Exploring the Growth Effects of COVID-19 across Developing Countries

This paper investigates the spread of the COVID-19 pandemic and its impact on economic growthacross developing countries. It documents the evolution and co-movement of COVID-19 infections with government responses(including health containment measures) across developing countries. It then estimates the impact of the differentchannels of transmission of COVID-19 on economic growth—thus, identifying factors that contribute to theeconomic resilience of countries during the pandemic shocks. The findings show that the pandemic’s impact on the declinein growth was substantive across the different developing country groups—although at different rates. The estimatesshow that a deeper downturn in economic activity due to the pandemic can be averted in countries with higher levels ofhuman capital, well-targeted containment measures, and improved global health security. Diversifying trade patterns(across products and markets) is also crucial, and so is strengthening intraregional trade, as higher commerce acrossborders within the different developing regions may help secure the supply chains of essential goods in times ofcrisis—and particularly during pandemics. Finally, having fiscal space and a less risky public debt profile can makethese economies more resilient against crisis.