Pandemics are rare events. However when a pandemic hits the world, the impact on the global economy last a long time according to a research study by Keith Wade at Schroders. He notes that adverse effects can last up to 40 years. However in the current scenario, the impacts may not last that long but still the recovery won’t be V-shaped. It is rather likely to be a U or L shaped recovery. Keith also makes the following insight:
Covid-19 is most frequently compared with the Spanish flu of 1918-19, an outbreak that claimed 40 million lives, or 2% of the world population implying 150 million deaths when applied to today’s population.
Fortunately, better health systems and government action to suppress the virus mean that the current outbreak should not be anywhere near as fatal. Nonetheless, although governments may ultimately succeed in curtailing the health impact, the economic effects and debt costs are significant. (emphasis mine)
With that brief excerpt the following graph shows the large pandemics the world experienced since the Black Death of the 14th century that led to the death of some 75 million people.
Click to enlarge
Source: Covid-19: the inescapable truths faced by investors, Keith Wade, Schroders
