Why PET Can Be a Useful Tool?
The COVID-19 pandemic has brought the world into a new era of pandemic economy, the deepest recession since the Great Depression. Measuring the trade-offs between the pandemic and the economy as well as tracking them in a precise and timely manner is key for all major decisions, from community to global levels, to avoid unnecessary costs and find robust recovery strategies.
The first such trade-off is between mobility and economic activities. The contraction of people’s mobility has become a very powerful indicator in explaining the differences in economic performance and expectation across countries. Among the 19 countries and regions that have announced first-quarter GDP, we find that almost three-quarters of the variation in GDP growth can be explained by differences in mobility during this period (Figure 1).
Figure 1. As mobility plummeted worldwide, so did economic performance (GDP) and expectation (PMI)
Source: PET project, using data from Google, Apple, Baidu, and Wind.
This variability across countries results from the fact that the virus arrived at different times during the quarter, and triggered mobility responses of varying speed and intensity. Other factors, such as economic structure, domestic economic and financial policies, and external shocks, are important in the understanding pandemic economy as well, but mobility stands out as a benchmark indicator for its real-time accessibility, high frequency, and global availability.