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The Impact of the COVID-19 Pandemic on Consumption: Learning from High Frequency Transaction Data

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Document pages: 51 pages

Abstract: We use daily transaction data in 214 cities to study the impact of COVID-19 on consumption after China’s outbreak in late January 2020. Based on difference-in-differences estimation, daily offline consumption—via UnionPay card and QR scanner transactions—fell by 32 , or 18.57 million RMB per city, during the twelve-week period. Spending on goods and services were both significantly affected, with a decline of 33 and 34 , respectively; within finer categories, dining & entertainment and travel saw the greatest dip of 64 and 59 . The consumption decrease is prevalent across cities with the largest drop occurring in the epicenter Wuhan (by 70 ). Consumption responded negatively to the day-to-day changes in epidemic severity while distancing measures remained stable. Consumption had rebounded back to the baseline level by the end of March but dropped to -20 in early April due to the elevated risk of a second wave of infections. We infer that China’s offline consumption decreased by over 1.22 trillion RMB in the three-month post-outbreak period, or 1.2 of China’s 2019 GDP. Our estimates suggest a significant economic benefit of containing the virus through a lessened consumption decrease and a faster consumption recovery.

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