This week’s Bank and Finance presentation reviews the Gross Domestic Product (GDP) losses around the world in the aftermath of the COVID pandemic and escalating geopolitical tensions in the 2020 to 2023 period.
The expected world’s GDP loss accumulated from 2020 to 2023 is $26,732 billion (equivalent to 20.35% of the $130,580 billion world GDP in 2019). The realized losses are $8,472 billion (6.49%) in 2020, $5,458 billion (4.18%) in 2021, and $5,919 billion (4.47%) in 2022. The expected GDP loss for 2023 is $6,882 billion (5.21%).
Even though, after the COVID-19 pandemic, most countries resumed economic growth in years 2021 or 2022, they are still lagging their pre-COVID trends. Relative to potential, defined as the 2000 to 2019 average growth, the mean output losses in the years 2020 to 2023 are 8.62%, 7.75%, 7.36%, and 7.81%, respectively, where these percentages are expressed in the 2019 real GDP level. Median values and 5% and 95% bounds in parenthesis of the GDP losses are 7.51% (1.11%, 20.40%) in 2020, 6.73% (-0.74%, 23.36%) in 2021, 6.85% (-2.70%, 24.71%) in 2022, and an expected 7.88% (-4.23%, 28.08%) in 2023.
In the 2020 to 2022 period, the accumulated world’s GDP loss was 15.20% of 2019 GDP. By income levels, based on the World Bank country classifications, high-income countries lost 12.13%, upper middle-income countries lost 20.28%, lower middle-income countries lost 25.21%, and low-income countries lost 20.43%. By regions, North America lost 7.98%, Latin America and the Caribbean lost 18.52%, Europe and Central Asia lost 14.38% with the European Union losing 13.12%, the Sub-Saharan Africa lost 20.68%, the Middle East and North Africa lost 18.70%, with the Arab World losing 24.24%, South Asia lost 29.49%, while East Asia and Pacific lost 19.3%.
The presentation provides individual information about potential and observed GDP, and the GDP loss in years 2020, 2021, 2022 and 2023, all expressed as a percentage of 2019 GDP for 215 countries and territories and 48 regions and country groups.
To aid interpreting the tables, we provide graphical examples of the GDP loss in the United States, China, and Mexico in the 2020 – 2023 period. For the US expected accumulated GDP losses are equivalent to USD 1,759 billion (8.58% of its 2019 GDP), for China accumulated losses are USD 11,567 billion (51.42% of its 2019 GDP), and for Mexico losses are USD 779 billion (31.04% of its 2019 GDP).
GDP Losses Around the World in the Aftermath of the COVID Pandemic and Escalating Geopolitical Tensions, 2020 – 2023
Alberto Ortiz, October 18, 2023.