After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage

By Philip Barrett, Sonali Das, Giacomo Magistretti, Evgenia Pugacheva, Philippe Wingender

July 30, 2021

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Philip Barrett, Sonali Das, Giacomo Magistretti, Evgenia Pugacheva, and Philippe Wingender. After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage, (USA: International Monetary Fund, 2021) accessed November 21, 2024

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.

Summary

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.

Subject: COVID-19, Economic growth, Economic recession, Financial crises, Health, Production, Total factor productivity

Keywords: After-effects of the COVID-19 pandemic, COVID-19, Economic recession, Financial crisis recession, Global, Long-lived scar, Output loss, Recession type, Total factor productivity

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/203
Stock No:

WPIEA2021203
ISBN:

9781513587905
ISSN:

1018-5941

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