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October 12, 2020

The COVID-19 Pandemic and the $16 Trillion Virus

Author Affiliations
  • 1Department of Economics, Harvard University, Cambridge, Massachusetts
  • 2Harvard Kennedy School, Cambridge, Massachusetts
JAMA. 2020;324(15):1495-1496. doi:10.1001/jama.2020.19759
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The SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) pandemic is the greatest threat to prosperity and well-being the US has encountered since the Great Depression. This Viewpoint aggregates mortality, morbidity, mental health conditions, and direct economic losses to estimate the total cost of the pandemic in the US on the optimistic assumption that it will be substantially contained by the fall of 2021. These costs far exceed those associated with conventional recessions and the Iraq War, and are similar to those associated with global climate change. However, increased investment in testing and contact tracing could have economic benefits that are at least 30 times greater than the estimated costs of the investment in these approaches.

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    1 Comment for this article
    World Economic Growth Dependent on Vaccine Development for COVID-19
    Takuma Hayashi, MBBS, D.M.Sci, GMRC, PhD | National Hospital Organization Kyoto Medical Center
    On October 13, 2020, the International Monetary Fund (IMF) revised its World Economic Outlook (WEO). The IMF forecasts the world economy to grow 4.4% negatively in 2020 and has revised it up 0.8 points from the world economy as of June 2020. Huge fiscal mobilization from each country has reduced the extent of the deterioration of the world economy. However, the deterioration of the world economy in 2020 is large compared to the 0.1% decrease in the world economy during the financial crisis in 2009. In the IMF report, the economic loss caused by the slowdown in world economic growth has been estimated at 28 trillion dollars over the next six years.

    The world economy has returned to a recovery trajectory from the July-September period of 2020, as major countries in the world have made huge fiscal mobilizations totaling $12 trillion. Vaccines against COVID-19 are expected to become widespread in 2021, so the world economy is projected to grow by 5.2%.

    In Japan, the increase in the number of people infected with SARS-CoV-2 is relatively restrained. As a result, Japan's economic growth rate in 2020 is projected to be minus 5.3%, which has been revised upward by 0.5 points from the forecast of Japan's economic growth rate as of June 2020. However, the revised economic growth rate is the same negative growth as Japan's economic growth rate of 5.4% decline immediately after the financial crisis in 2009. In 2021, Japan's economic growth rate is expected to return to a gradual recovery trajectory with a positive growth of 2.3%.

    The IMF has estimated down and up scenarios for world economic growth, depending on the prevalence of vaccines against COVID-19. If the development of a vaccine against COVID-19 is delayed and it is difficult to end COVID-19, the world economic growth rate in 2021 will decrease by 3 points from the basic scenario of 5% level. If the vaccine against COVID-19 spreads faster than expected, the world economic growth rate in 2021 will increase by 0.5 points.