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.

Amid the current need to continually focus on the COVID-19 crisis, it is understandably hard to address other important issues. But, on March 31st, Washington Governor Jay Inslee signed landmark facial recognition legislation that the state legislature passed on March 12, less than three weeks, but seemingly an era, ago. Nonetheless, it's worth taking a moment to reflect on the importance of this step. This legislation represents a significant breakthrough – the first time a state or nation has passed a new law devoted exclusively to putting guardrails in place for the use of facial recognition technology.

For more on Washington's privacy legislation, visit Microsoft On The Issues.

Over the past decade or so, the European Union has weathered the global financial crisis, a migrant crisis, and the rise of populist nationalism. Sure, it's taken its fair share of bumps and bruises along the way, but the idea of a largely borderless Europe united by common democratic values has survived more or less intact.

Then came the coronavirus. The global pandemic, in which Europe is now one of the two main epicentres, is a still-spiralling nightmare that could make those previous crises look benign by comparison. Here are a few different ways that COVID-19 is severely testing the 27-member bloc:

The economic crisis: Lockdowns intended to stop the virus' spread have brought economic activity to a screeching halt, and national governments are going to need to spend a lot of money to offset the impact. But some EU members can borrow those funds more easily than others. Huge debt loads and deficits in southern European countries like Italy and Spain, which have been hardest hit by the outbreak so far, make it costlier for them to borrow than more fiscally conservative Germany and other northern member states. In the aftermath of the global financial crisis, this imbalance nearly led the bloc's common currency, the Euro, to unravel.

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3.5 billion: There are now an estimated 3.5 billion people worldwide under some sort of coronavirus lockdown after residents in Moscow (12 million) and Nigeria's capital Lagos (21 million) were ordered to join the ranks of those quarantined at home.

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North Korea has zero coronavirus cases? North Korea claims to be one of few countries on earth with no coronavirus cases. But can we take the word of the notoriously opaque leadership at face value? Most long-term observers of Pyongyang dismiss as fanciful the notion that the North, which shares a border with China, its main trade partner, was able to avert the coronavirus pandemic sweeping the globe. Many point to Pyongyang's lack of testing capabilities as the real reason why it hasn't reported any COVID-19 cases. To be sure, Kim Jong-un, the North's totalitarian leader, imposed some of the strictest lockdown measures in the world, well before many other countries – closing the Chinese border and quarantining all diplomats. The state's ability to control its people and their movements would also make virus-containment efforts easier to manage. We might not know the truth for some time. But what is clear is that decades of seclusion and crippling economic sanctions have devastated North Korea's health system, raising concerns of its capacity to manage a widespread outbreak of disease.

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As the coronavirus continues to ravage the world, all eyes now turn to the place where it all started. For more than two months, the 11 million residents of Wuhan, the Chinese industrial hub where the novel coronavirus was first detected, have lived under near complete lockdown.

Now, as China reports a dwindling number of new cases, the city's people are slowly emerging back into the daylight. Some travel restrictions remain, but public transportation is largely functioning again, and increasing numbers of people are cautiously – with masks and gloves and digital "health codes" on their phones that permit them to move about – going back to work.

The rest of the world, where most hard-hit countries have imposed various forms of lockdown of their own, is now keenly watching what happens in Wuhan for a glimpse of what might lie in store for the rest of us.

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