Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's stay one hundred
Speaker 1: and seventy seven since coronavirus was declared a global pandemic.
Speaker 1: Today's main story the pandemic has plunged the world into
Speaker 1: a global recession. But what does a post COVID economy
Speaker 1: look like? But first, here's what happened in virus News today.
Speaker 1: Scientists at the University of Washington forecast that deaths from
Speaker 1: COVID nineteen in the US are likely to more than
Speaker 1: double by the end of the year. The researchers predicted
Speaker 1: that the death toll would reach four hundred and ten
Speaker 1: thousand by January one one, but they said that number
Speaker 1: could be cut dramatically with certain precautions. If almost everyone
Speaker 1: wears masks and governments with high death rates put social
Speaker 1: distancing measures in place, more than one hundred thousand deaths
Speaker 1: could be prevented in the US and seven hundred and
Speaker 1: seventy thousand lives could be saved worldwide. Danish drug maker
Speaker 1: Novo Nordisk is exploring whether a new class of medicines
Speaker 1: that helps people lose weight and control diabetes also has
Speaker 1: potential in fighting COVID nineteen. Research shows people afflicted by
Speaker 1: obesity and diabetes often fare worse with the disease. Now,
Speaker 1: new data shows g LP one, drugs, which help patients
Speaker 1: keep blood sugar levels in check, could be a meaningful
Speaker 1: therapy in helping people with diabetes battle COVID nineteen. According
Speaker 1: to NOVO chief scientific officer Mad's Krogskard Thompson, he pointed
Speaker 1: to it in the virus attacks cells that produced the
Speaker 1: hormone insulin. Finally, the first peer reviewed data on Russia's
Speaker 1: proposed COVID nineteen vaccine show it has promise. In early trials,
Speaker 1: the drug induced an antibody response in all participants and
Speaker 1: found no serious adverse effects. According to the first vetted
Speaker 1: data on the controversial project, preliminary results from phase one
Speaker 1: and two trials that were published Friday in the Lancet
Speaker 1: Medical Journal showed the vaccine also produced a response in
Speaker 1: T cells, a type of white blood cell that helps
Speaker 1: the immune system destroy infection. Russian officials had previously made
Speaker 1: broadly similar statements about the shot, but there had been
Speaker 1: no review by outside experts. And now, for today's main story,
Speaker 1: the global economy could lose up to twenty two trillion
Speaker 1: dollars in twenty twenty alone due to COVID nineteen. That's
Speaker 1: according to Australian economist Warwick McGibbon. He predicts that successive
Speaker 1: waves of coronavirus infections will mean the world will continue
Speaker 1: to count the cost of the pandemic for years. Bloomberg
Speaker 1: Senior editor Jason Gale spoke with Professor McGibbon about his
Speaker 1: dire forecasts. He explains that the pandemic will result in
Speaker 1: lasting changes to the way we work, live and interact.
Speaker 1: Warick McGibbon is a professor of public policy and the
Speaker 1: director of the Center for Applied macro Economic Analysis at
Speaker 1: the Australian National University in Canberra. It was to Warwick
Speaker 1: who the World Health Organization turned to quantify the economic
Speaker 1: cost of Sazzle Severe Acute Respiratory Center and when it
Speaker 1: spread across the globe almost twenty years ago. Back then,
Speaker 1: sickness and death were thought to be the biggest contributors
Speaker 1: to a contagions economic cost because of their effect on
Speaker 1: labor productivity. But Warrick and his colleagues found that the
Speaker 1: behavior of people and businesses in response to pandemics are
Speaker 1: bigger drivers. We found The conventional cost of STARS, which
Speaker 1: was just how many people died and what was their
Speaker 1: fort on income, was really quite small. But when you
Speaker 1: took into account the change in people spending behavior and
Speaker 1: the way capital was relocated around the world, we can't
Speaker 1: be an estimate of about forty billion US dollars, which
Speaker 1: is the official WHO estimate for the Stars outbreak. According
Speaker 1: to Warwick's modeling, the COVID nineteen pandemic may cost more
Speaker 1: than forty billion dollars a day. We estimate this outbreak
Speaker 1: is going to cost tens of trillions to the world economy,
Speaker 1: and it's actually not over even once his pandemic is through.
Speaker 1: Work began looking at the coronavirus outbreak and what it
Speaker 1: might cost back in January when it was just beginning
Speaker 1: to spread into aw We wanted policy makers to understand
Speaker 1: that if they didn't react to very quickly, that this
Speaker 1: was going to be a very very dangerous and expensive disease. Potentially.
Speaker 1: Ricks analysis has been updated to take into consideration the
Speaker 1: actual spread since then. One of his models, the most pessimistic,
Speaker 1: sees the accumulative cost of COVID nineteen topping thirty five
Speaker 1: trillion dollars. I asked him what the biggest costs will
Speaker 1: be with COVID nineteen number one. His international trade has collapsed,
Speaker 1: and the movement of goods around the world has has collapsed.
Speaker 1: The movement of people has collapsed. Very there's a lot
Speaker 1: of human capital that's generated then distributed around the world
Speaker 1: with people moving across different countries for different types of
Speaker 1: jobs and that that's that's a big problem. For example,
Speaker 1: in India, internally, we have a lot of people that
Speaker 1: were working in the city's have lost their jobs, so
Speaker 1: they've had to migrate back to the countryside and take
Speaker 1: the disease with them. So this mobility of people and
Speaker 1: goods is the biggest impact, he says. The second biggest
Speaker 1: factor is the impact on confidence. People argue you shouldn't
Speaker 1: have shutdowns because if you had no shutdowns, there's been
Speaker 1: no economic loss. Well that's just not true. In our
Speaker 1: study that we did, we looked at what happened to
Speaker 1: electricity use in Australia. We had very fine data from
Speaker 1: one of the electricity companies and we knew which which
Speaker 1: groups of companies had been closed by mandate and which
Speaker 1: were still operating, but their demand had shifted because of
Speaker 1: people's own preferences, and overwhelmingly the change in economic outcomes
Speaker 1: is caused by individuals changing their behavior, not because the
Speaker 1: government mandated the shutdown. So the shutdowns are there because
Speaker 1: there are a number of individuals that won't respond appropriately
Speaker 1: to make the choice between do nothing and say the
Speaker 1: economy is a false, false choice. Why it says the
Speaker 1: loss of confidence is having impacts everywhere except in stock markets,
Speaker 1: which in itself is an interesting problem, and that's I
Speaker 1: think largely caused by central banks just flooding the world
Speaker 1: with liquidity, and people are putting that liquidity into buying equities.
Speaker 1: Plus some companies have done very well out of this.
Speaker 1: In the meantime, he sees the current pandemic leading to
Speaker 1: significant change. I think the shift to working from home
Speaker 1: and the uptate of technology is the ever last. There's
Speaker 1: going to be long lasting. There's going to be a
Speaker 1: lot of industries that are going to be restructuring that
Speaker 1: some industries that may cease to exist, especially if we
Speaker 1: never get an effective vaccine. But the other structural shift
Speaker 1: I think is they're just in time technology. They's just
Speaker 1: in time processing that we developed with all of these
Speaker 1: chains for production. That's going to change and I think
Speaker 1: you're going to shift from just in time to just
Speaker 1: in case. Unemployment has surged across the globe as nation
Speaker 1: shutted large parts of their economies. Work estimates the world
Speaker 1: economy has slump. Why tend to this is the biggest
Speaker 1: shock since certainly bigger than the Great Depression for some countries.
Speaker 1: With the structural shifts in the economy remain, a lot
Speaker 1: of people aren't going to be able to use their
Speaker 1: existing skills. You're gonna have to retrain a lot of
Speaker 1: people to take up these new jobs. And we've had
Speaker 1: a lot of automation, so even a lot of jobs
Speaker 1: that were substituted away for either new techniques or machines
Speaker 1: um and so those jobs won't come back. So you
Speaker 1: could have a regular recovery, but it's probably not going
Speaker 1: to have a job recovery. At the same time, says
Speaker 1: that during the global financial crisis, the Group of Twenty
Speaker 1: mobilized a very large fiscal response at the global level,
Speaker 1: saving a lot of economic loss, but the Forum has
Speaker 1: been much less active in responding to the current crisis.
Speaker 1: There is no G twenty response at this point. The
Speaker 1: leadership coming that came from the UK and came from
Speaker 1: the US and came from Australia. It's just not there.
Speaker 1: Suppose you actually coordinated a response so that countries like Brazil, Argentina,
Speaker 1: Indonesia who need fiscal stimulus but can't because the financial
Speaker 1: markets won't allow it. What if you had got them
Speaker 1: the resources to do that and the whole world is
Speaker 1: much better off? Wreck says a vaccine won't turn the
Speaker 1: economic outlook around any time. Seen. I don't think you
Speaker 1: can physically have a vaccine that's going to be adopted
Speaker 1: or by six billion people over the next two years.
Speaker 1: It's just practically impossible. So who's going to get it?
Speaker 1: Where the elites will get it? Who's going to get it? Well,
Speaker 1: the rich countries will get it. Um. So okay, if
Speaker 1: there's a vaccine tomorrow and you can give it to
Speaker 1: the wealthiest people in the country, why does that change
Speaker 1: the economic outcomes? It doesn't. You've got to get it
Speaker 1: into the into the population. You've got to get people
Speaker 1: out there interacting again. You've got to get businesses moving again.
Speaker 1: So you have to get a fair bit of quite
Speaker 1: a lot of the population vaccinated before the economic costs
Speaker 1: start to come down. You'll get you'll get a surge
Speaker 1: in markets because people will say, oh, there's a vaccine,
Speaker 1: and confidence will be restored. But it's hard to imagine
Speaker 1: that the Dow can go much higher once a vaccine.
Speaker 1: If a vaccine is forthcoming, it's already pumped up by
Speaker 1: cheap money. As much as I enjoyed my chat with Warrick,
Speaker 1: it didn't fill me with optimism. As Warrick says, we're
Speaker 1: operating in a great deal of uncertainty, and that's why
Speaker 1: the policy framework is extremely important. And that's why communication
Speaker 1: is extremely important, because you can't predict anything to do
Speaker 1: with this disease except that it's going to be unpredictable,
Speaker 1: which is very helpful. Ah. No, we're all desperate to
Speaker 1: know when we can safely return to our workplaces, when
Speaker 1: our kids can return to the classroom, when we can
Speaker 1: travel again. The reality is, for most of us, nothing
Speaker 1: is certain, and if the pandemic is teaching us anything,
Speaker 1: it's to embrace uncertainty or at least acknowledge it. That
Speaker 1: was Jason Gale, and that's it for our show today.
Speaker 1: For coverage of the outbreak from one bureaus around the world,
Speaker 1: visit Bloomberg dot com. Slash coronavirus and if you like
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Speaker 1: help more listeners find our global reporting. The Prognosis Daily
Speaker 1: edition is produced by Top for Foreheads Jordan Gaspoure, Magnus Hendrickson,
Speaker 1: and me Laura Carlson. Today's main story was reported by
Speaker 1: Jason Gale. Original music by Leo Sidrin. Our editors are
Speaker 1: Rick Shine and Francesca Levi. Francesca Levi is Bloomberg's head
Speaker 1: of podcasts. Thanks for listening.