In support of the G-20, this report discusses structural reform options to support a strong, sustainable, balanced and inclusive economic recovery from the COVID-19 pandemic recession.
The COVID-19 pandemic is the largest global economic shock in decades and is causing a loss of lives and a deep recession in 2020. The virus continues to spread in many regions of the world, and many countries are experiencing a resurgence of cases. The immediate policy challenge is to contain the continual spread – and any new outbreaks – of the virus, while minimising the collateral economic and social damage. Containing the virus requires efforts to ensure widespread testing, effective and timely tracking, and tracing, social distancing, and use of masks and the continuation of certain targeted containment measures to control local outbreaks. Fiscal and monetary policy support needs to be maintained to preserve confidence and limit uncertainty. Crisis-related support policies should be flexible and state-contingent, evolving as the recovery progresses to ensure assistance to households, workers, and firms and focus on viable jobs and companies.
Exceptional crisis related policies need to be accompanied by the structural reforms most likely to raise opportunities for displaced workers and strengthen economic dynamism, allowing the reallocation of labour and capital resources towards sectors and activities with the strongest growth potential. Governments’ structural policies acting on three main fronts are crucial for an inclusive, and sustainable economic recovery.
The global economy requires policy support to exit the crisis. This involves maintaining fiscal and monetary support while adapting short-term crisis-related measures, introducing some new policies and targeting policies where they would be most effective. Governments’ structural policies acting on three main fronts are crucial for an inclusive, and sustainable economic recovery: