toll of the covid-19 pandemic is incalculable. But let’s try anyway. A useful starting point is the semi-annualreport released this week by the World Bank. It calculates that the world economy probably shrank by 4.3% in 2020, a setback matched only by the Depression and the two world wars. But this dramatic figure still understates the cost. It measures the world economy’s fall from where it was before the pandemic, not from where it would have been had the virus not spread.
In 2021 the world economy should grow unusually briskly, the bank projects, helped by the roll-out of vaccines. But even if this expectation is met and no further calamities intrude, the level of output in 2021 will remain 5.3% below the bank’s pre-pandemic projections: a further shortfall of almost $4.7trn .
Put these two numbers together and the cost of covid-19 this year and last will amount to about $10.3trn in forgone output: goods and services the world could have produced had it remained unafflicted. That is, to put it mildly, a big number. Only America and China have an annualgreater than $10trn. And there are 153 economies that produced less than that between them in 2019. Converted into today’s money, $10.
Over $2trn of the cost will be suffered by the euro area. America will bear roughly $1.7trn. Among developing countries, India is set to endure the biggest loss in dollar terms: about $950bn . Although China’s economy is much bigger than that of India, it will suffer a smallerEven these colossal numbers understate the cost, however. The economic damage, after all, will not be confined to this year and last. The World Bank expects globalin 2022 to remain 4.4% below its pre-pandemic predictions.
There is another reason why these figures understate the economic tab. If the pandemic had never happened, worldwould not only have been higher, it would also have been different. Instead of masks, tests, vaccines, Zoom calls and parcel deliveries, the world economy would have produced other items. Because the pandemic is so damaging to health and society, it is worth diverting vast resources to fight it—these efforts are of enormous economic value.
VIVA T R U M P ✌️
When pessimism sounds better than optimism. Check out Morgan housel articles and you will figure it out .
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