The coronavirus pandemic poses enormous economic challenges for the EBRD regions. The economic impact of domestic containment measures has been compounded by external shocks such as lower commodity prices, depressed demand for exports across the board and disruptions to value chain linkages, as well as a collapse in tourism.
In a series of economic monitors, we examine the impact of the on the countries where we work. Short notes are published alongside the accompanying datasets.
The notes complement the latest economic forecasts published in our Regional Economic Prospects.
A collection of podcasts and webinars on the economic effects of the coronavirus pandemic is also provided below.
The Covid-19 Shock: Effects on the Migrant Labour Force and Remittances
While everyone faces a risk of infection, the economic shock associated with Covid-19 has been far from even, hitting the most vulnerable hardest. We show that migrants are more likely to be concentrated in occupations and sectors most affected by closures and are less likely than natives to be able to work from home. They are also less likely to have permanent contracts. This makes them especially vulnerable to job and income losses. In line with this, remittances have already fallen sharply to many economies. Many migrants also appear to have returned to their home countries, at least temporarily, suggesting that remittances may fall further going forward.
Not all in this together? Early estimates of the unequal labour market effects of Covid-19
Recent studies have highlighted the unequal labour market effects of the Covid-19 crisis in advanced economies. We contribute to this literature by drawing on a new survey of almost 40,000 adults in 14 advanced as well as emerging economies conducted in August 2020. We show that while labour market impacts are, on average, more severe in emerging markets, these are less unequally distributed than in advanced economies. In line with the findings of existing studies for advanced economies, we document that job losses in emerging markets are also concentrated among the young, less educated and those with lower levels of income before the pandemic. However, we find that the likelihood of job losses falls less sharply with income in emerging markets than in advanced economies. Drawing on a similar survey conducted in 2010 we show that, unlike the Global Financial Crisis, the Covid-19 crisis disproportionately hit women. Job losses also appear to me more concentrated among the young now than during the Global Financial Crisis.
The Political Scar of Epidemics
What will be political legacy of the Coronavirus pandemic? We find that epidemic exposure in what psychologists refer to as an individual’s “impressionable years” (ages 18 to 25) has a persistent negative effect on confidence in political institutions and leaders. We find similar negative effects on confidence in public health systems, suggesting that the loss of confidence in political leadership and institutions is associated with healthcare-related policies and their limitations at the time of the epidemic. In line with this argument, our results are mostly driven by individuals who experienced epidemics under weak governments with less capacity to act against the epidemic, disappointing their citizens. We provide evidence supportive of this mechanism by showing that weak governments took longer to introduce policy interventions in response to the COVID-19 outbreak. These results imply that the Coronavirus may leave behind a long-lasting political scar on the current young generation (“Generation Z”).
Ease of exiting social distancing and achieving economic recovery in the EBRD regions
This note pulls together various indicators associated with greater ease of exiting social distancing and achieving economic recovery in the context of Covid-19. Based on the severity of the Covid-19 outbreaks, demographic structures, economic geography, the structure of the labour markets and the magnitude of the pledged fiscal response, many economies in the EBRD regions are better positioned to exit social distancing than emerging-market and advanced-economy comparators.
Covid-19 repository of policies: EBRD policy comparator
We are establishing a repository of policies adopted in response to the pandemic to track systematically each country’s experience and draw lessons, both within the regions and from selected countries elsewhere. Over time, the repository will be used to identify innovative and effective policies that bring real benefits in terms of economic resilience and recovery and can be introduced more widely. The repository will include various knowledge products, including country pages, in-depth case study analysis, webinars and other relevant materials.
This note examines the resilience of economies to the Covid-19 shock, reflecting the strength of their health systems, the structure of output and labour markets, the extent of exposure to various external shocks, availability of fiscal space and the ability of the financial system to absorb a rise in non-performing loans.
Coronavirus credit support: Don’t let liquidity lifelines become a golden noose (VoxEU blog)
As lockdown measures continue, or are relaxed only gradually, many small businesses continue to experience significantly reduced turnover. This column reports on a firm-level analysis across 16 emerging markets, and three Western European comparator countries, in order to gauge the potential risks associated with debt-driven COVID-19 support. The overall goal is to prevent a wave of bankruptcies that could break valuable relationships between firms and their suppliers and employees. However, liquidity support in the form of additional bank lending may create debt-overhang problems in the future and therefore requires careful targeting.
Revenge of the Experts: Will COVID-19 Renew or Diminish Public Trust in Science? (EBRD Working Paper)
An effect of the COVID-19 pandemic, it is sometimes suggested, will be to reverse the secular trend toward questioning the value of scientific research and expertise. We analyse this hypothesis by examining how exposure to previous epidemics affected the confidence of individuals in science and scientists. Consistent with theory and evidence that attitudes are durably formed when individuals are in their impressionable years between the ages of 18 and 25, we focus on people who were exposed to epidemics in their country of residence at this stage of the life course. Combining data from a 2018 Wellcome Trust survey of more than 70,000 individuals in 160 countries with data on global epidemics since 1970, we show that such exposure has no impact on views of science as an endeavour or on opinions of whether the study of disease is properly an aspect of science, but that it significantly reduces confidence in scientists and the benefits of their work. These findings are robust to a variety of controls, empirical methods and sensitivity checks. We suggest some implications for how scientific findings are communicated and for how scientists seeking to inform and influence public opinion should position themselves in the public sphere.
The Covid-19 shock: Employment in middle-income economies (VoxEU blog)
While flexible labour markets normally facilitate economic adjustment during crises, recent Google search data suggest that the widespread Covid-19 lockdowns may impede this adjustment process. This column explores how labour market structures may determine how employment levels across middle-income countries are affected by the shock. The impending job and income losses are likely to be most severe where fewer people have permanent contracts, where many are self-employed, and where more people work for small firms and in retail. In the long term, these asymmetric impacts may further increase the demand for public-sector jobs.
Jobs at risk: Policy responses to COVID-19 in emerging markets (VoxEU blog)
Small businesses, especially in retail and services sectors, which account for the vast majority of employment in the European region, have borne the brunt of the COVID-19 crisis. This column provides estimates of job displacement and surveys the policy measures taken by 38 emerging economies in Europe, Central Asia, and the Southern and Eastern Mediterranean in response to the economic disruptions. Given the predominance of small businesses in employment, job displacement rate in many of these economies is expected to reach 30%. In the presence of constraints on fiscal measures and limited administrative capacity to disburse funding, second-best measures such as price control have been implemented widely.
Podcasts and webinars
International economic cooperation post COVID-19: A discussion panel
Globalisation in the post-COVID world
Fiscal policy and the post Covid-19 social contract
Is technology in the era of Covid-19 a threat to democracy?
Will capitalism survive the coronavirus pandemic?
The political economy of COVID-19: What do we learn from Emerging Europe?
The future of capitalism post Covid-19 crisis
Coronavirus and the future of trust and populism
What does the coronavirus pandemic mean for gender inequality?
Will COVID-19 reshape the global economy?
What does the coronavirus pandemic mean for impact investing?
Can open borders survive the coronavirus pandemic?
How will the coronavirus pandemic affect the global economy?
- Coronavirus and the global economy: What next?