FlyTitle: The recession in rich countries

Countries around the world are bracing for a deep downturn. Our ranking shows which might suffer most


经济学人双语版-除掉弱者 Picking off the weak

AS THE VIRUS upends productive activity across the world, the question now is how bad things will get. On April 14th the IMF warned that the global recession would be the deepest for the best part of a century. But the severity of the pandemic and the uncertainty around the duration of lockdowns are such that economists’ models, trained on business cycles in the post-war era, are of little use. Some companies, such as Starbucks and Dell, have pulled their guidance on annual earnings, declining even to hazard a guess about the future. Amid the fog, however, one thing seems certain: some economies will suffer much more than others.


Economic crises expose and exacerbate structural weaknesses. Analysis by The Economist of five decades of GDP data finds that growth rates in rich countries tend to converge during expansions, as even the weakest economies are pulled along. Yet during downturns performance diverges markedly. In the first half of the 2000s the average annual gap between the GDP growth rates of the best- and worst-performing rich countries was five percentage points. In 2008-12, in the recession that followed the global financial crisis, the gap widened to ten points.


This recession will be no different. Three factors should help separate the bad economic outcomes from the dire ones: a country’s industrial structure; the composition of its corporate sector; and the effectiveness of its fiscal stimulus. The Economist has used indicators of these to rank, roughly, the exposure of 33 rich countries to the downturn. Some, such as those in southern Europe, appear far more vulnerable than America and northern European countries (see chart).


经济学人双语版-除掉弱者 Picking off the weak

Take industrial structure first. Lockdowns will slam countries that depend on labour-intensive activities. Those with large construction sectors, such as many central European countries, look vulnerable. So do those that rely on tourism—it accounts for one in eight non-financial jobs in southern Europe. Conversely, those with large mining industries, which require less labour, may do better. Here Canada looks relatively insulated.


Industrial structure also influences the share of people who can work from home, and thus dodge the worst disruption of the lockdowns. In a paper published on April 10th Jonathan Dingel and Brent Neiman of the University of Chicago estimate that fully 45% of jobs in Switzerland could plausibly be done from home. Many Swiss work in industries, such as finance, where all they really need to do their job is a laptop. Others elsewhere do not have this luxury. Less than a third of jobs in Slovakia, a big manufacturing hub, can be performed remotely; home working is also difficult in southern Europe. Research by Indeed, a job-search website, and Ireland’s central bank finds that since the pandemic began, countries where home working is less prevalent have seen bigger falls in the number of online job advertisements.

产业结构还影响着有多大比例的劳动者可以在家工作,从而避开封城带来最严重的扰乱。芝加哥大学的乔纳森·丁格尔(Jonathan Dingel)和布伦特·尼曼(Brent Neiman)于4月10日发表的一篇论文估计,瑞士有多达45%的工作似乎都可以在家完成。许多瑞士人在金融等行业工作,他们其实只需要一台笔记本电脑就能干活。其他地方的人可没有这么好的条件。在大制造业中心斯洛伐克,只有不到三分之一的工作可以远程操作;在南欧,居家工作也很难实现。求职网站Indeed和爱尔兰央行的研究发现,自疫情开始在全球流行以来,在远程工作较不普遍的国家,网上招聘广告减少的幅度更大。

The shape of the corporate sector is the second consideration. Economies with a large share of small firms are more likely to be scarred by long shutdowns. Minnows tend to have few if any cash buffers, making it hard for them to survive a drought in revenues. A survey by researchers at the University of Chicago, Harvard University and the University of Illinois finds that a quarter of small firms in America do not have enough cash on hand to last even a month. Nearly half of Italians and Australians work for firms with fewer than ten employees, compared with a fifth in Britain and an even lower share in America.


A third determinant of the economic pain to come is the nature of fiscal support. Rich countries have deployed stimulus on an unprecedented scale. Even by the most conservative estimate, these packages are more than twice as large as in 2008-09. But the size of the stimulus varies widely across countries. Most tallies find that support in America and Japan is the most generous, as a share of GDP; investors, who see their assets as a haven, are happy to provide the necessary funding. Yet some euro-area governments with high debt levels are more cautious, perhaps constrained by the fear that, as members of a currency union, they enjoy only a partial backstop from the central bank. The average fiscal boost in France, Spain and Italy, as a share of GDP, is about half of that provided in Germany.


The design of the stimulus, though, matters as much as its size. Broadly speaking, rich countries have taken one of two approaches to preserving living standards. Some are concentrating on supplementing household incomes. America is sending cheques to families and making unemployment benefits far more generous; Japan is offering handouts to the needy. By contrast, policy in northern Europe and Australia aims mostly to maintain employment by subsidising wages.


Government pledges to protect jobs are normally a bad idea. They prevent workers moving from failing sectors to up-and-coming ones, slowing the recovery. The coronavirus recession may be different, however. If the lockdowns are lifted soon, some European economies will be able to resume production quickly. Elsewhere workers will have to search for jobs, and bosses to hire them. Some American workers will even do better to stay on benefits than find work; according to Noah Williams of the University of Wisconsin-Madison, benefits in six states could exceed 130% of the average wage. That will mean it takes longer for GDP to recover its pre-pandemic level once the lockdowns lift. Instead of leading to a painful few months, the damage could be much longer-lasting. ■

政府出面保障就业通常不是个好主意。这样做会妨碍工人从没落的产业转移到有前景的新兴行业,拖慢经济复苏的步伐。但是,这次冠状病毒导致的衰退可能有所不同。如果不久之后就解除封城,一些欧洲经济体将可以迅速恢复生产。而其他地方的劳动者则不得不重新找工作,雇主也要重新招工。一些美国劳动者依靠失业救济甚至会比重新就业过得更好;威斯康辛大学麦迪逊分校的诺亚·威廉姆斯(Noah Williams)指出,有六个州的救济可能超过了平均工资的130%。这意味着,一旦封城解除,GDP需要更长时间才能恢复到疫情之前的水平。这不只是苦熬几个月的问题,损害可能会长久得多。