Growth, Volatility and Resilience in Small Economies : The Impacts of the 2008 Global Financial Crisis and the COVID-19 Pandemic

Armstrong, Harvey W. and Read, Robert (2025) Growth, Volatility and Resilience in Small Economies : The Impacts of the 2008 Global Financial Crisis and the COVID-19 Pandemic. In: Environmental and Socioeconomic Vulnerabilities and Resilience in Small States :. Routledge, Abingdon, pp. 86-100. ISBN 9781032703848

Abstract

This chapter analyses the separate and combined effects of the global financial crisis and the COVID-19 pandemic on the economic growth performance of small economies. These economies experienced particularly severe adverse impacts from the financial crisis along with generally sluggish recoveries owing to their heavy reliance on the financial services and tourism sectors. The global COVID-19 lockdown also affected many small economies disproportionately owing to the cessation of international tourism and their critical dependence upon this sector for employment and export earnings. Both crises led many small economies to experience significant adverse effects out of line with the global average. Data for 61 small economies is analysed for the period 2007–22 and for four distinct sub-periods – pre-crisis, post-crisis, pre-pandemic and post-pandemic. The study demonstrates that most small economies were adversely affected by both crises, some especially severely and persistently, although most experienced limited growth during the period 2007–22 as a whole. However, several small economies had not recovered their 2007 economic activity levels by 2022. The effects of the two crises, both separately and combined, highlight the greater exposure of small economies to the effects of global shocks transmitted via the key sectors upon which they depend.