Presented by: Gregory Thwaites (University of Nottingham)
We present forecasts of the impact of Covid-19 on productivity in the private sector of a representative industrialised country derived from a firm-level survey. Our estimates suggest that Covid-19 will reduce TFP by around 5 per cent in the year to 2021Q2. Firms anticipate a large, negative reduction in productivity within firms, which is more than fully accounted for by an increase in the use of intermediate inputs to produce sales. Part of this may not be fully measured in early vintages of official data. The negative within-firms effect is expected to be offset, partially and decreasingly over time, by a positive between-firms effect as employment shrinks most in the least productive sectors, and the least productive firms within them.