COVID-19 pandemic may not kill as many as 50 million people claimed by the Spanish flu a century ago, but it is set on damaging the world economy by as much as a harrowing $82 trillion.
This is the estimate of the damages related to the coronavirus pandemic over the next five years, according to recent findings by a University of Cambridge department that examines systemic risks.
These cost projections are based on 2019 gross domestic product volumes which stood at $69.2 trillion for the world’s 19 leading economies.
The Centre for Risk Studies at the University of Cambridge Judge Business School determined that the potential toll could range between what it called an “optimistic loss” of $3.3 trillion in case of rapid recovery, and $82 trillion in the event of an economic depression.
While lost value of $82 trillion is the worst case scenario, the centre’s consensus projection was a loss of some $26.8 trillion, or 5.3%, of global GDP in the coming five years.
To put a figure on the potential impact to some of the leading global economies, the following five-year loss projections added more context (All %’s represent five-year GDP estimates):
*US: Best case: $550 billion (0.4% of GDP). Worst case: $19.9 trillion (13.6%)
*UK: Best case: $96 billion (0.46%). Worst case: $2.5 trillion (16.8%)
*China: Best case: $1 trillion (0.9%). Worst case: $19 trillion (16.5%)
The centre was keen to stress that its metrics are not forecasts for what will happen, rather projections on what might occur. They are also not meant to reflect an economic contraction, but rather how much potential GDP is at risk.
“The new calculations on GDP@Risk from the pandemic are not forecasts, but rather are projections based on various plausible scenarios that could unfold in the next five years related to the economic impact of COVID-19,” Andrew Coburn, the centre’s chief scientist said.