The statistical link between short-term GDP loss and potential growth loss

It is well known that recession s lead to a loss of potential growth, due to the resulting loss of productive capital and human capital. We try to quantify this relationship between a short-term GDP loss and long-term growth loss . A 1% loss of GDP in the short term relative to the previous trend can be estimated to reduce potential growth by 0.1 percentage point per year. The spring lockdown has therefore already reduced potential growth by 0.6 percentage point per year in the United States, 0.9 percentage point per year in the euro zone and 0.7 percentage point per year in Japan. This means that potential growth is now 1.6% per year in the United States, 0.6% per year in the euro zone and 0.8% per year in Japan. Another, identical lockdown in the winter of 2020-21 would lead potential growth to fall to 1.0% in the United States and to -0.3% per year in the euro zone.