Recovery from the Pandemic Crisis : Balancing Short-Term and Long-Term Concerns
The COVID-19 (coronavirus) pandemic crisis combines the worst characteristics of previous crises. It features a simultaneous supply and demand shock; domestic, regional, and global scope; a projected long duration; and a high degree of uncertainty....
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/461391599582188306/Recovery-from-the-Pandemic-Crisis-Balancing-Short-Term-and-Long-Term-Concerns http://hdl.handle.net/10986/34462 |
| Summary: | The COVID-19 (coronavirus) pandemic
crisis combines the worst characteristics of previous
crises. It features a simultaneous supply and demand shock;
domestic, regional, and global scope; a projected long
duration; and a high degree of uncertainty. What can be
expected for recovery from the pandemic crisis across the
world? This brief first assesses the projections of economic
activity in 2020 and 2021 and the domestic and international
conditions that will constrain and drive a possible
recovery. It then discusses the potential shapes of the
recovery (or lack thereof) for specific country conditions.
Finally, it explores the need to balance short-term and
long-term concerns, arguing in favor of policies that focus
on sustained recovery, rather than quick but debt-fueled and
short-lived gains. Drawing on the lessons from past crises,
the brief concludes that sustained economic recovery is
possible only when the underlying causes are addressed and
the foundations of growth are protected. For the pandemic
crisis, this implies mitigating the spread of the disease to
manageable levels while keeping the economy sufficiently
active. In the short term, economic policy should focus on
preventing further poverty, averting unnecessary business
closures, and avoiding lasting damage to human capital and
productivity. In the long term, policy reform should address
the structural vulnerabilities that the pandemic crisis has
exposed. This includes reforms to expand labor and business
formalization; to improve the coverage and adequacy of
social protection; to extend financial inclusion to elderly,
rural, and poor people; to promote digital transformation
across society; and, most basically, to improve access to
and quality of public health care. |
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