The Great Economic Shutdown: a quarter of the cake gone

We estimate the shutdown measures in place today on account of the Covid-19 outbreak are leading to a 20-25% reduction in economic activity in most advanced markets. The different sector compositions of countries will be a main factor in determining the size of the impact. Emerging markets are likely impacted more given their larger (in relative terms) consumer-facing sectors. Meanwhile, large public services and manufacturing sectors will contribute to stronger resilience in some other economies.

Key takeaways

  • Shutdown measures in major advanced economies lower overall economic activity by around one quarter, the biggest hit coming in the services sector.
  • Every week of shutdown costs about 0.5% of annual GDP.
  • Emerging markets are more vulnerable, with a 22-29% loss in output.
  • Despite a large services sector, the US is less vulnerable due to a large share of the public sector.
  • Sectors to suffer the most are hospitality, wholesale and retail trade, air travel, and other consumer facing services.
  • The extent of overall output losses will depend on length and severity of shutdowns, sectoral compositions of economies, and policy measures.

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Economic Insights The Great Economic Shutdown: a quarter of the cake gone

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