Global Macroeconomic Scenarios of the COVID-19 Pandemic

60 Pages Posted: 30 Jun 2020 Last revised: 1 Jul 2020

See all articles by Warwick J. McKibbin

Warwick J. McKibbin

Australian National University

Roshen Fernando

The Australian National University; Centre of Excellence in Population Ageing Research (CEPAR); Centre for Applied Macroeconomic Analysis (CAMA), Crawford School of Public Policy

Date Written: June 25, 2020

Abstract

The COVID-19 global pandemic has caused significant global economic and social disruption. In McKibbin and Fernando (2020), we used data from historical pandemics to explore seven plausible scenarios of the economic consequences if COVID-19 were to become a global pandemic. In this paper, we use currently observed epidemiological outcomes across countries and recent data on sectoral shutdowns and economic shocks to estimate the likely impact of COVID-19 pandemic on the global economy in coming years under six new scenarios. The first scenario explores the outcomes if the current course of COVID-19 is successfully controlled, and there is only a mild recurrence in 2021. We then explore scenarios where the opening of economies results in recurrent outbreaks of various magnitudes and countries respond with and without economic shutdowns. We also explore the impact if no vaccine becomes available and the world must adapt to living with COVID-19 in coming decades. The final scenario is the case where a given country is in the most optimistic scenario (scenario 1), but the rest of the world is in the most pessimistic scenario.

The scenarios in this paper demonstrate that even a contained outbreak (which is optimistic), will significantly impact the global economy in the coming years. The economic consequences of the COVID-19 pandemic under plausible scenarios are substantial and the ongoing economic adjustment is far from over.

Keywords: Pandemics, infectious diseases, risk, macroeconomics, DSGE, CGE, G-Cubed

JEL Classification: C54, C68, F41

Suggested Citation

McKibbin, Warwick J. and Fernando, Roshen, Global Macroeconomic Scenarios of the COVID-19 Pandemic (June 25, 2020). CAMA Working Paper No. 62/2020, Available at SSRN: https://ssrn.com/abstract=3635103

Warwick J. McKibbin (Contact Author)

Australian National University ( email )

Crawfrod School of Public Policy
Canberra, ACT 2600
Australia
02-61250301 (Phone)
02-62735575 (Fax)

HOME PAGE: http://www.sensiblepolicy.com

Roshen Fernando

The Australian National University; Centre of Excellence in Population Ageing Research (CEPAR) ( email )

Canberra, Australian Capital Territory 2601
Australia

Centre for Applied Macroeconomic Analysis (CAMA), Crawford School of Public Policy ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

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