By He Jianwu, Department of Development Strategy and Regional Economy, DRC

Research Report, No. 16, 2020 (Total 5760) 2020-2-20

Abstract: Compared with SARS, the special outbreak time, response measures and the domestic and foreign environment of COVID-19 (Coronavirus Disease 2019) have made its impact become more concentrated in terms of time, more extensive in terms of space and more difficult to deal with in terms of policy measures. This paper shows that the duration of the epidemic is the most critical factor in determining the impact of the epidemic. In the short term, the epidemic mainly affects consumer demand such as tourism, retail and catering service sectors as well as transportation. In the medium term, the epidemic will exert more impact on the supply side such as the production and employment of logistics, export volume and micro- small- and medium-sized enterprises. However, the Spring Festival (China’s lunar New Year) provides an important “window period” for mitigating the impact of the epidemic. If the epidemic is well controlled within the “window period”, the medium-term impact will be limited, but if the epidemic lasts longer than the “window period”, the medium-term impact will grow rapidly. Putting the short-term and medium-term impact together, it is estimated that the overall impact of the epidemic on annual GDP growth will optimistically stand at 0.8 percentage points to pessimistically1.6 percentage points.

Key words: COVID-19, epidemic impact, economic growth