The Group B countries, those that have performed well in many indicators but lagged in others, include Belgium, France, the Netherlands, USA, and Japan. Further down the ranking we find Austria which, despite its smallest GDP drop among the 12 countries has been classed in Group C – along with Italy – due to other main shortcomings.
The bottom tier (Group D) is formed by Spain and the UK. Spain is foreseen to experience the steepest drop to its GDP rate while the UK ranks amongst the worst in terms of unemployment, which is expected to almost double compared to its January figures.
Furthermore, we have observed that countries with higher mortality rates also face a higher drop in GDP, with the exception of Sweden and Switzerland which, despite their relatively high fatality rates have seen only a moderate hit to their economic output. Another exception to the rule, albeit from the other end of the spectrum is the UK which has experienced a relatively low number of infections but has been severely affected economically.
Recommendations to mitigate the COVID-19 impact
Despite the speed of change to the world of work due to coronavirus, we find that similarly to our conclusions on the positive effects of short-term work and the size of countries’ economic support, our recommendations have also been reaffirmed over the past month. If anything, they have become even more relevant than before. We advise policy-makers to consider the following five points:
Keep up the economic activity: while workers’ health and safety is the absolute baseline and the unique specificity to this crisis, it is becoming apparent that every week without an economic activity exponentially increases the negative economic impact of the crisis and reduces the potential for economic recovery.
Be responsive: a month in, our data confirm that the countries that have reacted swiftly and put in place an economic stimulus package have supported the upkeep of GDP. Important at this stage of the crisis is that the support measures are being extended and adjusted – notably by adding funds to the stimulus packages and prolonging the support schemes.
Respect social peace: more than any crisis before, this pandemic demands the cooperation of all country decision-makers. Countries with a model of social dialogue based on negotiation rather than confrontation show better results and higher trust in the political process and consumer confidence which are key to accelerating the pace of recovery.
Support employment: our data confirm that short-time work and other similar schemes have helped keep people in work and thus avoid mass lay-offs. Implementation of those schemes varies from country to country in terms of inclusiveness, volume, and duration but countries, where these schemes have worked in conjunction with the already existing social protection mechanisms have fared better than others.
Focus on driving the financial support to the beneficiaries: with a month passed and due to delays, businesses and workers in many countries are yet to receive the promised support as outlined in the respective stimulus packages. A lack of timely delivery will hamper consumption and lead to increased poverty and bankruptcies which will impact negatively on economic recovery.