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IMF: How Asia can navigate the long-term economic impact of COVID-19

Source | | Chang Yong Rhee

  • COVID-19 exacerbated existing long-term economic challenges in Asia.
  • Economics with need to navigate slowing productivity growth, growing indebtedness, aging populations, rising inequality, and managing climate change.
  • A new IMF paper explores how countries can overcome these challenges.

The Sydney Opera resumed live performances and the city of Melbourne recently hosted the Australian Open tennis tournament with fans (mostly) in attendance. Japan is back to planning the delayed 2020 Summer Olympics, while China focuses on the Beijing 2022 Winter Games. Having been hit by COVID-19 first, Asia is also recovering first. At the pandemic’s first anniversary, is the region back to full health?

The best answer is that it is too early to know for sure. The pandemic exacerbated existing long-term issues: slowing productivity growth, growing indebtedness, aging population, rising inequality, and managing climate change. A new IMF staff paper looks into how the region can navigate these multiple challenges.

Long-lasting effects

If past experience is any guide, this pandemic will have long-lasting effects. A look at past recessions in advanced economies reveals that on average, five years after the start of a recession, output is still almost 5 percent below its precrisis trend and unlikely to ever catch up.

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