How severe is the COVID-19 recession from a historical perspective? How does its magnitude vary across countries?

We address these questions in my latest blog post with @andyneumeyer and @LucasBelmudes3.

We find that countries in the 25th (1/6) https://www.stlouisfed.org/on-the-economy/2020/november/covid19-recession-historical-perspective?utm_source=Federal

percentile (worst performers), are expected to grow at a normalized growth rate that had zero probability a year ago, and has been observed in only 2% of the historical data (country-year pairs).

For the countries with data going back to the 19th century, the median year (2/6)

with a growth performance worse than this year is 1947, right after WWII.

The median growth forecast for this year (according to the #IMF's October WEO) is -5%, compared with 2.4% in 2019 and a historical average of 3.8%.

The median growth rate expected for this year is (3/6)

1.5 standard deviations below the historical growth average.

Even the best-performing countries (top 10%), will have a growth rate that is 0.6 standard deviations below their historical average.

When we look at the relation between the severity of the Covid-19 recession (4/6)

and per-capita income, we find no clear correlation. The worst performers are those who rely on oil and tourism.

Finally, we find a negative correlation between the change in 2020 growth forecasts and total deaths per million. (5/6)

We take this as evidence that the pandemic is an important driving factor of the global recession.

However, observable heterogeneity also suggests that there are other factors that are important. (6/6)