Economic Consequences of the COVID-19 Pandemic: Will It Be a Barrier to Achieving Sustainability?

ABSTRACT

This study quantitatively analyzes the economic impact of the coronavirus disease 2019 (COVID-19) crisis on Korea and other major nations using the standard Global Trade Analysis Project (GTAP) model. Based on the GTAP9a database, we created three scenarios that differed in the severity of the impact of COVID-19, divided the economic shocks witnessed in each scenario into three stages, and applied them at varying degrees to six regions and 10 industry sectors. The results revealed an increase in investments and a decrease in GDP, income, production, and exports, with private household expenditure and export value showing the largest declines in all regions. Under Scenario BA, the export value of the tourism industry decreased by approximately 28%, and private household expenditure on tourism industry imports declined by 33.4% on average across all regions. Conversely, government expenditure increased following the economic recession and increased tax revenue. The results showed similar trends across regions and sectors, with only slight variances according to each region’s economic structural characteristics. By shedding light on proposals and approaches to overcome the global economic crisis amid the ongoing pandemic, this study provides baseline data for devising more practical, detailed response plans and policy directions for potential future calamities.