This paper was prepared for the e-book “Monetary Policy and Central Banking in the Covid Era,” edited by Bill English, Kristin Forbes, and Ángel Ubide and published in June 2021 by the Centre for Economic Policy Research and the International Center for Monetary and Banking Studies. It is based on data available as of March 2021.
2020 was a year like no other. The official death toll of the COVID-19 pandemic, likely substantially understated, was close to 2 million people worldwide, and continues to rise rapidly into 2021. World economic activity declined by 3.3 percent when measured with weights based on purchasing parity—the worst peacetime decline since the Great Depression. By comparison, during the global financial crisis of 2008-09 world GDP declined by 0.1 percent. While the crisis affected the entire world economy, its incidence across the world was very uneven. At the country level, this reflected primarily three factors: the severity and duration of the domestic pandemic; the sectoral composition of economic activity, including the relative importance of contact-intensive sectors and the ease to work remotely; and the dependence on foreign demand, especially for travel and tourism. Within countries, the crisis impact was particularly severe for low-wage workers, especially women and the young, given the magnitude of their employment in contact-intensive sectors. A further hit to the employment for women came from the protracted school closures, which triggered a sharp decline in labor force participation among mothers.
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