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The macroeconomic spillover effects of the pandemic on the global economy


  • Emanuel Kohlscheen
  • Benoit Mojon
  • Daniel Rees


Given the historical persistence of economic activity, the reduction of GDP due to confinement measures is likely to drag on over several quarters. The total GDP shortfall could be as much as twice that implied by the direct initial effects of confinement. This persistence reflects in part two types of spillovers across countries. One is due to the risk that uncoordinated confinements lead to repeated virus outbreaks and confinements across the globe. Another is the more traditional trade and financial integration interlinkages. Economic spillovers and spillbacks across the major economic blocs are large. There is no immunity from the economic effects if the epidemic is controlled in only one or two regions. Countries should adopt confinement, border control and macroeconomic policies that internalise these global considerations.

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  • Emanuel Kohlscheen & Benoit Mojon & Daniel Rees, 2020. "The macroeconomic spillover effects of the pandemic on the global economy," BIS Bulletins 4, Bank for International Settlements.
  • Handle: RePEc:bis:bisblt:4

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    References listed on IDEAS

    1. Andreas Schrimpf & Hyun Song Shin & Vladyslav Sushko, 2020. "Leverage and margin spirals in fixed income markets during the Covid-19 crisis," BIS Bulletins 2, Bank for International Settlements.
    2. Stefan Avdjiev & Egemen Eren & Patrick McGuire, 2020. "Dollar funding costs during the Covid-19 crisis through the lens of the FX swap market," BIS Bulletins 1, Bank for International Settlements.
    3. Raphael Auer & Giulio Cornelli & Jon Frost, 2020. "Covid-19, cash, and the future of payments," BIS Bulletins 3, Bank for International Settlements.
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