Excess Deaths and Economic Production’s Losses During the COVID-19 Pandemic: the Preventing Role of Vaccines and Fiscal and Financial Policies

In this week’s presentation we show that 3 years after the COVID-19 Pandemic hit the world, it has had an enormous toll in lives and economic activity:

  • There have been more than 676 million recorded infectious COVID-19 cases and 6.9 million deaths have been officially recorded due to COVID-19. According to The Economist there have been more than 20.8 million excess deaths from January 2020 to 7 March 2023.

  • The average GDP loss accumulated from 2020 to 2022 is of US $17,002 billion (equivalent to 13% of the $130,444 billion world GDP in 2019), with $8,551 billion (6.55%) in 2020, $5,762 billion (4.41%) in 2021, and $2,689 billion (2.06%) in 2022.

Governments around the world implemented numerous health and economic policies to try to reduce the impact of this pandemic:

  • COVID-19 vaccines started being administered in December 2021, one year after the emergence of the virus. Up to 5 March 2023, 13,335 million vaccines have been administered worldwide.

  • From January 2020 to June 2021, the accumulated fiscal measures to combat the COVID-19 Pandemic accounted for US$10,417 billion (9.7% of World’s GDP), with $1,458 billion (1.4%) in additional health expenditure, $8,882 billion (8.2%) in non-health expenditure. In addition, during the same period, worldwide liquidity support accounted for $6,132 billion (6.2%), with $388 billion (0.4%) in equity injections, loans, asset purchases or debt assumptions, $4,054 billion (4.1%) in credit guarantees, and $1,690 billion (1.6%) in quasi-fiscal operations.

We take advantage of the heterogeneity in the vaccination efforts and fiscal and financial policies during 2020 and the first half of 2021 of 196 countries around the world, to estimate the correlation of those policies with the observed excess mortality and output loss during 2020, 2021 and 2022.

  • Excess deaths are negatively correlated with GDP per capita and positively related to the total cases per million people on 30 June 2021, the share of the population aged 65 or older, the cardiovascular death rate, the prevalence of diabetes, and the share of female smokers. Vaccination efforts from December 2020 to June 2021 are negatively correlated to excess deaths. Health sector expenditure is positively related to excess deaths, which could signal the multidirectional effect that managing a stronger pandemic requires higher expenses. Non-health sector expenditure and liquidity support are negatively correlated with excess deaths. Therefore, early vaccination efforts and higher non-health sector expenditure and liquidity support were associated with fewer excess deaths.

  • Output loss is positively correlated with the average GDP growth from 2000 to 2019 and GDP per capita. There is no statistically significant correlation with excess mortality. Despite there is a negative correlation with people vaccinated per hundred in the initial 7 months of administration, the effect is not statistically significant. Discretionary health sector expenditure is negatively correlated with output loss. Non-health discretionary expenditure is also negatively correlated with output loss, but the effect is not statistically significant.  Liquidity support is positively correlated with output loss, but the effect is not statistically significant. Therefore, a higher discretionary health sector expenditure was associated with a smaller output loss.

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