We wanted to understand which government responses lead to the best economic outcomes. This isn’t easy because the situation is evolving, with different regions at different stages of the pandemic and facing varying levels of exposure. As China and Asia are resurfacing, the effects of the virus are slowly but surely hitting the Americas – with different magnitude depending on the country. In Europe, countries such as Austria and Switzerland are beginning to ease their lockdowns, while Italy and Spain are being more cautious.
Nevertheless, macroeconomic analysis of 10 European countries gives a sense of which measures have been successful and which have not. We looked at GDP, unemployment, stock market levels, economic sentiment and purchasing intentions to estimate the scale of the economic cost of COVID-19. The results, with the caveat that they paint the picture of mid-April 2020, were informative.
The stimulus package is key
We looked at the link between the range and number of policy measures and their economic impact – and saw none. As often, quantity and quality often don’t go hand in hand.
Furthermore, the number of confirmed cases of COVID-19 in a country is not the best determinant of economic impact. France, where the focus was aggressively on reducing the number of infections, is facing a stiff economic price, with the third largest drop in GDP and a significant unemployment increase.
Switzerland, Italy and Spain have a similar number of cases per million inhabitants, but Switzerland is in a much better position economically.