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The COVID-19 pandemic has triggered an unprecedented economic crisis. This article analyses the impact of mandatory social distancing imposed by lockdown policies and voluntary social distancing triggered by COVID-19 fatality rates on GDP growth in the first three quarters of 2020 for a sample of 42 countries. OLS and IV results indicate an important role for the fatality rate, while panel regressions show that lockdown stringency is the more important driver of growth. When including lagged variables, more restrictive measures lead to lower GDP growth in the same quarter but are associated with a positive, catching-up effect in the following quarter.

The coronavirus pandemic led to substantial revisions of 2020 GDP growth projections. We analyse whether and to what extent the quality of government policies in handling the health aspects of the crisis influence cross-country differences in the economic impact of the pandemic as projected by the OECD, the IMF and the World Bank. We measure policy quality by a recently published Economist Intelligence Unit index and a COVID-19 Misery index combining the stringency of government-imposed distancing measures with the COVID-19 fatality rate. Moreover, we control for international spillovers captured by trade openness and export exposure to tourism. Results for most specifications show that good government performance pays off as the respective countries record less severe revisions of growth forecasts. Only in a few cases, our findings suggest that the pandemic’s global effect might be so strong that actions by individual governments do not affect cross-country differences of growth revisions. Finally, there is broad evidence supporting the view that a country’s exposure to the global economy influences its growth outlook relative to other countries.