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

Author

Listed:
  • Mr. Philip Barrett
  • Sonali Das
  • Giacomo Magistretti
  • Evgenia Pugacheva
  • Mr. Philippe Wingender

Abstract

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.

Suggested Citation

  • Mr. Philip Barrett & Sonali Das & Giacomo Magistretti & Evgenia Pugacheva & Mr. Philippe Wingender, 2021. "After-Effects of the COVID-19 Pandemic: Prospects for Medium-Term Economic Damage," IMF Working Papers 2021/203, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2021/203
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    Citations

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    Cited by:

    1. Masagus M. Ridhwan & Jahen F. Rezki & Arief Ramayandi & Aryo Sasongko & Dinda T. Andariesta, 2022. "The Potential Scarring Effect Of Covid19 On Productivity And Labor Market: The Case Of Indonesia," Working Papers WP/09/2022, Bank Indonesia.
    2. Onur Polat, 2021. "Time-Varying Network Connectedness of G-7 Economic Policy Uncertainties: A Locally Stationary TVP-VAR Approach," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 7(2), pages 47-59, December.
    3. Das, Sonali & Magistretti, Giacomo & Pugacheva, Evgenia & Wingender, Philippe, 2022. "Sectoral spillovers across space and time," Journal of Macroeconomics, Elsevier, vol. 72(C).
    4. Joe Piacentini & Harley Frazis & Peter B. Meyer & Michael Schultz & Leo Sveikauskas, 2022. "The Impact of COVID-19 on Labor Markets and Inequality," Economic Working Papers 551, Bureau of Labor Statistics.
    5. Doojav, Gan-Ochir, 2021. "Socio-economic recovery from the Covid-19 pandemic: Macroeconomic impacts and policy issues in Mongolia," MPRA Paper 111197, University Library of Munich, Germany.

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