Officials from Rome to Washington are urgently mapping out plans to loosen lockdowns and begin rebooting their economies even as the coronavirus pandemic still rages across swaths of the globe.
Trouble is, there’s no master plan.
The juggling act for policy makers will be to reopen without triggering a second wave of infections that leads to a fresh round of lockdowns and yet more economic damage. History serves as a warning: the 1918 Spanish Flu pandemic, the world’s worst health crisis until this one, hit in three waves before finally being contained.
The city of Wuhan, the original epicenter of the outbreak, provides a test case after China this week lifted its months-long quarantine. Austria, Denmark and Norway are also on course to gradually open up. Even Italy, which has the highest death toll from the disease, has been weighing its exit strategy after a moderating trend in new infections. And in the U.S., President Donald Trump is again talking about getting people back to work.
As leaders prepare to tackle Phase Two of the pandemic -- the gradual reopening of the world’s shattered economy -- the stakes could scarcely be higher and the trade-offs more unsettling. With planes grounded, supply chains ruptured and factories idled, the $90 trillion global economy is enduring one of its worst shocks since the Great Depression.
Unfortunately, there’s no off-the-shelf plan for governments to decide when, let alone how, to rev up the economic engines after such an abrupt halt in activity, especially when restarting could put the lives of more people at risk.
“We have to reopen somehow. We can’t go in shutdown mode for 20 months,” said Michael Osterholm, director of the Center for Infectious Disease Research and Policy and professor at the University of Minnesota in Minneapolis. “If we shut down like Wuhan, we destroy society as we know it. If we allow the virus to run willy nilly, we will destroy our health-care system and the economy with it.”
Threading that needle is crucial, said Osterholm, who wrote “Deadliest Enemy: Our War Against Killer Germs.” One option is to allow young people -- those most likely to survive infection -- to get back to everyday life and allow many of them to develop immunity.
Reopening economies safely would require antibody tests to identify communities that were least affected. For now, those “are still not validated in most countries,” said David Heymann, a senior professor of infectious disease epidemiology at the London School of Hygiene and Tropical Medicine. “Until they’re available, it’s going to be a guessing game.”
Already more than 1.5 million people are infected across the globe, putting health care systems under severe strain, and at least 88,000 have died. Experts say policy makers should move slowly and be prepared for setbacks in a process that could drag on for many months.
All eyes are on Wuhan, a center for steel-making and car manufacturing, as it begins opening up. While trains, planes and cars are allowed to leave again, the transition back to normality is expected to be gradual as some restrictions remain in place.
Authorities say the coronavirus is under control but they remain wary of another wave, either through a domestic outbreak or through imported cases. Residents of some housing compounds have to prove they’re heading to their jobs to be allowed out. At least 10 Chinese provinces and cities also require travelers from Hubei province, where Wuhan is located, to enter quarantine for two weeks on arrival.
The experience of a car parts maker in Wuhan is one indication of just how onerous rebooting the global economy is going to be.
“We kept having to delay the factory’s restart,” said Gong Jinqian, sales department manager at Digit Stamping Technology (Wuhan) Ltd. The company had to apply for approval from the government, commit to disinfecting the factory daily and prove it had enough protective gear for workers.
The risk of a second round has already become real in Asia. A county in central China has been put under lockdown again while Heilongjiang, which borders Russia as China’s northernmost province, has reported 125 imported cases and another 111 imported asymptomatic cases this month. All but one of the imported cases are from Russia.
Japanese Prime Minister Shinzo Abe warned this week that hospitals were reaching capacity as he declared a state of emergency in Tokyo and its surrounding regions. Abe called for international coordination on anti-viral drugs and for all G20 governments to spend more to support their economies in a video call between the leaders late last month.
Singapore and Hong Kong have also been forced to implement new restrictions as the virus persists, underscoring that even those with early success in containing the outbreak have little room for complacency. Singapore reported a record 142 new infections Wednesday, and at least 40 of those were linked to clusters at foreign worker dormitories that house low-wage workers.
$5 Trillion Effort
The global emergency has forced unprecedented spending and interest rate cuts as governments unleash more than $5 trillion in fiscal measures and central banks dive deeper into crisis policy settings to cushion their economies from the shock. Morgan Stanley estimates that the Federal Reserve, European Central Bank, Bank of Japan and Bank of England will expand their balance sheets by a cumulative $6.8 trillion.
Despite those efforts, former Fed Chairman Ben Bernanke doesn’t see a quick, sharp economic bounce after a precipitous fall this quarter. “We’ll probably have to restart activity fairly gradually and there may be subsequent periods of slower activity again,” he told a virtual discussion hosted by the Brookings Institution on Tuesday.
While some parts of the economy will rebound faster than others as employees transition back to the workplace, others will take longer. Consumers are also likely to be wary about rushing to the mall, hanging out with friends at a pub, or hopping onto an airplane.
Deutsche Lufthansa AG, one of Europe’s largest airlines, estimated it will take months until global travel restrictions are completely lifted and years before the worldwide demand for air travel returns to pre-crisis levels. The company will slash its fleet of planes and shut a low-cost carrier.
Peter Williams, chairman of British clothing chain Superdry Plc, said it’s vital for retailers that consumer confidence recovers quickly. “For this to happen, consumers need to believe that it is OK to go outside again and start spending money, a message they will want to hear directly from the medical scientists and not the politicians,” Williams said.
Companies fretting over the lockdowns have turned to data scientists for guidance. Ayse and Tolga Akcura, a husband and wife duo who run eBrandValue, a data analytics company headquartered in New York, devised a model to help their corporate clients predict when they might be able to begin operating again.
“People are afraid to die, but I think people are more afraid to collapse financially,” said Ayse Akcura, who worked on Wall Street for more than 15 years.
Based on their findings and what’s happening in China, they’re saying clients should prepare for the possibility of re-starting operations 15 to 20 days after a country’s peak.
The concern among health experts and the public is that no matter how much you slow the rate of infection, in the absence of a vaccine the virus will return in force once lockdowns are lifted. The only way to prevent that and to know when and where to lift measures first is through testing.
“Once you raise the lockdown, you have to have an alternative method to suppress the virus -- active case finding, testing, isolation, tracking of contacts and strong community education,” said Mike Ryan, head of the World Health Organization’s health emergencies program.
The problem is, with some exceptions in countries like South Korea, Singapore and Germany, testing for the coronavirus has been beset by flaws in technology, delays in delivery and shortages in materials. The U.K. encountered yet another testing disappointment recently when Oxford University researchers found that kits the nation was counting on to identify people who had been infected weren’t accurate. That’s caused skepticism about the speed and effectiveness of any mass testing effort.
Return in Stages
A road map authored by a group of U.S. health specialists including former Food and Drug Administration commissioner Scott Gottlieb calls for an intermediate stage in which schools and businesses would reopen but gatherings would still be limited. People would be encouraged to keep at a distance from one another, and those at high risk would be told to limit their time in public. If cases begin to rise again, restrictions would be tightened.
Austria plans such an incremental approach. Small shops, hardware and gardening stores will be allowed to open after Easter, to be followed by all retailers starting May 1, the chancellor, Sebastian Kurz, said Monday. Denmark and Norway also plan to ease restrictions gradually, starting with the reopening of schools. Curbs on the size of gatherings will remain.
“Norway has managed to gain control of the virus,” Norwegian Prime Minister Erna Solberg told reporters. “The job now is to keep that control.”
Still, opening up relatively small economies like Norway or Austria is a far cry from rebooting countries on the scale of the U.S., or even Italy.
In Italy, where the pandemic has claimed more than 17,600 lives, selected firms could open in mid-April after the level of new cases flattened out, an official familiar with the discussions said earlier this week. If the situation continues to improve, early May could bring fewer social restrictions, the official said, with some shops reopening but bars and restaurants remaining closed. Social-distancing rules will remain.
The plans that the White House is developing to get the economy back in action depend on testing far more Americans for the coronavirus than has been possible to date, people familiar with the matter have said. The effort would likely begin in smaller cities and towns in states that haven’t yet been heavily hit. Hot spots such as New York, Detroit, and New Orleans would remain shuttered.
“Everyone wants to open up and get back to normalcy, but there isn’t anything that I’m aware of that has the exquisite strategy we need to see where a hot zone might be emerging,” said Eric Topol, founder and director of the Scripps Research Translational Institute in La Jolla, California. “It’s a recipe for failure if there isn’t a way to have people under some type of surveillance to see if the virus is bouncing back.”
A reopening might begin within four to eight weeks, said Lawrence Kudlow, director of the National Economic Council.
New York Governor Andrew Cuomo, whose daily virus briefings have won him a national following, said the state doesn’t have the “luxury” of waiting until the virus has been stamped out to start getting the economy going again. He suggested younger workers, who are less at risk from the virus, or those who have already survived and thus developed immunity, might be the first to return to work.
“It’s going to come down to how good we are with testing,” Cuomo said Tuesday. “You’re going to need to know who had the virus, who resolved the virus, who never had it.”
Governments are grappling with a challenge that the world economy has never faced before and there are probably no good answers. For all the rhetoric from politicians about getting back to work, they need to prepare their people for a long, hard slog, said Bruce Aylward, one of the WHO’s top officials, who has led missions to Spain and China.
“It’s not lifting lockdowns and going back to normal,” Aylward said. “It’s a new normal.”
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