The peril and the promise

THE THEORY of “black swans” says that unpredictable high impact events play a vastly greater role than most people realise. Long before 2020 scientists feared that a zoonotic respiratory disease might originate in Asia and spread globally. But hardly anybody foresaw the consequences. The story told by a casual inspection of most economic data is this: little happened for decades, and then in 2020 covid-19 upended everything.

Before 2020 the most sophisticated modelling suggested that a pandemic comparable to the Spanish flu of 1918 might kill 71m people worldwide and trim 5% off GDP. The death toll from covid-19 seems far lower, but the hit to GDP has been bigger. According to IMF forecasts in June, due to be updated after this report went to press, by the end of 2020 world output may be about 8% lower than it would have been without the pandemic. Instead of growing by about 3% it will have shrunk by about 5%—the biggest contraction since the second world war. By comparison, in 2009 the “great recession” shrank the world economy by just 0.1%.