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October 21, 2020

Governments need to act to avoid ‘long economic Covid’

By Paul Dennis

21 October

The Covid-19 pandemic has had a crushing blow on the world economy, with the threat of ‘long economic Covid’ looming in most parts of the world.

The second wave of the disease is expected to increase the financial fragility among rich as well emerging and developing economies.

Erik Fossing Nielsen, group chief economist at Unicredit, shared an article by Martin Wolf who states that Covid-19 has not just crippled the healthcare system and people, but also the economy.

What started as a ‘long Covid’ threat will lead to a ‘long economic Covid’ threat, leading to years of debility.

Policymakers are of the opinion that governments cannot retract from providing support in current times as they did after the 2008 financial crisis or they will have to bear the cost of inaction.

On the contrary, governments will have to fill in the gaps as the private sector pulls back.

The International Monetary Fund (IMF) has already forecasted a dip in economic activity, which is most likely to keep private investments passive.

The IMF also predicts slow growth of real gross domestic product (GDP) per head from 2019 to 2025.

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