Macroeconomic Implications of the Fight against COVID-19: First Estimates, Forecasts, and Conclusions
Macroeconomic Implications of the Fight against COVID-19: First Estimates, Forecasts, and Conclusions

Summary/Abstract: The COVID-19 pandemic has triggered a massive spike in uncertainty all over the world. Bulgaria is no exception. Major uncertainties surround almost every aspect of human life: the infectiousness, prevalence, and lethality of the virus; the capacity of healthcare systems to meet the challenge; how long it will take to develop ‘herd immunity’; how long and how strong should social distancing be; how long it will take to develop and deploy safe, effective vaccines etc. On top of all this comes the economic uncertainty. There is no doubt the pandemic is having immediately visible effects on economic activity. The rapid contraction in economic activity, the collapse of trade, and the dramatic increase in the unemployment rate are without precedent. Our goal here is to assess near-term macroeconomic effects of these COVID-induced uncertainties. To this end we look at the measures taken worldwide and in the EU in particular, focusing on Bulgaria’s main trading partners. We develop three different scenarios for the economic development by the end of 2020 based on different assumptions with regard to the severity of the external shock as well as the duration of the social distancing.

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