COVID-19 and Long-Term Economic Growth

ABSTRACT

This article investigates the impact of the COVID-19 pandemic on the long-term economic growth of South Africa. We embed an epidemiological model in a modified Solow–Swan model and explore various channels such as morbidity, mortality, unemployment, loss of school days and capital accumulation. We demonstrate that COVID-19 will lower the average annual growth rate of GDP per capita of South Africa by 0.07 percentage points in the next four decades, a 25 per cent decline relative to the no-COVID benchmark. We show that human capital losses due to school closures account for more than half of the economic slowdown. © 2023 The Authors. The Australian Economic Review published by John Wiley & Sons Australia, Ltd on behalf of The University of Melbourne, Melbourne Institute Applied Economic & Social Research, Faculty of Business and Economics.