What is an asymmetric shock?

An asymmetric shock is an event that affects a specific economy (such as a country, region, or trade bloc), while other economies are affected less or differently. This can also be the case within a common currency zone, where one part of the zone is hit by a shock, while other parts are not, or are affected in a different way.

An economic shock is a sudden and often unexpected change in an economic variable that pushes an economy, region, or sector out of its normal cycle. In a symmetrical shock, all economies, regions, or sectors are affected equally. This is often the case with global recessions, where the impact is fairly uniform across different areas.

In contrast, asymmetric shocks do not affect all sectors or regions equally. This can lead to divergence, where different parts of a region or currency bloc are affected in different ways. Asymmetric shocks often affect one country or region within a larger geographical area.

Examples of asymmetric shocks:

• A rapid rise in oil prices can have positive effects for oil-producing regions such as Texas and Alaska, while it has negative consequences for oil consumption-dependent areas such as California.
• The collapse of the Argentine peso in 2002 (the tango crisis) had a much greater impact on Spain than on other eurozone countries, due to the strong historical and business ties between Spain and Argentina.
• The rise of Apple and the success of the iPhone had a major impact on Finland due to the important role of telecom manufacturer Nokia in the Finnish economy.
• In 2022, the war in Ukraine was expected to hit the European economy much harder than the American economy.