> 00:11:15,840 Speaker 1: and me Laura Carlson. Today's main story was reported by 178 00:11:15,920 --> 00:11:21,160 Speaker 1: Jason Gale. Original music by Leo Sidrin. Our editors are 179 00:11:21,280 --> 00:11:26,000 Speaker 1: Rick Shine and Francesca Levi. Francesca Levi is Bloomberg's head 180 00:11:26,000 --> 00:11:28,280 Speaker 1: of podcasts. Thanks for listening.