In the months and years following the last pandemic, social unrest increased in the most affected countries. Based on these historical trends, the COVID-19 pandemic may pose a threat to the social fabric of many countries, but these trends do not predetermine the outcome.
The pandemic could trigger a vicious cycle of economic despair, inequality and social unrest.
We are aware of the impact of previous large-scale pandemics that occurred in 133 countries between 2001 and 2018 (SARS in 2003, H1N1 in 2009, MERS in 2012, Ebola in 2014, and Zika in 2014). A new IMF staff working paper explores this issue by analyzing the 2016. As shown in this week’s chart, social unrest has consistently increased with each of these outbreaks. The International Country Risk Guide’s civil unrest score, a measure of high-frequency and cross-country social unrest, increased significantly on average one year after the pandemic.
Regarding methodology, we apply two complementary econometric approaches. First, we use monthly data to estimate how levels of social anxiety respond to the pandemic. We use social unrest and pandemic data at a monthly frequency to establish a direct relationship between exogenous pandemic events, i.e. events caused by external factors, and social disruption (expressed as a score) . Second, we use annual data to investigate the pathways through which past large-scale pandemics lead to medium-term social unrest. In particular, we focus on her two main channels of inequality and economic growth.
In fact, the pandemic could trigger a vicious cycle of economic despair, inequality, and social unrest. Using econometric analysis, we show that past large-scale pandemics led to significant increases in social unrest in the medium term due to reduced growth and increased inequality. Rising social unrest leads to lower growth and worsens inequality, creating a vicious cycle.
Which countries are more vulnerable? Additional analysis from the Asia-Pacific Economic Outlook suggests that the impact will be stronger where income inequality is already high. If the initial level of the net Gini coefficient (after taxes and transfers) is above 0.4, an increase in the net Gini coefficient, commonly used as a measure of inequality, is associated with an increase in social unrest. More than 45 percent of the world’s countries, and about a third of Asian economies, have net Gini coefficients higher than this criterion.
We also find that the effect of inequality on social unrest depends on the extent of redistributive transfers. When redistributive transfers are low, higher inequality is associated with increased insecurity, suggesting that social safety measures can help alleviate social tensions.
Policy makers need to pay special attention to avoid scarring the lives of society’s most vulnerable people. These are historical trends, not the destiny of the country.