TAIPEI, TAIWAN - FEBRUARY 03: A woman walks out of a store wearing a mask as Taiwan issues a new ... [+] order that each resident must use a NHI card to buy surgical masks and can only buy two per week in stores recognized by National Health Insurance on February 03, 2020 in Taipei, Taiwan.Taiwan faces supply issues of surgical mask amid the coronavirus crisis, and the government have issued an order that each resident must use a NHI card to buy surgical masks and can only buy two per week. With over 17,390 confirmed cases of Novel coronavirus (2019-nCoV) around the world, the virus has so far claimed 362 lives.There are 10 confirmed cases without any death case. (Photo by Gene Wang/Getty Images)

One things for sure about the Coronavirus which originated in Wuhan, China: nobody knows how bad it will be for human lives and the global economy. That is not stopping experts from trying to estimate that toll. Meanwhile the U.S. market seems to be bouncing back with the S&P 500 futures up 1.3% after rising on February 3.

The human toll of the virus is increasing. By February 3, the Coronavirus had infected 17,000 people and claimed 360 lives primarily in mainland China, according to the Wall Street Journal. By February 4, the total had risen to 20,438 confirmed cases and 420 deaths, according to the New York Times, which noted the good news that 632 people had recovered from the disease.

One expert Warwick McKibbin, a professor of economics at Australian National University estimates that the outbreak could reduce global economic growth by $160 billion four times the $40 billion economic impact of 2003s SARS epidemic, according to Bloomberg. This estimate is based on the quadrupling of Chinas share of the global economy since 2003 to 17% of global economic output.

On January 31 Goldman Sachs estimated that the virus to cut between 0.4 and 0.5 percentage points at an annual rate from U.S. economic output in the first quarter of 2020, with growth rebounding in the second quarter, leaving minimal impact on full-year growth, according to the Journal. Goldman expects the Coronavirus to reduce Chinas GDP growth from 5.9% to 5.5% while a longer outbreak could cut that growth rate to 5%.

In a February 1 interview, MIT professor Richard C. Larson said that hysteria-driven overreaction to the Coronavirus could be the biggest economic cost and that he sees too much uncertainty now to build models to predict that impact.

Global Reactions to Coronavirus

Fear of the Coronavirus and Chinas integration has caused repercussions around the world. As Bloomberg wrote, In New Zealand, a bath furnishings seller told a customer that the German-designed shower head he ordered is unavailable because the factory in Shanghai is closed. Out in California executives of REC Group organized a supply chain war room to plan around an anticipated trucking shortage and port logjam in China. In the Middle East, Saudi Arabia is rallying support for an emergency OPEC meeting on concern oil demand will falter.

On February 4, Macau, a gambling center, announced a two week shutdown, according to the Times. Other responses include:

MIT Expert On Uncertainty And Overreaction To Coronavirus

Larson who served as principal investigator on six years of pandemic research supported primarily by the Centers for Disease Control said that the Coronaviruss future trajectory is uncertain. However, he noted that this years U.S. influenza has taken a far greater human toll killing about 10,000 Americans so far and infecting over 19 million.

Moreover, Larson believes that over-reaction to the Coronavirus could exact a higher economic toll than the progression of the disease itself. My personal opinion is that the current hysteria in some domains (such as the selling out of face masks and terminating all flights to and from China), are over-responses, he said. He also thinks that a big benefit of this global response could be to reduce the incidence of this years seasonal flu.

His understanding of the physics of the Coronavirus its longevity in the air and on hard surfaces and ability of the human body to fight it do not now appear to him to differ significantly from the flu.

While there is no way to control these physics, individual and collective changes in behavior can limit Coronaviruss spread. Larson said this means social distancing namely minimizing close contact with infected or infectious individuals, avoiding closed rooms, and self-quarantining by those who think theyve been exposed and hygienic behavior changes e.g., [washing] hands several times a day with the hottest water tolerable and singing happy birthday to yourself a couple of times!

Larson thinks the number of infected people will follow a typical pattern over time. As he explained, Usually it is initially exponentially increasing, then continues to increase in a decreasing positive slope, hits a maximum (having zero slope), and then slowly drops to zero. [The underlying chemistry and biology] of Coronavirus suggests it would follow the same pattern [as the flu virus].

He thinks it is too early to develop a model that predicts the economic impact of the Coronavirus. one has to know when one knows enough to create a reliable model, reliable enough for policy informing. With only very noisy data [and] limited sample sizes, available now, [I think] it is too soon to try to create a systems model of the progression of this disease.

He suspects that the Chinese government is underreporting the number of deaths and those infected by the Coronavirus. The first is most likely deliberate but the second is a natural consequence of under-reporting or late reporting or no reporting of mild cases, he said.

Larson speculates that overreaction to the Coronavirus could impose its highest economic costs. But if our response is a pendulum swinging way too far towards unwarranted hysteria, the dominant economic costs could come from our over-response and not to the progression of the disease itself, he said.

But as Larson suggested, the societal response could have a big impact on the Coronaviruss progression and if the response now is an over-response that higher cost could turn out to be an investment that saves lives.

The rest is here:
MIT Expert: Overreaction Could Boost Coronaviruss Economic Impact - Forbes