The Impact of the COVID-19 Pandemic on Electricity Consumption and Economic Growth in Romania

Georgeta Soava,Eugenia Grecu,Mihaela Sterpu,Anca Mehedintu

doi:10.3390/en14092394

Georgeta Soava, Eugenia Grecu + Show 2 more

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https://doi.org/10.3390/en14092394

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Abstract

This paper analyzes the impact of the COVID-19 pandemic on economic growth and electricity consumption and investigates the hypothesis of the influence of this consumption on the gross domestic product (GDP) for Romania. Using time series on monthly electricity consumption and quarterly GDP and a multi-linear regression model, we performed an analysis of the evolution of these indicators for 2007–2020, a comparison between their behavior during the financial crisis vs. COVID-19 crisis, and empirically explore the relationships between GDP and electricity consumption or some of its components. The results of the analysis confirm that the shock of declining activity due to the COVID-19 pandemic had a severe negative impact on electric energy consumption and GDP in the first half of 2020, followed by a slight recovery. By using a linear regression model, long-term relationships between GDP and domestic and non-household electricity consumptions were found. The empirically estimated elasticity coefficients confirm the more important impact of non-household electricity consumption on GDP compared to the one of domestic electricity consumption. In the context of the COVID-19 pandemic, the results of the study could be useful for optimizing energy and economic growth policies at the national and European levels.

Highlights

This study provides an overview of the impact of the COVID-19 pandemic on economic growth and electricity consumption, for Romania, an emerging European Union (EU) country, and could serve as arguments for establishing policy initiatives to address the pandemic and economic decline
These results indicate that both domestic and non-household electricity consumption have an impact on economic growth, while economic growth influences the level of electricity consumption in individual households
Observing the downward trend of gross domestic product (GDP) at the beginning of the pandemic, we may conclude that the average GDP growth rate will be insufficient to recover Romania’s development gaps compared to the EU average

Summary

Introduction

In 2020, the sudden outbreak of the COVID-19 pandemic cast a shadow over the world and dealt a severe blow to the health and safety of people in all countries and to economic development, causing a global economic and social crisis [1]. The world economy is in one of the worst economic crises since the Great Depression (1929–1933), the forecasts of economists placing its impact even beyond the magnitude of that recorded during the. Emerging as a health crisis, the COVID-19 pandemic has brought societies around the world to their knees. This crisis has generated a number of severe circumstances for the economy [3], and a lot of complex challenges [4] generated by the important shocks [5]

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