THE IMPACT OF THE COVID-19 PANDEMIC ON THE MACROECONOMIC AGGREGATES OF THE EUROPEAN UNION

Authors

  • Aleksandar Đukić High School of Catering, Trade and Tourism, Banja Luka, Bosnia and Herzegovina
  • Mirjana Štaka Data d.o.o. East Sarajevo, Bosnia and Herzegovina
  • Dajana Drašković Culture centre of East Sarajevo, Bosnia and Herzegovina

DOI:

https://doi.org/10.2478/eoik-2021-0023

Keywords:

COVID-19 pandemic, EU, EU GDP, EU macroeconomic aggregates, economic crisis

Abstract

Economic experts’ predictions of a slowdown in the EU’s global economy and economic growth in the year 2020 were based on various risks and uncertainties existing on a world scale, ranging from the US-China trade war, traditionally strained relations of the EU and the US on the one hand and the Russian Federation on the other, all the way to BREXIT and economic migration to developed EU countries. However, the COVID-19 pandemic has further aggravated those forecasts, so that the entire EU is recording a historic decline in all macroeconomic aggregates. The beginning of the pandemic in the EU was accompanied by the complete border lockdown of the entire Union, which greatly affected the economies of the member states. The EU is experiencing a decline of both real and nominal GDP, declining incomes, employment decline and unemployment increase. Tis paper will investigate the impact of COVID-19 onto GDP, unemployment, and EU public debt. Correlation-regression analysis confirms the positive correlation between these variables and the economic crisis caused by the COVID-19 pandemic. In addition to the economic crisis, a crisis of EU health systems, which requires huge economic investments. A more prominent economic recovery is hard to expect until the global pandemic ends. One thing is for certain, this economic crisis will continue in 2021, whereby a more significant recovery is expected only in the year 2022. Certainly, it will take years to make up for the economic losses caused by the pandemic.

References

Baldwin, R and B Weder di Mauro (2020), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes, a VoxEU.org eBook, CEPR Press.

Barrero, J M, N Bloom and S J Davis (2020), “COVID-19 Is Also a Reallocation Shock”, NBER Working Paper 27137.

Bénassy-Quéré, A and B Weder di Mauro (2020), Europe in the Time of Covid-19, A VoxEU.org eBook, CEPR Press.

Bénassy-Quéré, A, R Marimon, J Pisani-Ferry, L Reichlin, D Schoenmaker and B Weder di Mauro (2020), “COVID-19: Europe needs a catastrophe relief plan”, VoxEU.org, 11 March.

Dingel, J and B Neiman (2020), “How Many Jobs Can be Done at Home?”, Covid Economics: Vetted and Real-Time Papers 1: 16-24. Also Voxeu.org column.

Dirk Krueger, (2009), Macroeconomics, University of Pennsylvania, Pages 10. Europe’s moment: Repair and prepare for the next generation, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_940

Gormsen, N J and R S J Koijen (2020), “Coronavirus: Impact on Stock Prices and Growth Expectations”, Working Paper, University of Chicago Booth School of Business. Also VoxEU.org column.

Hensvik, L, T Le Barbanchon and R Rathelot (2020), “Which jobs are done from home? Evidence from the American Time Use Survey”, CEPR Discussion Paper 14611. https://europa.eu/european-union/coronavirus-response_en

Jovičić, M., Ekonometrijski metodi (eng. Econometrics Methods), Faculty of Economics Belgrade, Belgrade: 2002;

Koren, M and R Pető (2020), “Business Disruptions from Social Distancing”, Covid Economics: Vetted and Real-Time Papers 2, CEPR Press. Also VoxEU.org column.

Maliszewska, Maryla; Mattoo, Aaditya; van der Mensbrugghe, Dominique. 2020 The Potential Impact of COVID-19 on BDP and Trade : A Preliminary Assessment. Policy Research Working Paper;No. 9211. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/33605 License: CC BY 3.0 IGO.

Marco Pagano, Christian Wagner, Josef Zechner (2020), „COVID-19, asset prices, and the Great Reallocation“, A VoxEU.org eBook, CEPR Press.

Martin, I (2017), “What is the Expected Return on the Market?”, The Quarterly Journal of Economics 132(1): 367-433.

Martin, I W and C Wagner (2019), “What is the Expected Return on a Stock?”, The Journal of Finance 74(4): 1887-1929.

OECD Interim Economic Assessment (2020). Coronavirus: The world economy at risk. (https://www.oecd.org/berlin/publikationen/Interim-Economic-Assessment-2-March-2020.pdf)

Pagano, M, C Wagner and J Zechner (2020), “Disaster Resilience and Asset Prices”, CEPR Discussion Paper 14773 and Covid Economics: Vetted and Real-Time Papers 21. Policy Responses to COVID-19, IMF, https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19

Ramelli, S and A Wagner (2020), “Feverish Stock Price Reactions to COVID-19”, CEPR Discussion Paper 14511. Also VoxEU.org column. U.S. Bureau of Labor Statistics, https://www.bls.gov/news.release/laus.nr0.htm

World Bank. 2021 Global Economic Prospects, January 2021. Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/34710 License: CC BY 3.0 IGO.

Haque , M. ., Nabila, N. ., Abdel-Razzaq, A. ., & Shaznin, K. . (2021). THE ECONOMIC INFLUENCE ON CONSUMERS BUYING BEHAVIOR IN ISLAMIC COUNTRIES: EVIDENCE FROM THE COVID-19 ECONOMIC CRISIS . ECONOMICS , 9(1), 179-204. https://doi.org/10.2478/eoik-2021-0003

Kolluru, D. M. K. (2021). A STUDY OF GLOBAL RECESSION RECOVERY STRATEGIES IN HIGHLY RANKED GDP EU COUNTRIES . ECONOMICS , 9(1), 85-106. https://doi.org/10.2478/eoik-2021-0011

Clemens, K. S., Matkovic, J., Faasse, K., & Geers, A. L. (2020). Determinants of safety-focused product purchasing in the United States at the beginning of the global COVID-19 pandemic. Safety Science, 130, 104894. https://doi.org/10.1016/j.ssci.2020.104894

Crabbe, M. (2020, March 3). Research your way out of a crisis: COVID-19 ’s e?ect on consumer behavior. [Marketing Research]. Mintel. https://www.mintel.com/blog/consumer-marketnews/research-your-way-out-of-a-crisisCovid-19 s-e?ect-on-consumer-behaviour

Chinazzi, M., Davis, J. T., Ajelli, M., Gioannini, C., Litvinova , M., Merler, S., Piontti, A. P., MU, K., Rossi, L., SUN, K., & Viboud, C. (n.d.). Te effect of travel restrictions on the spread of the 2019 novel coronavirus (COVID-19) outbreak. Science. https://doi.org/10.1126/science.aba9757

Durcova, J. (2021), “The Impact of Interest Rate Transmission Channel on the Prices Development in the Eurozone Countries”, Montenegrin Journal of Economics, Vol. 17, No. 2, pp. 23-35. doi:10.14254/1800-5845/2021.17-2.2

Downloads

Published

2021-12-18

How to Cite

Đukić, A. ., Štaka, M. ., & Drašković, D. . (2021). THE IMPACT OF THE COVID-19 PANDEMIC ON THE MACROECONOMIC AGGREGATES OF THE EUROPEAN UNION . ECONOMICS - INNOVATIVE AND RESEARCH JOURNAL, 9(2), 91–108. https://doi.org/10.2478/eoik-2021-0023