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Tao Sun
This note analyzes the economic impact of digital lending to micro and small sized enterprises (MSEs) in China during the coronavirus disease (COVID-19) pandemic. A preliminary analysis of a large pool of MSEs served by a digital bank indicates that digital banks were able to remotely evaluate borrowers and sustain lending during the pandemic, thereby facilitating the business continuity, sales growth, and financial inclusiveness of MSEs. In the global context, a policy framework—leveraging the advantages of digital banks and empowering digital banks, while guarding against possible financial stability risks—would further support small businesses during and after the COVID-19 pandemic.
Ruchir Agarwal and Ms. Gita Gopinath

Urgent steps are needed to arrest the rising human toll and economic strain from the COVID-19 pandemic that are exacerbating already-diverging recoveries. Pandemic policy is also economic policy as there is no durable end to the economic crisis without an end to the health crisis. Building on existing initiatives, this paper proposes pragmatic actions at the national and multilateral level to expeditiously defeat the pandemic. The proposal targets: (1) vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022, (2) tracking and insuring against downside risks, and (3) ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low. The benefits of such measures at about $9 trillion far outweigh the costs which are estimated to be around $50 billion—of which $35 billion should be paid by grants from donors and the residual by national governments potentially with the support of concessional financing from bilateral and multilateral agencies. The grant funding gap identified by the Access to COVID-19 Tools (ACT) Accelerator amounts to about $22 billion, which the G20 recognizes as important to address. This leaves an estimated $13 billion in additional grant contributions needed to finance our proposal. Importantly, the strategy requires global cooperation to secure upfront financing, upfront vaccine donations, and at-risk investment to insure against downside risks for the world.

Ms. Dora Benedek, Mr. Edward R Gemayel, Abdelhak S Senhadji, and Alexander F. Tieman
Ms. Dora Benedek, Mr. Edward R Gemayel, Mr. Abdelhak S Senhadji, and Alexander F. Tieman
The COVID-19 pandemic hit countries’ development agendas hard. The ensuing recession has pushed millions into extreme poverty and has shrunk government resources available for spending on achieving the United Nations Sustainable Development Goals (SDGs). This Staff Discussion Note assesses the current state of play on funding SDGs in five key development areas: education, health, roads, electricity, and water and sanitation, using a newly developed dynamic macroeconomic framework.
Alexandra Fotiou and Andresa Lagerborg
Following the Great Lockdown in 2020, it is important to take stock of lessons learned. How effective have different containment measures been in slowing the spread of Covid-19? Have containment measures been costly in terms of economic growth, fiscal balances, and accumulated debt? This paper finds that countries with previous SARS experience acted fast and "smart", and were able to contain the virus by relying mainly on public health measures ─ testing, contact tracing, and public information campaigns ─ rather than stay-at-home requirements. Using past coronavirus outbreaks as an instrumental variable, we show that countries with past experience were able to contain the virus in a smart way, reducing transmission and deaths while also experiencing higher economic growth in 2020.
Alexandra Fotiou and Andresa Lagerborg

Following the Great Lockdown in 2020, it is important to take stock of lessons learned. How effective have different containment measures been in slowing the spread of Covid-19? Have containment measures been costly in terms of economic growth, fiscal balances, and accumulated debt? This paper finds that countries with previous SARS experience acted fast and "smart", and were able to contain the virus by relying mainly on public health measures ─ testing, contact tracing, and public information campaigns ─ rather than stay-at-home requirements. Using past coronavirus outbreaks as an instrumental variable, we show that countries with past experience were able to contain the virus in a smart way, reducing transmission and deaths while also experiencing higher economic growth in 2020.

Mr. John C Bluedorn, Francesca G Caselli, Mr. Niels-Jakob H Hansen, Mr. Ippei Shibata, and Ms. Marina Mendes Tavares
Early evidence on the pandemic’s effects pointed to women’s employment falling disproportionately, leading observers to call a “she-cession.” This paper documents the extent and persistence of this phenomenon in a quarterly sample of 38 advanced and emerging market economies. We show that there is a large degree of heterogeneity across countries, with over half to two-thirds exhibiting larger declines in women’s than men’s employment rates. These gender differences in COVID-19’s effects are typically short-lived, lasting only a quarter or two on average. We also show that she-cessions are strongly related to COVID-19’s impacts on gender shares in employment within sectors.
Mr. Andrew J Swiston
Korea’s economy has leaped to high-income status thanks to several decades of sustained high growth. However, population aging and shifts in global demand provide headwinds for future growth and Korea now faces the effects of COVID-19 on economic activity. This paper asseses the expected drag on potential growth from these factors and discusses policies that could provide offsetting upward momentum by facilitating structural transformation. We find that potential output growth slowed to about 2½ percent before the COVID-19 pandemic and would have fallen to 2 percent by 2030, mainly due to demographic factors. Moreover, there is a possibility of scarring from the COVID-19 shock as adjustment frictions from structural rigidities interact with shifts in demand and supply patterns, lowering investment and labor force participation. At the same time, industry-level analysis suggests ample scope to raise productivity, especially in services where productivity gains have lagged. Addressing these rigidities could offset a large proportion of the expected downward pressure on potential output.