Analytical commentary

The impact of the pandemic on economic activity in a given country depends significantly on the severity of the quarantine measures taken. However, even in countries where the severity of restrictions is similar, the consequences may differ depending on specific measures and economic characteristics.

To illustrate this, ACRA analyzed preliminary data for Russia and Spain, where the severity of quarantine measures was more or less comparable, as well as for Sweden, where quarantine measures were minimal. These countries were included in the sample because they released official data for a wide range of industries earlier than many other countries, which allowed for a relatively complete comparison.

According to ACRA, annual GDP losses in April amounted to -1 percentage point for Russia, -1.5 for Spain, and -0.4 for Sweden. The industry dynamics for April are the most significant when assessing the impact of measures aimed at curbing the spread of COVID-19, since almost all countries had already taken their main restrictive measures by the beginning of this month.

Figure 1.  In Russia, quarantine measures hit* the service sector** the hardest, while in Spain, industrial production suffered most.

* Data for April 2020 was compared with data for December 2019.
** Data on the service sector in Russia is defined as “Paid services to the public.” In Sweden and Spain, similar statistics use the NACE Rev. 2 standard. Industry data is published with varying degrees of detail.
Sources: Federal State Statistics Service, National Statistics Institute of Spain, Statistics Sweden, Oxford COVID-19 Government Response Tracker

According to the Oxford COVID-19 Government Response Tracker, the severity of measures taken in Russia and Spain to counter the virus was comparable. The level of restrictions in these countries averaged 85.1 and 83.6 points, respectively, for April (on a scale from 0 to 100). In Sweden, this indicator was very small by world standards, averaging only 39.6 points for April (higher than only Belarus, Nicaragua, Tajikistan, Turkmenistan, and a number of other small countries).

According to industry data for April, Russia’s main industries suffered less than Spain’s. However, the decline in services and retail trade was similar. The domestic consumer goods and services sector in both countries reacted almost equally strongly to restrictions, while the extent of the quarantine’s impact on other industries differed.

In particular, industries like mining, manufacturing, and wholesale trade showed more negative dynamics in Spain than in Russia. The decline in the manufacturing industry was largely due to a significant decline in the automotive industry (-92 percentage points in April of this year compared to April 2019), which is one of the main branches of industrial production in Spain. According to ACRA, this could be due to a reduction in consumer spending around the world on non-essential items, including cars. Food production, another important manufacturing industry in Spain, also showed a significant drop. Compared to the previous year, the decline was -7.3 percentage points, which may be due to a lack of tourist flow after the country’s borders were closed in response to the coronavirus.

Mining in Spain (predominantly ores and rocks used in industry and construction) also declined amid falling global demand and lower prices. However, it is very difficult to make a comparison between the extractive sectors of both countries, since the share of this industry in Spain’s GDP structure is insignificant compared to Russia. A larger decline in wholesale trade in Spain compared to Russia may be the result of a more significant decline in Spain’s production activity.

In Sweden, which decided not to impose strict quarantine measures, most sectors did not show a drop comparable to Russia or Spain. However, industries like manufacturing and wholesale trade showed a noticeable negative trend equaling   -15.8 and -11.4 percentage points, respectively, compared to December 2019. This is because Sweden is an export-oriented country (engineering products), and, as a result, it is sensitive to demand shocks in foreign markets. The decline in Sweden’s service sector, which in April 2020 amounted to -8.2 percentage points compared to December 2019, could be a result of its population self-isolating.

ACRA assessed the economic effect of quarantine measures in April as the weighted average of seasonally adjusted production indices by industry for April 2020 relative to December 2019 (weights according to GDP structure in 2019). The effect of one month of restrictions on Russia’s annual GDP was -1 percentage point, with this figure standing at -0.4 for Sweden and -1.5 for Spain.

Technical comment. The industries shown in the graph represent about 70% of the GDP of each of the countries included in the sample. Figures on the dynamics of the main industries are provided by statistical institutes on a monthly basis in the form of preliminary data. ACRA compared seasonally adjusted production indices by industry for April with similar data for December 2019, i.e., before COVID-19 had affected any of the countries under review. The “Paid services” category for Russia provides data on services provided primarily to the public. The corresponding data for Spain and Sweden include NACE Rev. 2 categories such as transport services, accommodation services, as well as services related to information technology, professional, scientific, and administrative activities. Other categories were not included due to the lack of data for them in the statistics for Spain.

The quarantine severity index is published by the Oxford COVID-19 Government Response Tracker and takes into account parameters such as the functioning of public transport and office buildings, public events, self-isolation requirements, and restrictions on movement both domestically and abroad. Its values range from 0 (minimum) to 100 points (maximum) and are based on subindices for each of the abovementioned parameters.

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Rostislav Erzin
Assistant Analyst, Sovereign Ratings and Macroeconomic Analysis Group
+7(495) 139-0480, доб. 172
Alexey Churilov
Manager, External Communications
+7 (495) 139 04 80, доб. 169
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