The effects of COVID‐19 containment measures on the Asia‐Pacific region

Abstract As the COVID‐19 pandemic spread across the world, governments introduced significant containment measures to control the spread of the virus. In this paper, we leverage inputs from IMF desk economists to construct a novel narrative index of containment measures for 11 countries in the Asia‐Pacific region. A key innovation in our index is that it distinguishes between economic sectors (services, industry, retail), thus providing a more granular view of restrictions related to economic activity. Using this index, along with other high‐frequency data, we find that containment measures have been successful in reducing the spread of the virus (though with some heterogeneity) but have also been associated with large short‐term economic costs. Furthermore, exploiting the granularity of our index, we find that differences in strategies across countries regarding the closing of the industrial sector have mattered: imposing less severe restrictions on industry has been associated with lower economic costs without leading to worse health outcomes, possibly reflecting the less contact intensive nature of industrial activity.