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Recovery from the Pandemic Crisis : Balancing Short-Term and Long-Term Concerns

Author

Listed:
  • Loayza,Norman V.
  • Sanghi,Apurva
  • Shaharuddin,Nurlina Binti
  • Wuester,Lucie Johanna
Abstract
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.

Suggested Citation

  • Loayza,Norman V. & Sanghi,Apurva & Shaharuddin,Nurlina Binti & Wuester,Lucie Johanna, 2020. "Recovery from the Pandemic Crisis : Balancing Short-Term and Long-Term Concerns," Research and Policy Briefs 152797, The World Bank.
    • Handle: RePEc:wbk:wbkrpb:152797
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    References listed on IDEAS

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    1. World Bank, 2019. "Finance for Growth," World Bank Publications - Reports 33563, The World Bank Group.
    2. Loayza,Norman V. & Pennings,Steven Michael, 2020. "Macroeconomic Policy in the Time of COVID-19 : A Primer for Developing Countries," Research and Policy Briefs 147291, The World Bank.
    3. World Bank, 2020. "The COVID-19 Pandemic [Pandémie De Covid-19]," World Bank Publications - Reports 33696, The World Bank Group.
    4. Loayza,Norman V., 2020. "Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective," Research and Policy Briefs 148535, The World Bank.
    5. Daron Acemoglu & Victor Chernozhukov & Ivàn Werning & Michael D. Whinston, 2020. "A Multi-Risk SIR Model with Optimally Targeted Lockdown," CeMMAP working papers CWP14/20, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    6. Norman V. Loayza & Steven Pennings, 2020. "Macroeconomic Policy in the Time of COVID-19," World Bank Publications - Reports 33540, The World Bank Group.
    7. Enrique Alberola-Ila & Yavuz Arslan & Gong Cheng & Richhild Moessner, 2020. "The fiscal response to the Covid-19 crisis in advanced and emerging market economies," BIS Bulletins 23, Bank for International Settlements.
    8. Maloney,William F. & Taskin,Temel, 2020. "Determinants of Social Distancing and Economic Activity during COVID-19 : A Global View," Policy Research Working Paper Series 9242, The World Bank.
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    Cited by:

    1. Kraemer-Eis, Helmut & Botsari, Antonia & Gvetadze, Salome & Lang, Frank & Torfs, Wouter, 2020. "European Small Business Finance Outlook 2020: The impact of COVID-19 on SME financing markets," EIF Working Paper Series 2020/67, European Investment Fund (EIF).
    2. Elżbieta Kacperska & Jakub Kraciuk, 2021. "Changes in the Stock Market of Food Industry Companies during the COVID-19 Pandemic—A Comparative Analysis of Poland and Germany," Energies, MDPI, vol. 14(23), pages 1-17, November.
    3. Silvia Muzi & Filip Jolevski & Kohei Ueda & Domenico Viganola, 2023. "Productivity and firm exit during the COVID-19 crisis: cross-country evidence," Small Business Economics, Springer, vol. 60(4), pages 1719-1760, April.
    4. Islamaj,Ergys & Le,Duong Trung & Mattoo,Aaditya, 2021. "Lives versus Livelihoods during the COVID-19 Pandemic : How Testing Softens the Trade-off," Policy Research Working Paper Series 9696, The World Bank.
    5. Shirov, A., 2021. "The pandemic crisis: The mechanisms of development and solutions for economic policy," Journal of the New Economic Association, New Economic Association, vol. 49(1), pages 209-216.

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