ECONOMIC SHOCKS OF THE PANDEMIC IMPACT: THE EUROPEAN CASE

Abstract

The purpose of the paper is to identify a nature and forms of the economic shocks generated during the COVID-19 pandemic in 2020 and to assess such shocks implications on the European countries. Such economic shocks have caused many of business companies freezing, contraction of industries and services, recession of economies. Economic shocks specifics and their influence on the European economy are considered. Shocks implications are causing economic recessions and influence on recovery prospects. Implications of economic shocks are argued in order to develop practical guidelines for economic policies. Methodology. Pandemic is a natural event of new coronavirus (COVID-19) spread, which influenced on economic and social life. Therefore a study of pandemic-generated economic shocks are based on interdisciplinary approach including inputs of methods from public health, psychology, classical economics, behavioral economics, institutional economics, systemic analysis. Selected relevant data of pandemic shocks impact of the European countries are assessed. Results. Pandemic of the COVID-19 coronavirus and governmental policies in response have generated a number of economic shocks. Such pandemic shocks are different from previously known economic shocks. Content and forces of pandemic – related shocks are a mixture of natural event and results of preventive public measures. The study has identified content and major forms of pandemic economic shocks, their implications. The major shocks of pandemic are considered: psychological, medical, economic, financial, social. Economic shocks have been defined such as: external shocks, supply and demand shocks, cross-border spillovers of pandemic economic shocks are considered as a major reason of national, regional and world economies slowdown. Specific features of shock in Europe are depending on country-specific levels of infection, economic structures and public policies. Cases of economic recession of shock-ignited countries are differentiated among the European countries and have unpredictable recovery tracks. Practical implications. Specific shocks and recession may require different policies responses. The European countries have used different combinations of monetary, fiscal and direct support instruments. The balance between national policies and international coordination is contradictory. Short-term economic policies should be focused on the economies’ recoveries. Medium-term policies should include structural and sustainability instruments, long-term policies should be focused on drivers of innovation, education, research and inclusive development.