Who's winning and who's losing? Economic impact of COVID-19 on manufacturing firms

The severity of the economic impact of COVID-19 in Zambia has been projected to be substantial, where simulations predict a 4.2% contraction in Zambia’s economic output. Unequivocally, the impact on industries such as tourism, hospitality, retail, restaurant and bars has been negative and immediate. On manufacturing, however, it is less certain. Certain industries are likely to be hit harder as result of reduced consumer demand for non-essential goods and disruptions to supply chains as countries slow down or shut down production and exports, and lay off or temporarily decommission non-essential workers.

Since manufacturing is a priority sector within the country’s long-term development plan for achieving inclusive and sustained economic growth and middle income status, understanding the impact of COVID-19 on manufacturing activities is important for informing policy adjustments and ensuring that the industry quickly rebounds post-COVID-19.

A major challenge for developing countries to effectively respond to the economic crisis caused by COVID-19 is the lack of credible and timely evidence-based analyses on the pandemic’s economic impact on firms. While the severity of the economic impact of COVID-19 is well understood owing to the availability of various macro-level projections on global, regional and country output, trade and employment, little is known about firm level impacts and how these impacts differ across firm size, industry, and exporters and non-exporters. Therefore, this research project aims to fill the information gap and help the Government of Zambia have a better understanding of the economic impact of COVID-19 on the manufacturing industry.