Short-term impact of COVID-19 on consumption spending and its underlying mechanisms: Evidence from Singapore

Seonghoon Kim, Kanghyock Koh, Xuan Zhang

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We examine the short-term impact of COVID-19 on consumption spending and its underlying mechanisms using individual-level monthly panel data from Singapore. Although Singapore's case fatality rate was one of the lowest in the world in the early stage of the pandemic (0.05%), we find that the COVID-19 pandemic reduced household consumption spending by almost one quarter at its peak, with a larger response from households with above-median wealth. We show that the reduction in consumption spending is associated with the nationwide lockdown policy, heightened economic uncertainty and reduced income. In addition, we find a substantial increase in monthly savings among households without income losses, suggesting a substantial rebound in consumption spending after the lifting of the lockdown. The results from June 2020 confirm this conjecture, as we find that consumption spending rebounded by about 10 percentage points in that month.

Original languageEnglish
JournalCanadian Journal of Economics
DOIs
Publication statusAccepted/In press - 2021

ASJC Scopus subject areas

  • Economics and Econometrics

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