Winners and Losers: An Analysis of the Performance of Some Economies During the Pandemic

Winners and Losers: An Analysis of the Performance of Some Economies During the Pandemic

Winners and losers

Our analysis of which economies have done best and worst during the pandemic

The speed at which the Great Recession of 2020 rebounded surprised many forecasters. The combined output of the 38 OECD members may have exceeded the levels a few months ago before the pandemic. The average unemployment rate across the OECD was 5.7 percent, unchanged from the post-war average. Inflation-adjusted total household income is higher than it was before the COVID-19 outbreak. Despite the emergence of several variants of the novel coronavirus, the overall situation is very optimistic. But there is a clear difference behind this. The pandemic has created winners and losers – and the gap between them could continue into 2022.

The speed from the enormous recession of 2020 of the economic bounce­back has taken many forecasters by surprise. Output across the 38 mostly rich OECD countries combined probably surpassed its pre­pandemic level a few months ago. The average unemployment rate across the club, at 5.7%, is in line with the post­war average. And aggregate household income, adjusted for inflation, is above its pre­covid level. The overall picture has been remarkably benign, even as several variants of the coronavirus have emerged. But it hides stark differences beneath. The pandemic has created winners and losers— and the dispersion between them is likely to persist in 2022.

◎ OECD：abbr. Organisation for Economic Co-operation and Development

◎ benign:/bɪˈnaɪn/ a. ( formal ) ( of people ) kind and gentle; Not hurting anybody good; kind; kind

◎ stark: /stɑːk/ a. unpleasant; real, and impossible to avoid harsh; naked; real and unavoidable

◎ dispersion: /dɪˈspɜːʃn/ n. the process by which people or things are spread over a wide area 分散；散开；散布

To assess these differences, The Economist collected data on five economic and financial indicators from 23 rich countries — GDP, household income, stock market performance, capital spending, and government indebtedness. We rank each economy based on its performance on each indicator, resulting in an overall score (the table below shows the overall ranking, as well as four of our five indicators). Some countries are still at an economic trough, while others are doing better than they were before the pandemic in almost every way. Denmark, Norway and Sweden are all close to the top of the list, while the United States is doing quite well. However, many European powers, such as Britain, Germany, and Italy, fare worse. Spain was the worst.

In order to assess these differences, The Economist has gathered data on five economic and financial indicators—GDP, household incomes, stockmarket performance, capital spending and government indebtedness—for 23 rich countries. We have ranked each economy according to how well it has performed on each measure, creating an overall score (the table on the next page shows the overall ranking, and four of our five indicators). Some countries remain in the economic pits, while others are faring better than they were before the pandemic on almost every measure. Denmark, Norway and Sweden are all near the top, and America has also performed reasonably well. Many big European countries, however, such as Britain, Germany and Italy, have fared worse. Spain has done worst of all.

◎ indebtedness：/ɪnˈdetɪdnəs/ n. the state of being indebted 负债

◎ pit: /pɪt/ n. The pits is a slang word for the worst possible person, place, or thing. (Colloquialism) The worst people, places, or things

◎ fare: /feə(r)/ V-I If you say that someone or something fares well or badly, you are referring to the degree of success they achieve in a particular situation or activity. 进展

Our first indicator is the change in overall GDP since the end of 2019, which reflects the general picture of the health of the economy. Some countries always seem to be vulnerable to the collapse of tourism bans and service spending, especially in southern Europe, which relies heavily on tourism. Elsewhere, including Belgium and the United Kingdom, the number of COVID-19 infections and deaths is high, which limits consumer spending.

The change in headline GDP since the end of 2019, our first indicator, offers a snapshot of economic health. Some countries always looked vulnerable to travel bans and a collapse in services spending— in particular those in southern Europe, which rely heavily on tourism. Other places, including Belgium and Britain, suffered high levels of covid­19 infections and deaths, which limited consumer spending.

◎ snapshot：/ˈsnæpʃɒt/ n. If something provides you with a snapshot of a place or situation, it gives you a brief idea of what that place or situation is like. 简况; 大致印象

◎ vulnerable: /ˈvʌlnərəbl/ a. ~ (to sb/sth) weak and easily hurt physically or emotionally (physically or emotionally) fragile, vulnerable... Hurtful

Granular data helps to paint a picture. The change in household income gives an idea of how well the family is performing, as it includes not only employment income, but also government benefits. Our measures are based on real prices, adjusted for the decline in purchasing power caused by the recent spike in inflation.

Granular data help fill in the picture. The change in household income gives a sense of how well families have done, as it includes not just earnings from employment but also handouts from governments. Our measure is in real terms, which adjusts for reduced purchasing power as a result of recent surges in inflation.

◎ granular: /ˈɡrænjələ(r)/ a. consisting of small granules ; looking or feeling like a collection of granules is made of particles; contains particles; is granular

◎ handout：/ˈhændaʊt/ n. A handout is a gift of money, clothing, or food, which is given free to poor people. 施舍物; 救济品; 救济金

In some countries, especially those with relatively little impact from the pandemic, the labor market has not been greatly affected and people can continue to work to earn money. Japan's unemployment rate has barely changed since the outbreak began. By comparison, Spain's unemployment rate rose three percentage points between February and August 2020.

In some countries, especially those where the impact of the virus was relatively slight, labour markets did not suffer too much, allowing people to continue to earn. Japan’s unemployment rate has barely budged since the pandemic began. By contrast, Spain’s rate rose by three percentage points between February and August 2020.

◎ budge：/bʌdʒ/ v. to move slightly; to make sth/sb move slightly （使）轻微移动，挪动

Budget:n. Budget; Government Budget adj. Cheap, affordable v. Make a budget; plan, schedule

Some governments make up for lost labor income by providing people with huge sums of money. Here's America's strategy: While unemployment has soared with the economic lockdown, households will receive more than $2 trillion in government transfer payments in the form of subsidized unemployment benefits and stimulus checks during 2020 and 2021. Canada has done something similar. Other countries, such as the Baltic states, however, have focused their fiscal firepower on protecting corporate cash flows or expanding health care capacity. Austria and Spain appear to have neither kept jobs nor compensated those who have lost: in both countries, real household income levels are still around 6 percent below pre-pandemic levels.

Some governments more than made up for people’s lost labour income by sending them vast amounts of money. That was America’s strategy: although unemployment soared as the economy locked down, households received more than $2trn in government transfers in 2020 and 2021, in the form of topped­up unemployment benefits and stimulus cheques. Canada did something similar. Other countries, however, such as the Baltics, focused their fiscal firepower on protecting firms’ cash-flow or expanding health­care capacity. Austria and Spain seemed neither to preserve jobs nor compensate the losers: in both countries real household income is still around 6% below its pre­pandemic level.

◎ toppedup: adj. Full; recharged

◎ the Baltics: The Baltic States, mainly the three states of present-day Lithuania, Latvia and Estonia, located in the easternmost coastal region of the Baltic Sea, sometimes including Finland and Poland.

◎ compensate：/ˈkɒmpenseɪt/ v. ~ sb (for sth) to pay sb money because they have suffered some damage, loss, injury, etc. 给（某人）赔偿（或赔款）

So, what about companies? The performance of the stock market hints at their health and the attractiveness of a country to foreign investors. Uk stock prices are now slightly lower than they were on the eve of the pandemic, perhaps reflecting the uncertainty caused by Brexit. There has also been a reduction in the number of companies in the UK in high-growth industries, benefiting from the adoption of technology triggered by the pandemic and lower interest rates. The U.S. has more of these companies, and its stock market has risen sharply. But it found nothing on the Nordic exchange, where prices soared. Three of the ten largest companies in the Danish market by market capitalization are healthcare companies, a quality stock that can be held during the pandemic.

What about companies? Stockmarket performance hints at their health, as well as a country’s attractiveness to foreign investors. Share prices in Britain are slightly lower today than on the eve of the pandemic—a reflection, perhaps, of Brexit­induced uncertainty. Britain also hosts fewer companies in the higher­growth sectors that have benefited from pandemic­induced technology adoption and lower interest rates. America, which has more such firms, has seen its stockmarket jump. But it has nothing on the bourses of northern Europe, where prices have soared. Three of the ten biggest firms by market capitalisation on the Danish market are in health care, decent stocks to hold in a pandemic.

◎ hint：/hɪnt/ v. ~ (at sth) to suggest sth in an indirect way 暗示；透露；示意

◎ bourse：/bʊəs/ n. The bourse of a European city or region is its stock exchange. Stock exchange (in Europe).

◎ decent: /ˈdiːs(ə)nt/ a. of a good enough standard or quality decent; fairly good; not bad

Capital expenditure is the fourth measure that measures how optimistic a business is about the future. Some countries are in the midst of a capital spending boom: in the United States, for example, entrepreneurs are noticing the opportunities presented by the pandemic, while some companies are investing heavily in home-based work technology to make stay-at-home more efficient. In October, Goldman Sachs predicted that S&P 500 constituents would see an 18 percent increase in capital spending and R&D spending in 2022 compared to 2019. In contrast, investment in some other places is more stable. Norway has cut capital spending on oil and gas.

Capital spending, our fourth measure, provides a gauge of businesses’ optimism about the future. Some countries are in the middle of a capex boom: in America, for instance, entrepreneurs are spotting opportunities created by the pandemic, and companies are spending big on technologies that make working from home more efficient. In October Goldman Sachs, a bank, forecast that s&p 500 companies would spend 18% more on capex and research and development in 2022 than they did in 2019. Investment in some other places, by contrast, is more sedate. Norway has seen cuts to oil­and­gas capex.

◎ gauge: /ɡeɪdʒ/ n. ~ (of sth) a fact or an event that can be used to estimate or judge sth (for estimation or judgment) fact, basis, scale, standard

◎ capex：abbr. Capital expenditures

◎ sedate:/sɪˈdeɪt/ a. slow, calm and relaxed calm; calm; unhurried

The last indicator is public debt. All else being equal, a sharp rise in government debt is worse than a small rise, because it could mean bigger tax increases and spending cuts in the future. While the United States, the United Kingdom, Canada and other countries have indeed accumulated huge amounts of debt during the pandemic, this is not the case in every country. Sweden's public debt as a share of GDP rose by only 6 percentage points. This may reflect the fact that the country has largely avoided a strict lockdown and thus requires less financial support.

Our last indicator is public indebtedness. All else equal, a big rise in government debt is worse than a small one, since it could indicate potentially larger tax rises and spending cuts in the future. Not every country has amassed enormous debts during the pandemic, even if America, Britain, Canada and others certainly have. Swedish public debt has risen by just six percentage points as a share of GDP. This is a reflection, perhaps, of the fact that the country largely avoided strict lockdowns, necessitating less fiscal support.

◎ amass: /əˈmæs/ v. to collect sth, especially in large quantities accumulates, accumulates

[Synonyms] accumulate: v. accumulate, accumulate

◎ necessitate: /nəˈsesɪteɪt/ v. ( formal ) to make sth necessary to make it necessary

The spread of the Omicron variant could dampen economic growth in early 2022. But the full-year economic recovery is still likely to continue, and the overall situation may once again mask the changes. The OECD expects some of the lesser performing countries to start catching up: Italy is expected to grow by 4.6 percent in 2022, higher than the OECD average of 3.9 percent.

The spread of the Omicron variant is likely to curtail growth in early 2022 (see next story). But the economic recovery is still likely to continue over the year, and the overall picture will probably mask variation again. The OECD expects some of the worst performers to start catching up: Italy is forecast to grow by 4.6% in 2022, above the average pace for the club of 3.9%.

◎ Omicron:/ˈɑːməkrɑːn/n. the 15th letter of the Greek alphabet (O, o) Omicron (coronavirus variant); the 15th letter of the Greek alphabet

◎ curtail：/kɜːˈteɪl/ v.( formal ) to limit sth or make it last for a shorter time 限制；缩短；减缩

But laggards still have a long way to go. The OECD expects the combined GDP of the three highest-ranked countries to be 5% higher than before the pandemic by the end of next year. Meanwhile, the combined GDP of the three worst-performing countries is projected to be only 1% higher than before the pandemic. In other words, the uneven impact of the pandemic will continue.

But the laggards have a long way to go. By the end of next year, the OECD expects the combined GDP of our three highest-ranked countries to be 5% higher than its pre­pandemic level. Output for the three worst performers, meanwhile, is expected to be just 1% higher than it was before covid­19. The uneven effects of the pandemic, in other words, will endure.

◎ laggard：/ˈlæɡəd/ n. a slow and lazy person, organization, etc. Sluggish slackers; sluggish people; sluggish institutions

◎ endure: /ɪnˈdjʊə(r)/ v. ( formal ) to continue to exist for a long time 持续；持久

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This concludes with a discussion of the economic recovery of OECD member countries under the impact of the pandemic. At present, there are some variants of the new crown virus, and the domestic epidemic is also one after another, which is inevitable to have an impact on the economy, but China has done a very good job in responding to the epidemic. I hope that the epidemic will end soon and spring will come soon. Everyone has to take good care of themselves, good luck ❤

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