Economic Impact of COVID-19 Will Be Far Worse than SARS
Gordon WooFebruary 24, 2020
Imagine being seated for eleven hours on a plane next to a passenger wearing an anti-viral face mask, and with a hand sanitizer clipped to his back-pack, which he dipped into for cough relief lozenges. This was my stressful experience last week; and it could be a common anxiety in the months ahead. IATA has estimated a revenue loss of about USD $30 billion this year, most of which would be in the Asia-Pacific region. But this was assuming that Covid-19 would play out like SARS in 2003, which caused a sharp decline for six months, followed by a quick rebound. Many business sectors other than aviation are likewise hoping for recovery after the summer. The fate of the Tokyo Olympics depends on recovery by July.
SARS was a very severe disease. Most patients developed pneumonia, and about 10% died. According to China CDC, about 5% of Covid-19 patients have critical diseases including respiratory failure, septic shock and multiorgan failure. In about 14% of cases, the virus causes severe diseases including pneumonia and shortness of breath. But about 80% of patients have a mild form of disease. Reassuring as this may sound, the mildness of most cases makes Covid-19 a far greater global menace than SARS. Those infected with SARS were not infectious during the incubation period. This greatly facilitated the task of tracking infected contacts of SARS cases; surveillance could focus on those contacts who developed symptoms.
Since January, intensive efforts outside mainland China at tracing the contacts of Covid-19 cases has controlled the growth of transmission in countries with a high standard of healthcare. There have been very few documented examples of sustained transmission from one person to another, and then another, and another. In southern Germany, a visitor from Wuhan infected an auto worker colleague, who then infected his child. But there has been no further onward transmission.
But for those who might have hoped that diligent contact tracing would be effective for Covid-19, a recently published Chinese medical study is alarming and discouraging. A 20 year-old woman from Wuhan, who was asymptomatic, travelled 400 miles on January 10 to visit her relatives in Anyang, which is outside Hubei province. Five of her relatives became ill with Covid-19. From tests done in late January, it appears her Covid-19 incubation time may have been even longer than 14 days.
Asymptomatic transmission explains the emergence of super-spreaders, who may unwittingly infect a large number of others. One of the first publicized examples, Steve Walsh, spread the infection he acquired in Singapore to eleven others in France and England. Given that cold symptoms are not uncommon in winter, a person with mild symptoms of Covid-19 can also be a super-spreader. In South Korea, a 61 year-old woman, with only mild symptoms of a cold, seems to have infected as many as 37 others in her church, which is now locked down. Religious gatherings of all kinds pose a risk of mass contagion. The incidence of Covid-19 in Iran started with pilgrims in the holy city of Qom. The contagion in Iran is now spreading through the Middle East much more than MERS, and an infected visitor from Iran has arrived in Canada.
Compared with either MERS or SARS, Covid-19 has viral characteristics which might have been malevolently designed to maximize the global economic impact: mild and asymptomatic transmission coupled with a case fatality rate which is significantly higher than seasonal flu. With a rapid proliferation of cases in Italy and Iran, as well as in South Korea and Japan, attempts to contain the spread of Covid-19 will come at a very high global economic cost of business disruption and supply chain dislocation for months to come.
 Bai Y. et al. (2020) Presumed asymptomatic carrier transmission of Covid-19. JAMA, Feb.21
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Gordon is a catastrophe-risk expert, with 30 years’ experience in catastrophe science, covering both natural and man-made hazards. Gordon is the chief architect of the RMS terrorism risk model, which he started work on a year after joining RMS in December 2000. For his thought leadership in terrorism risk modeling, he was named by Treasury & Risk magazine as one of the 100 most influential people in finance in 2004. He has since lectured on terrorism at the NATO Center of Excellence for the Defense against Terrorism, and testified before the U.S. Congress on terrorism-risk modeling.
As an acknowledged, international expert on catastrophes, Gordon is the author of two acclaimed books: “The Mathematics of Natural Catastrophes” (1999) and “Calculating Catastrophe” (2011). Dr. Woo graduated as the best mathematician of his year at Cambridge University and he completed his doctorate at MIT as a Kennedy Scholar and was a member of the Harvard Society of Fellows. He also has an Master of Science in computer science from Cambridge University.