The Coronavirus (COVID-19) pandemic has slowed down economic growth and has triggered significant interruption to urban economic growth, raising unemployment, reducing consumer spending and cutting local government finances. Cities are the engines of economic growth, with the world’s 1,219 cities generating 60% of global GDP in 2019; however, they have been the major sources of COVID-19 infections. The report examines the scale of economic disruption in cities caused by COVID-19.
This report comes in PPT.
90% of cities will see real GDP decline in 2020. The pandemic is unlike any economic crisis, and much more acute the financial crisis of 2008-2009.
Numerous urban industries have been impacted by the COVID-19 pandemic, including tourism, real estate, transport, retail and leisure, and the public sector. For example the tourism industry is not due to recover any time soon, as the threat of successive COVID-19 waves will require the continuation of social distancing and quarantine measures. This will suppress the tourism and travel industry in major hotspot cities, such as London, Paris and Bangkok.
Developing cities are forecast to come out of the economic slump caused by the COVID-19 pandemic faster than developed cities. This is especially the case with Chinese cities, which are among the few cities in 2020 that are set to record economic growth, while most others face economic contraction.
The COVID-19 pandemic could have only a mild impact on economies, but it also has the power to cause large-scale economic havoc. For example, in the worst case scenario, London could lose 10% of its largest household segment – households with disposable incomes of USD45,000-150,000 – in 2020 compared to 2019.
Given the reduction in business activity, most city municipalities will see their budgets cut, due to lower tax revenues. However, while tough times are ahead, municipal authorities need to boost their local economies by providing tax breaks and financial assistance to businesses. This may prevent or at least mitigate the impact of a laissez faire approach, which would result in excessive unemployment levels.
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