The hit of the novel coronavirus outbreak to China's economy

Hongbo Duan; Qin Bao; Kailan Tian; Shouyang Wang; Cuihong Yang; Zongwu Cai

doi:10.1016/j.chieco.2021.101606

The hit of the novel coronavirus outbreak to China's economy

China Econ Rev. 2021 Jun:67:101606. doi: 10.1016/j.chieco.2021.101606. Epub 2021 Feb 27.

Authors

Hongbo Duan¹, Qin Bao^{2

3}, Kailan Tian^{2

3}, Shouyang Wang^{1

2

3}, Cuihong Yang^{1

2

3}, Zongwu Cai⁴

Affiliations

¹ School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China.
² Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China.
³ Center for Forecasting Science, Chinese Academy of Sciences, Beijing 100190, China.
⁴ Department of Economics, University of Kansas, Lawrence, KS 66045, USA.

Abstract

Broke out at the end of 2019, the novel coronavirus pneumonia (COVID-19) has been spreading throughout the world, leading to more than 87 million confirmed infections and 1.88 million fatalities. Motivated by this, we evaluate the economic impacts of COVID-19 outbreak on both national and industrial levels by employing quarterly computable general equilibrium (CGE) model. Our results reveal that the epidemic may lower China's economic growth in 2020 by 3.5%, versus 4.4% for final consumption (relative to baseline). The service industry suffers the most from the outbreak, and the Accommodation-Food-Beverage service, Wholesale-Retail Trade, and Transport-Storage-Post are identified as the most vulnerable sectors, with the negative impact on output reaching as high as 14.6%. When moving to 2021, the hit to economy shrinks to 2% (1.2-2.7%), with industry estimated to be the most affected sector instead. This study indicates that implementing effective measures for preventing and controlling the epidemic and policies for post-disease economic recovery play critical role in curbing the potential economic damage.

Keywords: COVID-19; China; Economic impact assessment; General equilibrium modeling.