Economic impact of rapid, forceful anti-COVID measures?

In November 2021, Michael König, Project Manager at the FS-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, and Adalbert Winkler, Professor of International and Development Finance at Frankfurt School, published the results of their research into the impact of different COVID-19 strategies on economic growth in the international specialist journal Public Library of Science. In their article on “The impact of government responses to the COVID-19 pandemic on GDP growth: Does strategy matter?”, they investigate whether and to what extent countries that in 2020 adopted what is generally termed a “no-COVID” strategy (Australia, China, Japan, New Zealand and South Korea) were obliged to accept lower GDP growth rates than other countries as a result of responding rapidly and forcefully to rising incidences of infection by taking measures ranging from prescribing strict limits on social contact through to imposing full-scale lockdowns.

The researchers show that this hypothesis does not reflect the reality. On the contrary, in those countries that responded slowly and moderately to rising infection rates – such as Germany, France, the United Kingdom, Austria, the United States – similar COVID control measures had a significantly greater impact on GDP growth than in countries that relied on rapid elimination of the virus (by taking the no-COVID approach).

At first glance, these results tend to contradict the thesis – often heard in public debate – arguing that tough anti-viral measures have a disproportionately damaging impact on economic development. At the same time, however, they also show that the elimination strategy was pursued primarily by countries that had certain advantages based on, for example, their insularity and/or comparatively limited trade connections, when designing and implementing an effective no-COVID strategy. Consequently it is not entirely clear whether other countries would have been able to combat the pandemic with less impact on their respective economies if they had adopted the same strategy.

The article is available for downloading here.

The article forms part of an ongoing research project that has already published previous analyses in Intereconomics (July 2020), CEPS Covid Economics (November 2020), Intereconomics (February 2021) and Wirtschaftsdienst (March 2021).