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After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage
Author:
Mr. Philip Barrett
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Miss Sonali Dasnull

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Giacomo Magistretti
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Evgenia Pugachevanull

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Mr. Philippe Wingender
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 203
Language:
English
Publication Date:
30 Jul 2021
DOI:
https://doi.org/10.5089/9781513587905.001
ISBN:
9781513587905
ISSN:
1018-5941
Pages:
23
Keywords:
output loss; long-lived scar; after-effects of the COVID-19 pandemic; financial crisis recession; recession type; Economic recession; COVID-19; Total factor productivity; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The COVID-19 pandemic has led to a severe global recession with differential impacts within and across countries. This paper examines the possible persistent effects (scarring) of the pandemic on the economy and the channels through which they may occur. History suggests that deep recessions often leave long-lived scars, particularly to productivity. Importantly, financial instabilities—typically associated with worse scarring—have been largely avoided in the current crisis so far. While medium-term output losses are anticipated to be lower than after the global financial crisis, they are still expected to be substantial. The degree of expected scarring varies across countries, depending on the structure of economies and the size of the policy response. Emerging market and developing economies are expected to suffer more scarring than advanced economies.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2021: Issue 203