This Is No Black Swan (Part Two)

<< Read Part One: This Is No Black Swan

I was having a bit of ding-dong over my article about the coronavirus pandemic being perfectly predictable and not a black swan. There are many who believe the reaction to the pandemic is a black swan, as in the lockdown of Planet Earth.

Hmmm … what reaction did we think we would have to a pandemic? Business as usual?

There’s actually quite a lot of articles about the likely view which were printed pre-pandemic.

The World Bank simulated the economic impact of a pandemic back in 2008. In their most severe scenario – a repeat of the Spanish flu of 1918 – they estimated a global economic impact of -4.8% of GDP.

Interestingly, the OECD estimates we will see GDP shrink by -2.4% in 2020, based upon their March report.

Although the World Bank’s latest forecast is more pessimistic at 5.2%, e.g. worse than their most severe forecasts twelve years ago; and Statista makes it a gloomy 7.7%.

Maybe this is the black swan aspect that no one forecast, e.g. the lockdown. Governments worldwide closing to travel, trade and movement is what many say was not foreseen. I might agree but, in hindsight, a global lockdown was obvious.

In 2015, here’s the World Health Organisation – WHO? – view:

At 2013 values, the expected losses for 2015 amounted to about 500 billion United States dollars (US$), i.e. about 0.6% of global income, per year.12 The estimated proportion of annual national income represented by the losses varied according to country income grouping, from a little over 0.3% in high-income countries to 1.6% in lower-middle-income countries.

Interesting estimates as the actual cost of the pandemic is probably going to exceed $100 trillion.

Yep, that’s $100,000,000,000,000 or 100’s.

The question this raises is why were we so bad at forecasting this and the consequences?

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