Dynamics of the impact of COVID-19 on the economic activity of Peru

Abstract

Background The COVID-19 virus impacts human health and the world economy, causing in Peru, more than 800 thousand infected and a strong recession expressed in a drop of -12% in its economic growth rate for 2020. In this context, the objective of the study is to analyze the dynamics of the short-term behavior of economic activity, as well as to explain the causal relationships in a Pandemic context based on the basic number of spread (Re) of COVID-19 per day. Methods An Autoregressive Distributed Lags (ARDL) model was used. Results A negative and statistically significant impact of the COVID-19 shock was found on the level of economic activity and a long-term Cointegration relationship with an error correction model (CEM), with the expected sign and statistically significant at 1%. Conclusion The Pandemic has behaved as a systemic shock of supply and aggregate demand at the macroeconomic level, which together have an impact on the recession or level of economic activity. The authors propose changing public health policy from an indiscriminate suppression strategy to a targeted, effective and intelligent mitigation strategy that minimizes the risk of human life costs and socioeconomic costs, in a context of uncertainty about the end of the Pandemic and complemented by economic, fiscal and monetary policies that mitigate the economic recession, considering the underlying structural characteristics of the Peruvian economy.

Psychological Factors Affecting Risk Perception of COVID-19: Evidence from Peru and China

“…In addition, both countries have high levels of self-confidence. However, we found national differences, regarding the levels of risk perception, in the case of Peru 83% of the sample presents medium and high levels of risk, while in China 74% presents low levels of risk perception, these national differences could be explained by the fact that Chinese citizens have received information about the appearance and course of the new coronavirus since 2019 [ 70 ] on the other hand, in Peru, since the beginning of the state of emergency in March 2020, there was no accurate communication plan about the mechanisms of COVID-19 infection, which would explain a high perception of risk [ 71 , 72 ]. In fact, these characteristics actually have an impact on health behaviors, according to the serious situation of the COVID-19 outbreak.…”

Investigating the Causal Linkages among Inflation, Interest Rate, and Economic Growth in Pakistan under the Influence of COVID-19 Pandemic: A Wavelet Transformation Approach

“…According to the International Monetary Fund (2021), future developments will be significantly influenced by the pattern of the COVID-19 pandemic crisis and will depend on the following aspects of the effectiveness of policy strategies in order to diminish the economic losses, the dynamics of financial conditions and commodity prices, but also the adjustment capacity of the economy. Varona and Gonzales (2021) stated that for developing countries, the impact of the COVID-19 pandemic is double, such as: an external shock and an internal shock that affect aggregate supply and demand. Moreover, the external shock determines a contraction in the prices of raw materials, the demand for exports, employment, income, tourism, international remittances, and external financing.…”

Role of Government Financial Support and Vulnerability Characteristics Associated with Food Insecurity during the COVID-19 Pandemic among Young Peruvians

“…During this period, people were only allowed to go outside if they worked in essential sectors, and to buy food and medicine. This, along with subsequent regional lockdowns and other measures to promote social distancing (e.g., restrictions in capacity at shops and restaurants), as well as the direct effect of COVID-19 on morbidity and mortality, has caused significant social and economic disruption [2]. Within the Latin America Region, Peru experienced one of the largest contractions of its labour force in 2020-employment records for the economically active population saw a reduction of 13% [3].…”