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Recovery from the Pandemic across the World: Balancing Short-term and Long-term Concerns

November 11, 2020

Kuala Lumpur Research Seminar Series

  • 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.

  • Norman Loayza is a Lead Economist in the Development Research Group at the World Bank. He is currently leading the Asia hub of the Research Group, based in Malaysia. He was director of the World Development Report 2014, Risk and Opportunity: Managing Risk for Development. His research has dealt with various areas of economic and social development, including macroeconomic management, economic growth, microeconomic flexibility, private and public saving, financial depth and stability, natural disasters, and crime and violence. His advisory experience at the World Bank has also ranged across different topics in various regions and countries. A few examples include business environment and economic performance in Latin America; informal and formal labor markets in the Middle East and Northern Africa; public infrastructure gaps in Pakistan and Egypt; savings for macroeconomic stability and growth in Sri Lanka, Georgia, and Egypt; and pro-poor growth in Indonesia and Peru. On external service from the World Bank, he was a Senior Economist at the Central Bank of Chile (1999-2000), where he advised on financial and monetary policy. Norman has edited 10 books and published nearly 50 papers in professional journals and edited volumes. A Peruvian national, he holds a Ph.D. in economics from Harvard University (1994).

DETAILS

  • WHEN: Wednesday, November 11, 2020
  • WATCH: Watch Recording
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