Health preparedness and trade affect COVID-19 exposure

Outlook

There are 80,152 cases of the COVID-19 outbreak in China and more than 12,000 elsewhere. Travel restrictions, business shutdowns and quarantines are mounting.

In October 2019, experts constructed a global health security index for 195 countries to assess how prepared countries are for an infectious disease outbreak. Italy and Iran, two countries that have suffered more than 50 deaths from the virus, scored relatively low on the index, as did Japan, one of the first countries that the virus spread to.

Supply chains will be slower than many domestic sectors to recover because they are more likely to encounter bottlenecks as different countries remove travel and business restrictions at different rates. Countries reliant on trade, including South Korea and Germany, will be vulnerable to disruption long after the virus passes.

Impacts

• COVID-19 is a supply shock; stimulus will cushion business activity but spending and rate cuts will be slow to aid complex supply chains.
• Global cooperation in areas such as data sharing will be key to preparations, but fear and weak GDP growth may prompt more nationalism.
• In China, fiscal and monetary stimulus will mitigate the impact of the virus on growth and jobs, reducing the risk of political unrest.