Lessons to be drawn from past pandemics: MEI
Researcher compares COVID-19 to the deadly Spanish Flu and the prognosis is much better.
MONTREAL — In addition to a health crisis, the coronavirus pandemic raises concerns about the economy. A publication launched by the MEI, a public policy think tank in Montreal, analyzes the economic lessons that should be learned from this historical episode.
The Lessons to Be Learned from Past Pandemics cites two.
“The short-term costs will be substantial, and the size of the long-term costs will essentially depend on the public policies that we will put in place,” says Vincent Geloso, associate researcher at the MEI and author of the publication.
COVID-19 is often compared to the Spanish influenza, lasting from January 1918 to December 1920, which infected 500 million people – about a quarter of the world’s population at the time. Between 17 million and 50 million people were believed to have died.
He says a recent study shows that in a given country, the Spanish influenza pandemic reduced real GDP per capita by 6%, a significant reversal. “It must be noted that the Spanish flu killed mostly workers in the prime of life. The social distancing measures currently in effect to fight the coronavirus entail a considerable reduction of work that could rival that of the Spanish flu.”
A silver lining: following the Spanish influenza, there was a rapid economic recovery. In the US, industrial production bounced back by more than 25% between March 1919 and January 1920. “This gives us reason to hope that the Canadian economy will right itself rather quickly from the economic effects of the coronavirus, since workers will return to work once the contagion subsides,” says the researcher.
“The long-term economic damage of the Spanish flu is not negligible, but it is limited,” say Geloso. For example, pregnant women exposed to the Spanish influenza negatively affected the health outcomes of their children, and as a result, their economic prospects.
The most potentially harmful long-term effects are caused by public policies put in place to address the crisis, for example rigid regulation or barriers to trade. “The economic recovery will be quicker if we reduce certain barriers to entrepreneurial activity,” concludes the researcher.