Index – Economy – GDP 2020: there is a national economy that is cut in half, but which also grows one and a half times

Let’s start with a perhaps surprising statement at the beginning! Despite the great economic recession, the collapse of the coronavirus in many places, the IMF expects (at least by my own calculations) that roughly the same number of people will live in an economy that can grow in 2020 as it does in a recession.

The surprising claim is true despite the fact that there will be many, many more national economies in the red anyway, but some heavily populated Asian states, China, India, Indonesia, the Philippines and Bangladesh might close in on the plus.

János Haász

Development is tangible.

Yovan Gunardio Prasetyo took a sip of his tea instead of lunch and flipped through the newspaper. The rural teaching job in Sumbawa, in the Small Probe Islands, was not what Yovan wanted at the time, but a multi-million dollar bank manager or elite command may not be enough to graduate as an adult among seven siblings in a constantly miserable family. Misery was accompanied by, say, the teaching career, tea was for breakfast and lunch, but at least steamed rice and vegetables for dinner, a significant increase in living standards compared to college years from a few years ago.
He took a sip of his lunch while leafing through the newspaper. Upon reaching the economic column, he recalled what he had read at the time, at university, on the foreign side, already banned in his homeland, that the four richest people in his country had as much wealth as the hundreds of millions more poor (hardly in Europe, with national pride in his soul). Meanwhile, the news reached the point where the IMF hopes that despite the coronavirus, the economies of some heavily populated Asian states, including Indonesia, can strengthen even this year. Yovan Gunardio Prasetyo was very happy. He was glad that those four people were no longer richer than 100, but perhaps 102-103 million people.

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The end points

If we compare the change in the GDP of some 200 states, we can be sure that there will be some outliers that are practically incomparable with the rest.

the oil state devastated by the oil war. On the other hand, it is reassuring that the IMF can wait for the end of the military war and the oil market by 2021, as it expects an 80.7 percent increase in the country’s GDP by 2021.

that a small South American state would have practically doubled its GDP production without the corona virus after the launch of its massive offshore oil production project.

Formerly poor beggars, Guyana is Venezuela’s western neighbor, which is also completely orphaned, and owes the same to the large increase forecast for 2020, many of which have seen their decline this year, oil.

But while the well-known oil countries, Saudi Arabia, Norway, Kuwait and similar countries experience a decrease in base production due to lower prices, Guyana will skyrocket, its oil reserves per capita could beat everyone and Exxon from EE . USA It’s already out. extraction began this year.

The great setbacks

In addition to the two emerging countries, states living in tourism are falling even more sharply, with Macao (then 30 percent), Aruba, San Marino, Seychelles (10-12 percent), and Venezuela (minus 15 percent). , whose rapid decline is more of a counterproductive economic policy. joins a nightmare instead of the current virus. In our environment, Croatia is the biggest victim (minus 9 percent) and we can be the most crisis-resistant economy (minus 3.1 percent).

Of course, this large increase is mainly due to such a super positive weak base, in any case, the IMF predicts that next year, everyone is only expected that the eternal and desperate loser in Venezuela will decrease further. In all other countries, the sign of GDP change will be positive.

If we move away from each country a bit now and think about what our daily life is like in a crisis, for example, when

• we don’t go to the baker, we bake bread,

• we don’t go to the hairdresser, we cut our hair,

• we don’t go to a pub, we take home a case of beer once a month,

then, in practice, we can say that the value added of world GDP services is disappearing, or at least it is reducing considerably.

The triple structure of the economy.

In the classical division of national economies, in the triad of agriculture, industry, and services, coronavirus further changes the service sectors. The virus may shed some light on the often asked question of how strangely GDP measures human activity.

570 forint a kilo of bread, if we take it from the baker, but if we bake it, we have 150 forints and a small cost of electricity (half a kilo of flour, 3 dl of water, a little yeast, oil, salt, sugar), we ate the same, maybe just as good, but we didn’t produce a third of GDP.

If our wife cuts her hair, she will cut herself in the same way as if we went to a hairdresser, but GDP production was 0 HUF at home and 2,500 HUF at an outside service provider. If we evacuate the sick grandmother from the nursing home with coronavirus and the family takes care of her next month for free, we will take out the 200,000 forints that the service provider requested from GDP production.

Of course we can continue the line as long as possible, the coffee in our quarantine cafe will be HUF 50, which was 290 HUF in our favorite street cafe.

Agriculture became king

The joke is that at the time of the virus, food production will appreciate, industry will stagnate, and services will decline.

The sad reality of these countries is that agriculture is not good, it does not produce many agricultural products, just because 90 percent of the population is self-sufficient, there are almost no services or industry, so it still has the highest proportion.

Industrial Powers

The largest proportion of the industry is found in countries that are not particularly exciting, that do not stand out in terms of tourism, finance or any other service, but that have a strong industrial sector like buffalo, this is mainly the oil industry.

These states are also quite resilient to crises, even despite the fall in oil prices, they are not backing off much (Brunei may even grow).

Finally, the tertiary sector

In modern market economies, services dominate. If there is no place for agriculture or industry in a mini-state, but the country has some attractive financial, tourism and possibly gambling services, there is almost 100 percent of the service sector in the national economy: Gibraltar, Macao and the Cayman Islands, for example.

Of these, the IMF only listed Macao separately, but we have seen that it could decline by a third of the economy this year. In fact, even the service sector of the most developed states, the United States or Great Britain, represents 80 percent of GDP, and these states will fall by about 6 percent.

Services and GDP

It is customary to scold the GDP indicator, saying that it does not measure well human progress, its values, its happiness. The classic example is a lawyer’s fee, should we be happy if they generate more GDP?

In any case, the coronavirus mainly affects the service sector. We can be pretty sure that the happy feelings of chefs, bartenders, baristas and hairdressers who lose their jobs will decrease a lot.

Alternative theories of well-being, on the other hand, can once again increase how much our satisfaction decreases, our happiness when GDP falls, drinking coffee at home, eating our homeland for lunch, or having our partner cut our hair.

(Cover image: Vegetable shoppers in a Libyan store following the outbreak of the coronavirus epidemic in Misrata on April 16, 2020. Photo: Ayman Al-Sahili / Reuters)