The economic impact of coronavirus

Differences in strong unified national response, vs not: In Japan, everyone listened to the government. If they say wear a mask, everyone wears a mask. If they say engage in social distancing, everyone engages in social distancing. In South Korea, too - enables effective response.

In the US or Italy, there's much more individualism, irrespective of liking government. In Italy, mayors are pleading and shouting obscenities at citizens because they're not listening. Authority doesn't matter. In France, too. Contrast in Germany, strong support for the German government; in Western countries, one of the best response functions we've seen.


A reason you need consistent shutdown early: avoid overwhelming the health care system. If people can't get needed intensive care, fatality rates around coronavirus go up 5 - 10 times. There are knock on implications of a health care system not functioning: cross infection. People with chronic and severe conditions unrelated to coronavirus unable access critical medical care. That has knock on effects on the economy. You need to surge on available tests and ability to test, before discussing when to open up the economy.

Good news, this is a top priority in the developed world; surging on test capabilities, masks, ventilators is moving fast. US companies like Roche making hundreds of thousands of test kits per week, will get us to a place that medical systems will not. We'll be in a position not to be overwhelmed, probably within a month in many localities. There's danger that systems get overwhelmed before then - possibility in New York and other municipalities in the next 2 - 4 weeks. That's the biggest danger zone for the US. Parts of Europe, e.g., Spain. Possibly Paris.

In emerging markets, bigger problems: bad, late governance. In Mexico, in Brazil, leaders refuse to accept reality, providing fake news to their people. Not like Trump exaggerating when a cure might come or suggesting medicines could help to respond, that lead to a run on those medicines. Even with Trump's press conferences, which have replaced his rallies, you're getting real news from Pence, the surgeon general, the NIH, Tony Fauci. In the US, general information around the crisis is not great, but it's not godawful. In Mexico, in Brazil, in certain emerging markets, people are getting fake news. That it's not really a danger. It's not really a crisis. You can't get it. Don't worry. Act normally. Disaster for countries that can least afford a failed response.

Lack of coordination globally makes it harder to address crisis. If you can shut down borders effectively, doesn't matter as much. The economic hit is much greater. Restarting supply chain in China. In Malaysia, supply chain is shut down for a minimum of two weeks - going to be longer. Malaysia has a lot of components of electronic goods. Supply chain across Asia, rolling hits. True in Latin America. No global response, nor an equal global rollout of this crisis.

It takes time to restart the economy. Laid off workers won't be immediately available. Restaurants needs to hire, integrate. That's the case with many different components of our interconnected economy. Supply chain & labor disruptions, people that are ill, all make it harder to get the economy going.

Second quarter will be the worst quarter we will have experienced in our lifetimes. Third quarter will be bad. That implies that we're in a heavy recession right now. Potential for further outbreaks forcing a 2nd round of economic closures is significant. That would be the worst economic and market outcome for this crisis. Despite the political pressure to get markets open and get the economy open again - if you have to shut down the economy again and reestablish quarantine, confidence will be shot.

People aren't suddenly going to feel comfortable going to restaurants, malls. It's going to take time to get back up to speed. Even with strong stimulus, 2 trillion dollars in the US (could be bigger than that). Congress goes away, a lot of them already have tested positive for coronavirus or are under self-quarantine. Getting them back together to negotiate a new bill is probably a minimum of 4 weeks away. If we get major market crashes in the interim, don't look to Congress for help. That is an issue.

In Italy, stacks of plastic boxes in supermarkets and stores are not garbage - they are collected and reused, thanks to a consortium that specializes in recycling them for food storage. How do these "circular" plastic boxes help reduce energy consumption and carbon dioxide emissions?

Learn more in this episode of Eni's Energy SUPERFACTS series.

Over the past few years, we've seen three major emerging powers take bold action to right what they say are historical wrongs.

First came Crimea. When the Kremlin decided in 2014 that Western powers were working against Russian interests in Ukraine, President Vladimir Putin ordered Russian troops to seize the Crimean Peninsula, which was then part of Ukraine. Moscow claimed that Crimea and its ethnic Russian majority had been part of the Russian Empire for centuries until a shameful deal in 1954 made Crimea part of the Ukrainian Soviet Republic. Americans and Europeans imposed sanctions on Russia. But Ukraine is not part of NATO or the EU, and no further action was taken.

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British economist Jim O'Neill says the global economy can bounce back right to where it was before, in a V-shaped recovery. But his argument is based on a lot of "ifs," plus comparisons to the 2008 recession and conditions in China and South Korea that may not truly apply. Ian Bremmer and Eurasia Group's Robert Kahn take issue with O'Neill's op-ed, on this edition of The Red Pen.

Today, we're taking our Red Pen to an article titled "A V-Shaped Recovery Could Still Happen." I'm not buying it. It's published recently by Project Syndicate, authored by British economist named Jim O'Neill. Jim O'Neill is very well known. He was chairman of Goldman Sachs Asset Management. He's the guy that coined the acronym BRICS, Brazil, Russia, India, China. So, no slouch. But as you know, we don't agree with everything out there. And this is the case. Brought to you by the letter V. We're taking sharp issue with the idea that recovery from all the economic devastation created by the coronavirus pandemic is going to happen quickly. That after the sharp drop that the world has experienced, everything bounces back to where it was before. That's the V. Economists around the world are debating how quickly recovery will happen to be sure. But we're not buying the V. Here's why. W-H-Y.

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The United States and the European Union have comparable population sizes, but their COVID-19 death toll trajectories have recently become very different. Since the beginning of July, the average number of both new fatalities and new deaths per 1 million people is rapidly increasing in the US while it remains mostly flat in the EU. We compare this to the average number of new cases each seven days in both regions, where the US trend continues upward but is not surging like the death toll. EU countries' robust public health systems and citizens' willingness to wear masks and maintain social distance could explain the disparity.

"Neither America first, which is ultimately America alone, nor America the world's policeman," Sen. Chris Coons told Ian Bremmer in describing VP Joe Biden's approach to foreign policy should he win the presidential election in November. In the latest episode of GZERO World with Ian Bremmer, Sen. Coons provides details of how U.S. relationships with foreign governments and multilateral alliances could change in a Biden presidency. He also defended President Obama's track record, saying "I think it is a mischaracterization of the Obama-Biden foreign policy for President Trump to say that we were picking up the tab and fighting the world's wars and that we were disrespected." Coons stated that Biden would work to restore U.S. involvement in alliances like NATO, and shore up global support to pressure China on labor and environmental standards. The exchange is part of a broad conversation with the Senator about COVID response and economic relief, Russian interference in elections, and the 2020 presidential race. The episode begins airing nationally in the U.S. on Friday, July 10. Check local listings.