A Note on the COVID-19 Shock and Real GDP in Emerging Economies

Abstract

In this study, we estimate a multi-country Threshold-Augmented Global Vector Autoregressive (TGVAR) model of Chudik et al., (2020) to analyse the response of real GDP of emerging economies (Brazil, India, China and South Africa) as well as the US (as a reference country) to the COVID-19 shock. The result of the counterfactual analysis beyond the 2019Q4 indicates that the impact of COVID-19 shock on real GDP is pervasive and heterogeneous but more prevalent in the US than the emerging economies. We expect real GDP in the selected emerging economies, but not the US, to revert to pre-COVID levels.