Covid-19 Economic Vulnerability Index: EU Evidence

Area of Science:

• Economics
• Public Health
• Econometrics

Background:

• The COVID-19 pandemic significantly impacted global and national economies.
• Identifying economically vulnerable areas is crucial for effective pandemic policy implementation.
• Existing assessments lacked a unified indicator for economic pandemic vulnerability.

Purpose of the Study:

• To rank European Union (EU) member states based on their economic vulnerability to the COVID-19 pandemic.
• To develop a comprehensive indicator, the COVID-19 Economic Vulnerability Index (CEVI), to assess this vulnerability.
• To inform policy decisions and support mechanisms for economies most affected by the pandemic.

Main Methods:

• Construction of the COVID-19 Economic Vulnerability Index (CEVI) as a synthetic indicator.
• Utilizing multivariate statistical methods, including agglomerative clustering.
• Applying multi-attribute methods for object assessment across 27 EU member states.

Main Results:

• Significant variation in economic vulnerability to the pandemic exists among EU countries.
• Southern European countries (Spain, Croatia, Greece, Italy), heavily reliant on tourism, exhibit the highest vulnerability.
• Germany and Scandinavian countries demonstrated the lowest economic sensitivity to the pandemic's impact.

Conclusions:

• The CEVI effectively identifies countries with greater economic vulnerability to pandemic shocks.
• The index can guide decision support systems to prioritize aid for the most fragile economies.
• CEVI aids in pinpointing specific economic sectors contributing to vulnerability, enhancing resilience and recovery strategies.