[4] In this environment, many households are uncertain about future employment and wage dynamics, motivating them to save more for precautionary purposes. Similarly, firms are uncertain about future demand for their products and are grappling with weakened balance sheets, leading to cancellations and delays in investment plans.
Chart 1 shows that services sector activity has been disproportionately hit (also when compared with the global financial crisis). This asymmetry also implies that countries have been differently affected by the pandemic, depending on the degree of reliance on the services sector, including the tourism, travel and entertainment sectors that are especially affected by social distancing and containment measures.