“Hope 2021 is better than 2020” sets a really low bar when it comes to New Year wishes, but as the battered global economy limps back to normalcy, it is likely that 2021 will be better, particularly now that we have vaccines. The question is, how much better?
Unlike some past pandemics that reshaped economies with their high fatality rates, the economic impact of Covid-19 was primarily through the administrative interventions to slow its spread, as governments bought time to understand it better, and for the development of vaccines. So then, if lockdowns caused the economic slowdown, should not their lifting bring economic normalcy? Unfortunately, economic recessions can also impair productive capacity, somewhat like a piece of metal that once bent cannot be fully straightened again: firms shut down, households…
