Economic prosperity depends on the mobility and connection of various factors of production, which are being shut down by COVID-19. We find that the contraction of people’s mobility has become a dominant indicator to explain the differences of economic performance between countries. Among the 19 countries and regions that have announced GDP in the first quarter of 2020, the vast majority (3/4) difference of GDP growth can be explained by the difference of mobility. This is unimaginable during normal times.
It is high-time to define and grasp the nature of the pandemic economy, which is much more complex than the simple addition of an extra word before economy. At the macro level, the pandemic economy and policy responses have been tightly linked, profoundly affecting each other. In face of unprecedented uncertainties, decision-makers must understand the dynamic interactions between the pandemic and the economy to make robust decisions.
After the outbreak of the epidemic, all countries must first effectively control the epidemic at the cost of sacrificing the flow of people and economic activity, so as to realize economic recovery. At such a moment, it becomes particularly important and urgent to define, measure and track the epidemic economy. Epidemic economy is not an economic superimposed epidemic, but a triangle with deep mutual influence among epidemic situation, economy and policy response. Misjudgment of the three will bring painful economic and life costs, and the loss will rise exponentially with time.
Luohan Academy launches the global Pandemic Economic Tracker (PET), so that the global community can better understand the general patterns, the status of the countries in the pandemic economy, the challenges that can be expected, and the key choices to help make decisions.