COVID – Lifting lockdowns and the economic recovery

The pandemic could give rise to a new era of human development. Otherwise, economic and social development may falter for decades.

Exhibit 1 shows how different levels of physical isolation affect economic conditions. A recession could occur if faltering demand, restricted supply, and lost income reach critical levels. The differences between scenarios could be tenfold: a country that applies physical distancing in a lax way and ends it too soon could face zero GDP growth, but if the same country imposed a very strict and prolonged quarantine, GDP might plunge by 20 percent. In some Western economies, the latter scenario might increase government control of strategic sectors.

Countries can avoid the worst scenarios if they work quickly along three principal lines of action: first, minimizing the impact of physical distancing on the economy; second, spending deeply to keep it afloat; and third, spending even more to accelerate the crisis recovery and to close historical gaps.

Chosen excerpts by Job Market Monitor. Read the whole story @ Saving our livelihoods from COVID-19: Toward an economic recovery | McKinsey