The Covid-19 outbreak has been taking its toll on global supply chains and economic growth, but how governments are tackling the problem could have far worse economic consequences.
“A medical threat turned into international economic calamity, with these quarantines, these shutdowns, this frenzy and this hysteria. It’s becoming enormously disruptive to international commerce and actually even to domestic [US] commerce,” Jeffrey Tucker, the editorial director at the American Institute for Economic Research, told RT.
The epidemic left hundreds of flights grounded and many international events, from sport competitions to business forums canceled. SXSW, the annual tech, music, and film meetup in Austin, Texas, has become one of the latest victims of the panic. That hurts more than the virus itself, the analyst said.
Duomo square after a decree orders for the whole of Italy to be on lockdown, Milan, Italy, March 10, 2020 © Reuters / Flavio Lo Scalzo
“These are draconian responses. And it’s absolutely devastating. It’s going to affect the labor markets, industrial productivity.” Tucker stressed. “It’s costing the city something like half a billion dollars in economic activity.”
Such cancellations and quarantines result in “mass risk aversion,” especially among investors, according to the analyst. He believes that the situation will “definitely” have macroeconomic consequences, from lower first quarter GDP to creating a recessionary environment.