Pandemics and economics: The price of being unprepared
The Covid-19 outbreak in 2020 was on a scale not seen since the Spanish flu pandemic in 1918 and laid bare our lack of preparedness for such an event. Our ability to contend with the next pandemic will not just rely on process, but investment too

The world is on the verge of Disease X pandemic outbreak. Yes, the sound of it may pass as the stuff that can only be found in science-fiction blockbuster movies or bestseller novels. It also has the potential to cause panic, even anger. Yet, the World Health Organisation (WHO), which has increasingly been talking about Disease X, together with scientists and the entire medical fraternity, are in agreement that it is not a matter of ‘if’ but ‘when’ the world will face Disease X.
For now, Disease X remains a codename coined by the WHO in 2018.
It mainly refers to some currently unknown infectious pathogen
that is capable of causing a pandemic. By and large, Disease X
is a warning to the world. This emanates from the fact that a
known pathogen, an unknown one, or a newly discovered pathogen
has the potential to ignite a disease outbreak with devastating
impacts on a scale greater than Covid-19. For that reason, the
world must be prepared for Disease X, which is inevitable and
whose fatalities could be more than 20 times compared to
Covid-19. Climate change, human interactions with animals and
disruption of their habitats, poverty, civil conflicts and
global travel are some of the factors cited over their high
likelihoods to ignite the next pandemic.
“Some people say this may create panic,” said Tedros Adhanom
Ghebreyesus, WHO director-general at the World Economic Forum’s
annual meeting in January in Davos, Switzerland. “No. History
has taught us that we must anticipate new threats. Failing to
prepare leaves the world prepared to fail.”
Already, experts are predicting that over the next decade, the likelihood of another outbreak on the scale of Covid-19 is one in four. Predicting which pathogen will spur the next major outbreak, its origination, or how dire the consequences will be, is near impossible. However, the fact that humans continue to coexist with infectious pathogens means outbreaks are certain to occur. Yet, despite being caught flat-footed by Covid-19 in 2020, the world is doing horrendously badly in terms of preparedness. “I don’t think the world is doing enough to prevent and to prepare for the next pandemic,” says Gavin Yamey, Professor of Global Health and Public Policy at UK’s Duke University.
Failing to prepare leaves the world prepared to fail
Granted, the world has largely measured the impacts of epidemics and pandemics on human fatalities and overwhelming stretches on health and medical infrastructures and systems. However, recent reality has shown that depending on the magnitude, disease outbreaks can cripple economies and impoverish societies, even those of advanced and developed nations. As evidenced by Covid-19, a cough in a remote village has the potential to instigate global economic shutdown. The effects on key sectors of the economy like travel and tourism, manufacturing, construction, retail, and foreign direct investments (FDIs) among others is nothing short of catastrophic.
Pathogens of the past
Epidemics and pandemics are not a new phenomenon. For centuries,
the world has grappled with disease outbreaks that often leave a
trail of unprecedented deaths and socio-economic ruin. Over the
past century or so, the Spanish Flu of 1918–20, a strain of the
H1N1 virus, remains the deadliest pandemic. The virus is
believed to have infected 500 million people, or one-third of
the world’s population at that time, and caused between 30
million and 100 million deaths worldwide. In comparison, both
World War I and II combined resulted in the deaths of roughly 77
million people; an indication that the flu pandemic was one of
the worst catastrophes of the 20th century.
The global human immunodeficiency virus (HIV) epidemic, which was detected in the early 1980s, has been another major killer. The virus that causes acquired immunodeficiency syndrome (AIDS) has infected more than 84 million people and killed about 40 million. Though epidemics and pandemics have been part of human existence, the frequency of outbreaks and their devastating impacts have fast emerged as reasons for concerns. Just when the world is taking stock of the Covid-19 pandemic, viruses like influenza A subtype H5N1 and Mpox (monkeypox) are spreading fast in different regions across the globe, particularly in the US and Africa.
The US Centres for Disease Control and Prevention reckon the current overall individual and population health risk to the general public posed by the H5N1 virus presently spreading in poultry, cows and other mammals remains low. However, the country must remain vigilant with possibilities of increased infections with the onset of cooler temperatures. This year, a total of 14 human cases have been reported.
On its part, the Africa Centres for Disease Control and Prevention (CDC) contends that Mpox is fast becoming a burden to the continent. By mid-September, at least 15 countries had cases of Mpox infection. Overall, a total of 29,152 cases were reported between January and September, representing an increase of 177 percent compared to the same period last year. During the period, there were 738 deaths. Other diseases like Ebola, Zika, Dengue, Cholera, Yellow fever, Meningitis, Rift Valley Fever, and Middle East respiratory syndrome (MERS) among others continue to wreak havoc in economies, particularly of poor and developing nations.
A cough in a remote village has the potential to instigate global economic shutdown
“The extent to which these diseases are threatening globally depends on the ability of the diseases to spread and the willingness and capabilities of policymakers to react in order to reduce the spread,” states Klaus Prettner, Professor of Economics at the Vienna University of Economics and Business in Austria. He adds that considering the current generation had not experienced a global pandemic related to a new disease where almost everybody got infected before Covid-19, the world may have felt overly secure. “Extrapolating from past experience to future events, which is what humans tend to do, is prone to fail us with such low-probability, high-impact events,” he notes.
Bizarrely, it took the novel coronavirus (Covid-19) for the world view on pandemics to change. Assumptions that disease outbreaks were far-apart occurrences that lacked the ability to shake the world like natural calamities including earthquakes, floods or even war now seems imprudent. “The pandemic was a global disaster. We learned a great deal about how to respond to the next pandemic,” observes Scott Fulford, a senior economist at the Consumer Financial Protection Bureau, a US government agency responsible for consumer protection in the financial sector.
A wake-up call
That Covid-19 turned the world on its head is indisputable. When
the first case of the severe acute respiratory syndrome
coronavirus two (SARS-CoV-2) was detected in Wuhan, China, in
December 2019, the world could not have predicted the sequence
of events that followed. It was unparalleled to anything
witnessed in human existence in recent history. While the events
of 2020 remain engraved in the minds of many, the overall
impacts of Covid-19 will be felt for years to come. WHO
estimates show that as of January 2024, the virus had infected
more than 700 million people and claimed the lives of seven
million worldwide.
On the socio-economic front, the impacts have been colossal. The
International Monetary Fund (IMF) estimates that the cumulative
economic loss over the 2020–24 period stands in excess of
$13.8trn. Worse still, the pandemic has set back progress
towards the Sustainable Development Goals (SDGs) by decades,
across all areas. Though economic rebound across the globe has
been swift and laudable, for poor and developing nations,
emerging from the abyss of Covid-19 devastation is projected to
take years.
The US offers a classic pointer of the destructive impacts of Covid-19. Government statistics indicate over 1.1 million people have died as a result of the disease, with the economic losses being in the range of $3.7trn. At the early stages of the pandemic in 2020, the US economy lost 23 million jobs and sunk into a recession. Other economic ravages cut across heightened inflation, supply chains were disrupted, trade was crippled, stock markets crashed and businesses – particularly small and medium enterprises – shut down.
Overall, the Covid-19 damages were the worst economic downturn since the Great Depression. In fact, the US economy contracted faster in the second quarter of 2020 than it did during the Great Depression. With a gross domestic product (GDP) plunge of 32.9 percent on an annualised basis, it was the worst drop ever.
The ravages were not any less across the globe. In China, the pandemic caused the deaths of 1.4 million people with lockdowns instigating a 6.8 percent shrink in GDP growth in the first quarter of 2020. The country however saw a rebound to post a 2.3 percent growth during the year, the only large economy to post positive growth. Africa, which was lucky to experience relatively lower death rates from Covid-19, suffered a pandemic-induced contraction of 1.6 percent in 2020. At the global scale, the global economy posted a contraction of three percent.
Though by and large the US was a mirror of the devastating economic impacts of Covid-19, the global superpower response was nothing short of remarkable. In fact, it set the tone for post-pandemic recovery. Fulford, who has authored a book – The Pandemic Paradox: How the Covid Crisis Made Americans More Financially Secure – largely considers Covid-19 to have been a blessing in disguise for the US economy. “US economic policy protected individual households financially. Overall financial wellbeing improved for most Americans even though unemployment was high. Most other countries have not recovered nearly as well,” he notes.
For the US, a $5.2trn economic stimulus package over the two-year period from March 2020 to March 2022 was the magical pill. Granted, it was the largest aid given outside wartime and was also five times larger than the response to the Great Recession. The stimulus was critical in preventing the economic coma from causing individual harm. In essence, job losses did not hurt households, which were doing well financially due to government support. Having arrested individual impact, pandemic policy focused on ensuring economic recovery. Billions of dollars were directed to nearly every small business. Although some businesses did not need the aid, it prevented shutdowns on a large scale. In fact, it did not take long for businesses to start hiring again.
“Pandemic policies mitigated the economic and social disaster,” avers Fulford. He adds the proactive response by the then President Donald Trump administration substantially reduced the pandemic’s economic costs to the point where the country’s GDP per person swiftly recovered to its pre-pandemic trend by 2023. “The US patched together a mostly adequate safety net during the pandemic, which it does not have in normal times. The safety net kept the economic decline from spiraling further,” he notes, adding that another critical measure was ensuring that financial markets did not nosedive into a prolonged crisis to ensure firms could access credit and capital to adjust to the pandemic and reopen quickly.
Economic immune response
Economists reckon the resilience of the global economy has been
nothing short of impressive. Evidently, most economies are on a
stellar growth trajectory post-pandemic. This is largely due to
the adjustment mechanisms of modern market-based economies that
thrive on demand and supply. Over the past three years,
inflation has recorded a drastic downward spiral while GDP
growth has accelerated. The IMF forecasts a global growth of 3.2
percent this year and a moderate acceleration of 3.3 percent in
2025, an indication of recovery.
“Although economies bounced back after Covid-19, the cumulative
income losses over time were rather large and the public
expenditures that had been enacted during the pandemic have
stretched public finances of many countries rather severely,”
says Prettner. The pain has been particularly excruciating for
poor nations that are not only grappling with squeezed resources
to finance development projects but are also feeling the
intensity of public debts. In Africa, for instance, the stock of
external debt stood at a staggering $1.15trn by end of last
year. This year, the continent is paying $163bn just to service
debts, up sharply from $61bn in 2010.
The unavoidability of Disease X means the world must prepare.
Experts highlight that it costs a tiny fraction of money and
resources to prepare for future outbreaks than to react. Despite
Covid-19 lessons, the world is back on default mode and little
is being done in pandemic preparedness and response (PPR).
According to Yamey, countries need to strengthen their basic
public health capacities including surveillance, case detection
and contact tracing. When the next pandemic hits, and while the
world waits for vaccines and treatments to be developed, these
are bound to be vital. In fact, lives will be saved by basic
measures such as testing, contact tracing, isolation of infected
individuals, quarantining of those exposed, and social and
financial support for those isolating and quarantining.
“We are massively under-investing in development of pandemic medical countermeasures like vaccines, treatments and diagnostics. We also need to ensure that the manufacture of these control tools is globalised, so that all regions will become self-sufficient in making and distributing the tools when a crisis hits,” he explains.
The understanding that PPR could be at the core of preventing widespread adverse socio-economic destruction of the next pandemic has prompted the WHO to demand action. The global body, together with the World Bank, contends that governments in low and middle-income countries in collaboration with donors need to invest $31.1bn annually in PPR. A total of $26.4bn must be invested at the country level and $4.7bn at the international level. Tragically, raising the massive resources is a tall order. For most countries, it is highly unlikely they would meet their national PPR financing requirements.
In July, Yamey together with two other experts published a study on the feasibility of low and middle-income countries to mobilise the exponential resources. The study contends that low-income countries would need to invest on average 37 percent of their total health spending on PPR annually. Lower-middle income countries on their part must invest nine percent while upper-middle income countries would be required to invest one percent. On the same level, donors would need to allocate on average eight percent of their total official development assistance across all sectors to PPR annually to meet their target.
Putting a price on life
“It should be a no-brainer to set aside such an amount to be
prepared for the next health crisis. However, we all know how
political processes work and that, without immediate threats, it
is usually very difficult to mobilise appropriate resources even
though this would be the rational thing to do,” observes
Prettner.
It took the novel coronavirus (Covid-19) for the world view on pandemics to change
Africa is a typical case on just how near impossible it is to mobilise PPR resources. The Africa CDC reckons that it requires $599m to combat the Mpox outbreak. So far, it has only secured financial commitments to the tune of $314m. Notably, commitments do not often translate to disbursements. While it also requires 10 million doses of vaccines, it has only managed to secure 4.3 million doses. Inability to mobilise resources to effectively respond to the epidemic is bound to hurt economic activity and weaken fiscal metrics. Apart from draining squeezed resources, the disease has the potential to disrupt supply chains, strain the ever-sensitive tourism sector and deter FDIs, among other impacts.
“Fiscal metrics would also be affected, with weaker economic activity depressing tax revenues, and higher government spending on healthcare and epidemic-prevention measures,” states ratings agency Fitch. It adds that while international assistance could mitigate the effects, timing and size remains uncertain.
When it comes to combating disease outbreaks, rich and developed nations have often come under criticism for being aloof if an epidemic does not have direct impacts on their populations and economies. The 2014–15 Ebola outbreak that resulted in 28,652 cases and 11,325 deaths in West Africa is a case in point. Among the three badly hit countries – namely Guinea, Liberia and Sierra Leone – an estimated $2.2bn in GDP was lost while progress on SDGs was significantly reversed. Overall, the combined direct economic burden and the indirect social impact was estimated at $54bn. Despite the ravages, international assistance was not only slow in coming, it was also exasperatingly inadequate.
Globally, the consensus is that one effective strategy to combat epidemics and pandemics and prevent their destructive socio-economic impacts lies in vaccine development. In the case of Covid-19, vaccine development was fast and swift. It took less than a year for the first vaccine, mRNA from Pfizer/BioNTech, to be approved. Others followed in record time. The rapid rollout of Covid-19 vaccines is hailed for saving over 14 million lives across 185 countries in just their first year.
The next pandemic
For the world, preparing for the next pandemic in terms of
vaccine development has become paramount. The
Norway-headquartered Coalition for Epidemic Preparedness
Innovations (CEPI) has been laying down the foundations to
guarantee the world’s ability to respond to the next Disease X
with a new vaccine in just 100 days. The mission has been
criticised by some as impossibly far-fetched. CEPI, however,
contends that although ambitious, the goal is technologically
within reach with the collaboration of all stakeholders.
“Economically, it is about being prepared to make large, bold investments to speed up the building of our defences against emerging threats, even when many of those investments will not pay off,” says Richard Hatchett, CEPI Chief Executive Officer.
On developing vaccines, we already have a head start. This emanates from the fact that there are around 260 viruses known today that can infect humans. The 260 or so viruses belong to roughly 25 viral families. Despite this knowledge, the question of when and which form the next pandemic will take remains a mystery. To resolve these questions, researchers are turning to artificial intelligence (AI). So far, AI-based tools have been developed that can help predict new viral variants before they emerge and act as early warning systems. One of the tools is EVEscape, developed by the University of Oxford and Harvard Medical School.
The problem with pandemics and vaccines, however, lies in inequitable distribution. A recent study shows that with nearly 11 billion doses of the Covid-19 vaccine being administered, stark differences in the vaccination rates persist. Over the initial stages of vaccine rollouts, about 80 percent of people in high-income countries were vaccinated.
For low-income nations, only 10 percent were lucky to access the vaccines. “While admitting there was much unfairness to the Covid-19 vaccine rollout, rich countries’ research investments in developing and deploying vaccines have immense spillovers for poorer countries,” states Fulford. He adds that poor countries can only take advantage of vaccines if they have the public health infrastructure to deliver them.
While the world is gradually recovering from the devastating impacts of Covid-19, the lessons learned should not be ignored. The inevitability of future pandemics, particularly the looming threat of Disease X, calls for urgent and sustained investment in pandemic preparedness and response (PPR).
The global economy has proven resilient, but the next pandemic could be even more catastrophic without proactive measures. Governments, health institutions, and global stakeholders must prioritise early detection, vaccine development, and equitable distribution of resources to prevent future socio-economic disasters. The time to act is now, before we are again caught unprepared.