Unmasking the Impact of COVID-19 on Businesses : Firm Level Evidence from Across the World

This paper provides a comprehensive assessment of the short-term impact of the COVID-19 pandemicon businesses worldwide with a focus on developing countries. The results are based on a novel data setcollected by the World Bank Group and several partner institutions in 51 countries covering more than 100,000businesses. The paper provides several stylized facts. First, the COVID-19 shock has been severe and widespreadacross firms, with persistent negative impact on sales. Second, the employmentadjustment has operated mostly along the intensive margin (that is leave of absence and reductionin hours), with a small share of firms laying off workers. Third, smaller firms are disproportionately facing greaterfinancial constraints. Fourth, firms are increasingly relying on digital solutions as a response to the shock.Fifth, there is great uncertainty about the future, especially among firms that have experienced a larger dropin sales, which is associated with job losses. These findings provide a better understanding of the magnitude anddistribution of the shock, the main channels affecting businesses, and how firms are adjusting. The paper concludesby discussing some avenues for future research.