Global economic footprint of the COVID-19 pandemic

Abstract

Countries around the world have sought to stop the spread of the 2019 novel coronavirus (COVID-19) by severely restricting travel and in-person commercial activities. Here, we analyse the economic footprint of such “lockdowns” using detailed datasets of global supply chains and a set of pandemic scenarios. We find that COVID-related economic losses are largely dependent on the number of countries imposing lockdowns, and that losses are more sensitive to the duration of a lockdown that its strictness—suggesting that more severe restrictions can reduce economic damages if they successfully shorten the duration of a lockdown. Our results also highlight several key vulnerabilities in global supply chains: Even countries that are not directly affected by COVID-19 can experience large losses (e.g., >20% of their GDP)—with such cascading impacts often occurring in low- and middle-income countries. Open and highly-specialized economies suffer particularly large losses (e.g., energy-exporting Central Asian countries or tourism-focused Caribbean countries). Supply bottlenecks and declines in consumer demand lead to especially large losses in globalized sectors such as electronics (production decreases of 13-53% across our scenarios) and automobiles (2-49%). Although retrospective analyses will undoubtedly provide further policy-relevant insights, our findings already imply that earlier, stricter, and thus shorter lockdowns are likely to minimize overall economic damages, and that global supply chains will magnify economic losses in some countries and industry sectors regardless of direct effects of the coronavirus.

Socio-Economic Impacts of COVID-19 on Household Consumption and Poverty

“…However, there is now growing evidence of second-round effects, with unemployment growing in sectors that are not directly impacted by the containment, but by supply chain effects (e.g., affected firms reducing demand for other firms) or the aggregate drop in demand. To estimate these effects, a next step is to connect the household model presented here to an Input-Output model, such as the one used in (Guan et al 2020) to look at how COVID-19 affects global supply chains, or a Computable General Equilibrium (CGE) model. Alternatively, using payroll data such as the Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) or other employment data can be used as an input to the model for a better representation of labor income loss by industry sector.…”

The COVID-19 lockdowns: a window into the Earth System

“…By amplifying underlying inequities in the distribution of resources, the socioeconomic disruption caused by the response to COVID-19 will almost certainly have negative long-term impacts on human health and well-being. In particular, the economic shock is likely to increase the extent and severity of global poverty 50 , both from direct impacts on health, employment and incomes and through disruptions of supply chains and global trade 51 . The severe impacts on poverty rates and food security that are already emerging 50 are indicative of these disruptions and are a sign of how tightly many of the world's poorest households are now interwoven into the global economy.…”

“…2a) and extends across the seasonal transition from Northern Hemisphere winter to summer (and potentially beyond). Further, the scale of economic impacts suggest the possibility of sustained recession -or even depression -following the cessation of large-scale sheltering 51,66 . An extended period of substantially reduced economic activity would produce a trajectory of Earth System forcing that remains different from the pre-COVID-19 forcing, well after the COVID-19 restrictions are removed.…”

The propagation of economic impacts through supply chains: The case of a mega-city lockdown to prevent the spread of COVID-19

“…Third, although the econometric analysis of /citeBarrot2016, Boehm2019, Carvalho2016, Kashiwagi2018 quantitatively confirms propagation through supply chains, their analysis cannot estimate the total effect of a shock that can be obtained from the framework of Inoue and Todo [7]. Finally, the studies estimating the effect of COVID-19 rely on either a macroeconomic econometric model at the country level [14] or a general equilibrium model assuming international and inter-sectoral IO linkages [6,[15][16][17] and thus do not incorporate complex inter-firm linkages. As a result, the estimates of the previous studies may be largely undervalued, as suggested by the findings of Inoue and Todo [7].…”