世界银行-欧洲和中亚经济更新，2021年秋季：新冠肺炎后的竞争和企业复苏（英）2021-150页_7mb

Summary of "Competition and Firm Recovery Post-COVID-19"

Core Content

This report, Competition and Firm Recovery Post-COVID-19, provides an analysis of the impact of the COVID-19 pandemic on the business environment and firm recovery in Europe and Central Asia (ECA). It highlights the role of competition in driving economic resilience and long-term growth, emphasizing the importance of a dynamic and efficient market structure.

Main Views

• Economic Recovery in ECA: The ECA region is expected to grow by 5.5% in 2021, higher than initial projections, due to stronger-than-anticipated recovery in external demand and increased domestic demand from vaccinations and support packages. However, the recovery is expected to slow in 2022 to 3.4%, as global growth plateaus and macroeconomic support is withdrawn.

• Impact of the Pandemic on Firms: The pandemic caused significant disruptions, including a 24% drop in monthly sales and a 10% decline in full-time employment for firms in the first survey round (May–November 2020). By the second round (November 2020–May 2021), one in four firms anticipated falling into arrears on liabilities within six months.

• Heterogeneous Effects: Smaller, younger, and female-run businesses were disproportionately affected by the crisis, experiencing slower recovery and higher exit rates. In contrast, more productive firms were better able to adapt, increasing online activity and remote work.

• Role of Competition: Competition is vital for economic recovery and long-term growth. It encourages innovation, supports the entry and growth of efficient firms, and facilitates the exit of less productive ones. The report underscores the importance of "creative destruction" in reallocation processes.

• Government Support: Many governments in ECA implemented broad support measures to mitigate the crisis's impact. However, these measures were more likely to benefit less productive firms, which may have negative implications for competition and growth in the long run.

• Policy Implications: To foster sustainable recovery and growth, policymakers should phase out broad support measures and focus on creating a competitive business environment. Countries in Central Asia and the South Caucasus are identified as needing significant improvements in institutional frameworks and competition policy enforcement.

Key Information

Economic Outlook

• 2021 Growth: ECA is projected to grow by 5.5%.
• 2022 Growth: Expected to slow to 3.4%, with continued uncertainty due to the pandemic, vaccine access disparities, and geopolitical tensions.
• Global Context: Global economic activity rebounded but remains below pre-pandemic levels. The global economy was forecasted to grow by 5.6% in 2021, but this is not expected to be sufficient to return to pre-pandemic output levels by 2022.

Firm Impact

• Sales and Employment: Firms reported a 24% drop in sales and a 10% decline in employment in the first survey round.
• Productivity: Firms with higher pre-crisis labor productivity experienced smaller declines in sales and employment.
• Adaptation: More productive firms were more likely to adapt by increasing digital and remote activities.
• Exit Rates: Less productive firms were more likely to exit, while more productive firms remained resilient.

Government Support

• Reach and Effectiveness: Government support varied across countries, with about half of firms receiving some form of assistance.
• Bias in Support: Larger firms were more likely to receive support, and support was not tied to pre-crisis innovation levels.
• Consequences: Broad support measures may have favored less viable firms, potentially harming competition and long-term growth.

Policy Recommendations

• Phase Out Support: Governments should gradually phase out broad support measures to avoid distorting market competition.
• Strengthen Competition: Focus on improving institutional frameworks and enforcing competition policies, especially in Central Asia and the South Caucasus.
• Foster Innovation and Efficiency: Policies should encourage the reallocation of resources toward more productive firms and support innovation and digital transformation.

Conclusion

The report concludes that while the ECA region has shown resilience and recovery from the initial shock of the pandemic, the long-term success of the region's economy will depend on fostering a competitive business environment. This includes promoting the reallocation of resources from less productive to more productive firms, enhancing institutional quality, and ensuring that government support is targeted to those most in need rather than broadly distributed. The pandemic has underscored the importance of competition in driving economic growth and resilience, and its role in shaping the future of the region's business landscape.