The cost of fighting COVID-19 is far beyond anything imagined in sa国际传媒鈥檚 planning for the economic disaster that accompanies a pandemic.
There鈥檚 been lots of thinking over the years about the medical and health implications, although most of it didn鈥檛 conceive of what we鈥檙e going through today.
On the economic side, there isn鈥檛 much modelling of the effect a major public health emergency would have on the economy.
There鈥檚 one cautious document on file written 14 years ago, 鈥淧otential Impact of Pandemic Influenza on the sa国际传媒 Economy.鈥�
But it鈥檚 main recommendation: 鈥淐reate an epidemic economic response strategy,鈥� doesn鈥檛 appear to have produced anything.
In 2006, the sa国际传媒 government commissioned a detailed look at the potential impact an influenza pandemic could have.
It was put together after an outbreak of 鈥渂ird flu.鈥� But even making the grimmest, most pessimistic assumptions and adopting worst-case scenarios, they underestimated what鈥檚 happening today by a country mile.
And the document only concentrated on the cost and damage associated with the influenza itself, not the drastic prevention and mitigation measures of today.
Reading the document reinforces the constant refrain: 鈥淲e鈥檝e never imagined anything like this.鈥�
The planning document, written by KPMG for the government鈥檚 Economic Development Ministry, noted influenza pandemics come in waves that last 15 weeks. It presumed infection rates between 15% and 35%.
A drop in the gross provincial product of about 2% was predicted after a single wave of the pandemic. That estimate jumped to 4.4% if there were multiple waves..
That鈥檚 barely half or even a third the current estimate of the damage caused by the coronovirus and the massive curtailment of activity that鈥檚 been mandated to fight it.
鈥淭he most immediate cause is likely to be driven by a decline in consumer demand arising from uncoordinated efforts of people trying to avoid infection,鈥� said the report.
But the decline now underway dwarfs that, because it鈥檚 driven by a coordinated effort by government to curtail entire sectors of the economy.
鈥淪ectors with a high degree of interpersonal contact (the entire service sector) might be most vulnerable to a demand shock.鈥�
They got that right.
Travel restrictions would pile up more losses. All sectors would experience shocks due to increased absenteeism. But that was assumed to stem from 15% to 35% of the workforce taking a few days off sick. What鈥檚 happening today is vast numbers of healthy people losing employment for an unknown period of time.
The report also assumed that a vaccine would be made available in a few months following the initial outbreak.
Since the current pandemic is a novel coronovirus, rather than influenza, most estimates are that a vaccine will take much longer than that. Which means any subsequent waves could hit harder than they would if a vaccine was available.
The report was submitted with the recommendation that government create a provincial epidemic economic response strategy.
There鈥檚 no public record such a document was created, although some observations are folded into the Health Ministry鈥檚 pandemic response plan.
The authors of the report said they followed methodologies used by the World Bank and other global entities. That suggests nobody had any concept of the scale of the damage.
Regardless of any plan, the theme of the current international response is the same as the response to the banking collapse 鈥� a massive public spending program by most governments to mitigate losses and continue employment where possible.
The report also suggested an ongoing dialogue between government and various sectors of the economy about the potential for a pandemic and on guidelines for how to prevent and control them.
Fourteen years after it was submitted, that鈥檚 likely going to come to pass in a big way. We鈥檒l be talking about this for the rest of our lives.
