The pandemic may have directly affected and especially the sectors of the economy that depend on some contact or physical proximity, as is the case with restaurants, transport or retail. But the spillover effect has extended its impact to virtually all sectors through the imbalance between supply and demand, which have collapsed simultaneously.
For the IMF, and according to the report released this Wednesday on the impact of the pandemic, one of the main and most effective means of response is the policies and support with a direct impact on GDP introduced, where the more advanced economies have greater room for maneuver . Even so, Portugal presents in the group of member states one of the lowest efforts as a percentage of GDP.
In a second line, the IMF believes that “the extent of recovery will depend on the persistence of economic damage, or” scarring “, in the medium term”, which should vary depending on the economic structure of each country and the weight of its contact sectors . In the case of Portugal (not mentioned directly in the report), where tourism was responsible for almost 20% of the value of exports in 2020 and in view of the uncertainty that still remains in relation to the pandemic and the vaccination process, this recovery must still be more time consuming.
On the other hand, the country has managed to adapt well to the “new normal” – more digital – which is, according to the IMF, an asset for the future, with the impact on the country’s business fabric still to be determined. With the bankruptcy of small and medium-sized companies plagued by the pandemic, the IMF highlights the risk of “growth in the market power of dominant companies” that will see their market share grow.
Greater impact on emerging and developing economies
The IMF predicts that “low-income countries will perform worse, on average, than in the wake of the last global financial crisis” due to their limited capacity to respond through budgetary impact policies “.
Among the remaining economies, the forecasts now drawn indicate “that the losses of advanced economies are much lower than in emerging markets and developing economies”, much because of their superior capacity “through budgetary policies and greater anticipation of access to vaccination and therapies “.
One of the peculiarities of the economic crisis generated by the covid-19 pandemic is the way it affects economies of different structures differently. According to the IMF, “economies that are more dependent on tourism have a greater share of contact sectors” which results in the prediction of “more persistent losses” due, in many cases, to the limited space for “policies, responsiveness of health and livelihood support “of the population.
Also, the general closure of schools has a greater impact in the poorest countries, which leads the IMF to affirm that “individual income losses and damage to aggregate productivity can be one of the key legacies of the covid-19 crisis”.
“These differences in expected losses underline the importance of universal access to vaccination for both health and economic outcomes,” adds the IMF.
Get the latest news delivered to your inbox
Follow us on social media networks