Scale of economic collapse is becoming horrifyingly clear

Your columnist was the only non-medic to give evidence to the committee during a session last Thursday afternoon. The Dáil committee meeting underscored to me that medics don't fully get the longer term consequences of a Great Depression-type event across the world, nor, as non-economists, should they be expected to.

But given the huge calls politicians and the Government have to make, it is essential that different perspectives on the wide-ranging emergency being faced are heard. After the last crisis this country faced - the 2008-12 economic crash - valid charges were made that governments which presided over the earlier bubble period ignored the risks of the policy choices they made then. Given that it is not hard to envisage a scenario 12 months from now, when mass unemployment leads to charges that medics' views were given excessive weighting in government decisions in the first months of the pandemic, those in power now need to be fully appraised of the range of risks they face.

And as economic data on the extent of the collapse in activity in the spring and early summer begin to trickle in from around the world, there is every reason to fear a mass unemployment outcome.

Last week Britain reported its figures for Gross Domestic Product, the widest measure of economic activity. In the April-June period wealth creation was almost a quarter below where is was half a year earlier. It is hard to convey to anyone who does not follow economies just how big a contraction this is. It is utterly without historical precedent and 10 times greater than many past recessions in their first half-year of taking hold.

The eurozone and the United States, which are, along with the UK, Ireland's most important trade and investment partners, have recorded slightly smaller contractions since the pandemic's onset, but in both cases their recessions are also of historically large magnitudes.

Despite an almost universally grim picture, ever more data on how countries are performing - in terms of health and economics - are undermining the notion that we are all in the same boat when it comes to Covid and its consequences. In Europe, some countries, mostly in northern Europe, have been less affected economically than others, while the Mediterranean countries are among the hardest hit.

One northern European country of particular interest is Sweden. Unlike virtually all others in Europe and across much of the world, it did not introduce a lockdown at any point. This made it a poster child for those who have argued against lockdowns, and a bogeyman for those who have supported them.

Last week we learned that Sweden's economy has contracted by less than most other developed world economies since the pandemic erupted. That led to claims that its outlier approach to tackling the virus had been vindicated.

But not so fast. Sweden's GDP shrank by considerably more than its immediate neighbour Finland, which introduced a lockdown but recorded a tenth of Sweden's deaths (relative to the size of the two countries' respective populations). Denmark, another neighbour, had a similar sized economic contraction to Sweden, but with one fifth of the Covid deaths. These developments led to claims of a slam dunk against Sweden's no-lockdown policy.

But, again, not so fast. GDP has its limitations, as Irish readers will know. Often jobs data can give a better indication of what is happening in an economy than output figures.

According to last Friday's first estimates from the EU's statistics agency, employment across the bloc on average shrank twice as much as in Sweden between the first and second quarters of this year. Of the two other countries to report national data, Poland lost jobs at a similar rate as Sweden; Spain fared almost six times worse.

If you are struggling to see what all this means, there is good reason. The available evidence makes it very difficult to draw hard and fast conclusions on who got it right when handling Covid. We all need to remain open-minded, not least because more hard evidence over a much longer timeframe will be needed before definitive assessments can be made on which countries came closest to handling coronavirus in the least damaging way to human welfare in all its dimensions.

As this column has suggested since March, the world may well have over-reacted to the virus by not differentiating between, on the one hand the young and healthy, who are at very low risk, and on the other those whose lives are at serious risk, namely the elderly and those with serious underlying health conditions.

This view, however, is one I do not hold with rock solid confidence because there is insufficient evidence to support it.

But whatever happens, we will have to learn to live with the virus both in the very short term and until an effective vaccine is found, if that ever happens.

As recently as 70 years ago, seven people died every day from TB on average in the Republic (out of a much smaller population). The emergence of Covid 19 is in some ways a return to past times when the fear of contracting a deadly disease was so prevalent. Our parents, grandparents and the generations before them lived with that disease. We will have to find ways of living with Covid, as they did with TB.