Publication: The Evolving Effect of COVID-19 on the Private Sector
Date
2021-06-24
ISSN
Published
2021-06-24
Author(s)
Karalashvili, Nona
Viganola, Domenico
Abstract
This brief provides a descriptive
analysis of the evolving effect of the COVID-19
(coronavirus) pandemic on the private sector of 40
countries. It focuses on the essential aspects of business
operations: namely, firms' survival, production of
goods and services, and jobs. Firms have suffered massive
demand and supply shocks, affecting nearly all sectors.
These shocks and the consequent drop in revenues have dried
up firms' cash flows, depleting their working capital
and putting the private sector under considerable financial
distress. This brief also examines the effect of the
pandemic on firms' liquidity, providing general
assessments of the variation of these effects by country
income level and firm characteristics. Firms in lower-income
countries seem to have been hit harder across several
measures, such as declines in sales and the incidence of
overdue financial obligations. Within countries, small and
medium-sized enterprises (SMEs) with 5 to 99 employees seem
to have fared more poorly than large firms. While some signs
of a recovery in terms of sales and capacity utilization are
emerging, the recovery is fragile, as it bypasses important
aspects such as liquidity and job creation. For a full
post-pandemic recovery, it is important that sound
businesses that are facing a temporary liquidity problem
survive, and the workforce rebounds.
Citation
“Karalashvili, Nona; Viganola, Domenico. 2021. The Evolving Effect of COVID-19 on the Private Sector. Global Indicators Briefs; No. 1. © World Bank, Washington, DC. http://hdl.handle.net/10986/35869 License: CC BY 3.0 IGO.”