Daily Management Review

World's largest economies lose 7.1% of GDP due to lockdowns


Lockdowns and other restrictive measures during the pandemic cost the largest economies an average of 7.1 percentage points of GDP, according to a joint review by ACRA and Chinese rating agency Golden Credit Rating.

A total of 27 countries accounting for 81% of global GDP were taken into account in the study. The analysts' conclusion was that the depth of the economies' decline depended primarily on their structure and the severity of quarantine measures.

India, the Philippines, Spain and the UK had the strictest measures and the biggest losses (as compared to expected growth). The exceptions were China, Turkey, Vietnam and Kazakhstan, which suffered far fewer losses than the others. The first three countries even managed to maintain a positive GDP trend: in Vietnam, growth in 2020 was 2,9% (connected both to the low number of illnesses and the entry into force of a free-trade agreement with the EU), in China it was 2,3% and in Turkey 1,8%.

In Spain, a large tourism sector was a factor in the additional recession, while in the UK, Brazil and Italy a shortage of hospital beds led to tighter restrictions. Also contributing to the downturn were the high proportion of investment-oriented goods in industry (the case of Germany and Switzerland) and the low proportion of online business in retail and finance.

Among the sectors, the hardest hit were predictably transport (minus 10.7% compared to 2019), construction (minus 7.4%), mining (minus 7.4%) and services (minus 7.7%). Manufacturing and retail also suffered from restrictive measures, but managed to recover to varying degrees in the second half of 2020.

Analysts note that the speed of economic recovery will be influenced by the pace of vaccination. They will inevitably be uneven, which could predetermine the impact of new outbreaks, the report's authors point out. So far, the global average is only ten doses of vaccine per 100 inhabitants, which is not enough to eliminate restrictions. Israel, the United Arab Emirates, the United Kingdom, the United States and Singapore now lead in the vaccination rate.

source: bloomberg.com