In 2020, the global society and economy changed dramatically as the COVID-19 pandemic devastated almost all countries. Here, we put together 10 charts to highlight some of the most important facts and learnings from the pandemic economy, including a side-by-side comparison of the distinct strategies taken by China and the U.S., their interactions and the ramifications.
The COVID-19 crisis highlights the need for urgent actions to halt the spread of the virus, but imposing tight restrictions on movement also means hindering economic activity. Planning for the short-term outlook, governments need to balance the public health risks with the economic costs. Despite the extraordinary efforts of some governments to contain the virus, countries like the United Kingdom and Sweden have implemented the ineffective strategy of herd immunity from the basis of misjudgment.
In fact, without early interventions to successfully contain the outbreak, any premature actions to reopen the economy could damage the long-term economic prospects and cost further human lives. This is evident in countries like the United States and Brazil that have precipitated economic reopening and population mobility.
The chart below illustrates that among the major economies, those who have timely imposed containment measures and successfully curbed the outbreak of COVID-19 have significantly less economic loss and deaths than those who have waited and hesitated.
Although imposing stringent containment measures at an early stage would lead to an temporary contractionon economic growth, countries who have acted early enjoy a faster economic recovery in the long-term by effectively mitigating and containing the outbreak. The chart below illustrates the loss of economic activity in three different regions over the course of the pandemic. It can be seen that regions like East Asia performed significantly better on epidemic control compare to Europe and North America and suffered less economic loss than the latter ones.
The objective to successfully contain the outbreak requires social distancing measures to break the chain of transmission. However, restrictions on mobility come with a significant economic cost. In June, Luohan Academy launched its Global Pandemic Economy Tracker (PET). The program uses real-time big-data , as opposed to using the inexpedient conventional metrics like the GDP, to measure economic activity and mobility. In the graph below, we have listed 30 major countries in the world at each of their stage of the five phases of pandemic economy. (Learn more on Pandemic Economy Tracker (PET) Framework and Methodology)
China and the U.S. vary cosiderably in their handling of the COVID-19 and the results differ correspondingly. Two of the world's largest economies are now at complete different phases of pandemic economy recovery.
China's positive GDP growth in the second quarter of this year has benefited its fast export growth whilethe rest of the world were still in the midst of lockdown. At the same time, the Sino-US economic relations have grown tighter, at least temporarily, despite the unresting decoupling attempts from the U.S. such as imposing tariffs on Chinese exports.
Because of China's advantage in having an earlier economic recovery, the difference in stimulus measures between China and the U.S. puts China in a leading position in production while the U.S. leads in consumption. Looking ahead, there's a challenge of strengthening the domestic demand and consumer confidence in China.
Any monetary policy and fiscal policy instituted in the pandemic economy involves long-term risks, given the uncertainty around COVID-19. The fiscal stimulus policy is effective to the extent of debt-constrained agents benefit. We've shown that the corporate debt-to-GDP ratio is higher in China, while government debt is significantly higher in the US.
The U.S. and China dealt with the outbreak of the COVID-19 pandemic in vastly different ways, diverging both countries' economies into two directions. International investors have expressed their confidence in respective countries through the stock markets.
On November 15, 2020, fifteen countries have signed on the establishment of the Regional Comprehensive Economic Patnership (RCEP), the world's largest free trade zone to date. Under the current prevailing trend of ”slowbalization,” the signing of RCEP is conducive to boost free trade at a time that the pandemic poses challenges to global commerce. The graph below shows that the member nations of the RCEP bloc performed relatively well on containing the virus comparing to other regions, so that their recovery will continue tobenefit from this free trade deal. The RCEP bloc is on track to drive the global economic recovery in a post-pandemic era.
However, the pandemic economy is far from rounding the corner when there might even be chance of getting worse. The new variants of COVID-19 have changed the course of the pandemic and raise uncertainty as countries introduce vaccine rollouts. In December, more than 10,000 lives worldwide were lost daily due to the virus, far exceeding many other common diseases. The global daily average deaths are expected to continually increase in early months of 2021. We are faced with a grim reckoning of the long darkness before dawn.
The covid-19 crisis will go down in history as the event that reshaped society in lasting ways. We have put together the 2020 and 2021 forecast of major economies projected in the World Economic Outlook by IMF.
Behind the charts and figures are countless victims, bankrupted SMEs, and broken families. We feel very heavy as we put together the charts and look back at 2020. The COVID-19 pandemic is a wake-up call and we must learn our lessons maintaining united in the year ahead to end this pandemic through global coordination and solidarity. Good riddance to 2020 and we look forward to building a brighter 2021 together.