How COVID-19 and Other Pandemics Affect the Economy

Effects linger long after the fever passes

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The global cost of infectious diseases like the COVID-19 pandemic is rising as the world becomes more financially integrated. Outbreaks spread faster thanks to urbanization, mass migration, and international trade. They disrupt the economy and basic social functions like schools, health care, and employment.

Global trade means the supply of goods from affected areas could be threatened. Investors expect greater returns on new investments the longer an outbreak lasts to compensate for higher risks. 

  • An outbreak occurs in a limited area.
  • An epidemic is an often sudden increase in disease cases in a large area.
  • A pandemic spreads over several countries or continents.

COVID-19 Pandemic (2019–2021)

On March 11, 2020, the World Health Organization (WHO) declared COVID-19 a pandemic. COVID-19’s estimated mortality rate is between 3% and 4%, worse than the seasonal flu’s 0.1% rate. One reason is that the incubation period is longer, up to 14 days. Many people don’t show symptoms for days, if at all. As a result, people spread the disease before they even realize they are sick. COVID-19 is the disease caused by the coronavirus called SARS-CoV-2.


The coronavirus causes illnesses ranging from the common cold to dangerous diseases such as COVID-19 and severe acute respiratory syndrome (SARS).

As the disease spread worldwide, it constrained supply and lowered demand. The travel and entertainment industries were the hardest-hit at first as people stayed home. Large numbers of workers in the sales, manufacturing, and food services industries were laid off as demand plummeted. The World Bank predicted the pandemic would cause the global economy to contract 5.2% in 2020.

Zika Outbreak (2016)

The 2016 outbreak occurred primarily in Latin America and the Caribbean. The Zika virus creates mild flulike symptoms. It is rarely fatal but can cause miscarriages, stillbirths, and severe birth defects such as microcephaly.

Zika is a viral disease transmitted by mosquitoes. Its range is growing because of climate change. It has spread throughout the southern United States, from California to Delaware. Zika can also be transmitted from a pregnant woman to her fetus, via blood transfusions, and through sexual contact. 


In 2016, more than 40,000 Zika cases were reported in the United States and its territories.

Treating the 2016 Zika outbreak cost between $7 billion and $18 billion in the short term. The long-term cost of caring for children with birth defects could be as high as $29 billion.

If an outbreak on that scale hit the United States, the cost would be $10.3 billion if productivity losses are included. That’s if 10% of the population were infected. This is a lower infection rate than in some areas, where Zika has infected between 32% and 73% of people.

Ebola (2014)

The 2014 Ebola epidemic infected 28,639 people and killed 11,316 in West Africa. Its 40% mortality rate terrified people. The epidemic led to an additional 10,600 deaths from untreated conditions as doctors focused on stopping the outbreak.

It also affects bats and nonhuman primates like gorillas and chimpanzees. The virus spreads through direct contact with the body fluids or tissues of infected animals and people. Symptoms appear between two and 11 days after infection. These include fever, aches, fatigue, diarrhea, vomiting, and hemorrhaging.

Around the world, more than $3.6 billion was spent by countries fighting the epidemic. Guinea, Liberia, and Sierra Leone together lost $2.2 billion in economic output in 2015. Sierra Leone’s private sector lost half its workforce.


The most recent Ebola outbreak occurred in August 2018 in the Democratic Republic of the Congo. It infected 3,470 people and killed 2,287 of them, for a 60% mortality rate.

Dengue (2013)

Dengue has increased 30-fold over the past 50 years. It’s a mosquito-transmitted viral disease that affects up to 100 million people a year. Dengue is widespread in Asia and Latin America, but global warming is bringing it to the United States. Its potential range in the United States ranges from California to Delaware. Since 2013, cases have appeared in Florida, Texas, and Hawaii among people who had not recently traveled to tropical areas.

Dengue symptoms include fever, nausea, rashes, and aches. Only one in four people infected get sick, and they typically recover after a week.

One in 20 people who get sick with dengue develops severe dengue. This includes vomiting, bleeding from the nose or gums, and stomach pain. Severe dengue can be fatal within hours and requires hospitalization. The vaccine for dengue has severe side effects unless it’s used on someone who has had the disease to prevent a second infection.

The economic impact of dengue in the Americas is $2.1 billion per year. In Taiwan, a 2015 dengue outbreak reduced average incomes by 0.26%.

MERS Outbreak (2012)

Middle East respiratory syndrome (MERS) was first reported in Saudi Arabia. MERS is caused by MERS-CoV. Like other coronaviruses, its symptoms include fever, cough, and shortness of breath. Symptoms start between two and 14 days after exposure. The disease can be caught from infected people or from camels. Only two people in the United States have tested positive for MERS.

Of the 2,494 cases reported, 858 died. That creates an alarming mortality rate of between 30% and 40%. Most of the deceased had preexisting conditions, such as diabetes, cancer, or chronic lung disease. No vaccine was commercially produced since the outbreak resolved in 2015.

H1N1 (Swine) Flu Pandemic (2009)

The H1N1 or swine flu has the same symptoms as the seasonal flu. It originated in birds and pigs.

In the United States, H1N1 had a very low mortality rate, with 60.8 million cases and only 12,469 deaths. Worldwide, between 151,700 and 575,400 people died. Unusually, 80% of virus-related deaths occurred in those younger than 65.

WHO declared an end to the pandemic in 2010. Since then, the H1N1 flu continues to circulate as a milder seasonal flu. The annual flu shot offers protection against it.

SARS Outbreak (2003)

Severe acute Respiratory syndrome (SARS) is a coronavirus that includes a fever and a dry cough that often leads to pneumonia for most patients. 

The SARS outbreak lasted only six months, between February 2003 and July 2003. There were 8,098 cases, resulting in 774 deaths in 26 countries. Despite its short duration, the high mortality rate of almost 10% created great fear of contracting the disease. No vaccine was developed since the outbreak died down in 2004.

In affected areas, travel and retail sales plummeted. Foreign investors lost confidence in the governments’ ability to fight the outbreak. The lost economic activity was between $40 billion and $80 billion. 

Flu Pandemic (1918)

The 1918 flu pandemic was a vicious flu that often killed within hours. Symptoms included fever and coughing that quickly became a suffocating pneumonia. It could also cause hemorrhaging from the nose, stomach, and intestines.

The pandemic lasted between the spring of 1918 and the spring of 1919. Worldwide, one out of three (or 500 million people) got sick. Of those, 50 million died. The world population at the time was less than 2 billion. In the United States, 675,000 died.

One reason this influenza was so lethal was that it attacked before the invention of sulpha drugs and penicillin antibiotics. It was dubbed the “Spanish flu” since Spain had one of the most publicized early outbreaks. Almost 8 million Spaniards were infected by early 1918.


The movement of World War I troops helped spread the 1918 flu. 

Ironically, many U.S. communities experienced higher wage growth following the pandemic. The high mortality rates reduced the number of healthy workers. As a result, employers paid higher wages to attract the workers who were left. 

Long term, the 1918 flu affected children whose mothers contracted it while they were pregnant. These children were 15% less likely to attain high school degrees. The men’s wages were 5% to 9% lower as a result. 

The Plague (14th Century)

The bubonic plague killed 40% of Europe’s population between 1347 and 1352. England, France, Italy, and Spain lost between 50% and 60% of their populations in just one to two years. That makes it one of the largest shocks in human history.

People did not know what caused it, so they didn’t flee infected areas. As a result, it killed rich and poor alike. 

The economic impact was severe. It took 200 years for cities to regain their pre-plague populations. Cities created tax exemptions, free housing, and other perks to attract migrants. Urban incomes went up, and in many rural areas, the land returned to forests. The lack of rural farmers meant serfdom went into a sharp decline, from 2 million in Western Europe in 1400 to just a few thousand by 1500.

How Epidemics and Pandemics Affect You

Disease outbreaks occur somewhere every year. They result from mutations of existing strains and typically pass in a few months. Global pandemics occur every 10 to 50 years, resulting from new virus subtypes to which humans haven’t developed an immunity. Many of them are transferred from animals.

If today’s society experienced a pandemic on the scale of the 1918 Spanish flu, it would kill millions of people and cost the world economy $3 trillion. In the United States, it would cause 1.9 million American deaths and cost the U.S. economy almost $200 billion. 

Climate change is increasing the risk of infectious disease. One reason is that the melting permafrost is releasing viruses and bacteria that have been dormant for thousands of years. Climate change also causes more frequent and stronger natural disasters that create infectious diseases.

What You Can Do

The best way to protect yourself against a global pandemic is to avoid coming into contact with those who are infected. For example, during a coronavirus outbreak, you should:

  • Get vaccinated with an approved coronavirus vaccine and booster
  • Stay at home as much as possible.
  • If you must go out, wear a close-fitting mask.
  • Stay six feet away from anyone outside of your family.
  • Wash your hands often with soap and water.
  • Don’t touch your eyes, nose, and mouth to keep germs out of your body.

During a flu pandemic, the annual flu vaccine can offer only limited protection, because the virus mutates quickly. It’s still worth getting, though, because it updates your antibodies to the most recent known flu mutation. It protects between 60% and 90% of vaccinated persons from infection and keeps most of them out of the hospital. 

If a pandemic as bad as the 1918 flu or 14th-century plague occurred, it could disrupt local businesses. In that case: 

  • Get vaccinated with an approved vaccine for the pandemic vector (if available)
  • Learn how the disease spreads, and take measures to protect yourself.
  • Gather supplies, like extra food, water, medicine, and personal protective equipment.
  • Prepare for virtual coordination for school, work, and other needs.
  • Write down important health information like medications in case you need to go to the emergency room.
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