K-Shaped Scar of COVID-19 on the Global Economy

Abstract

COVID-19 crisis has exacerbated global economic inequality. Two main reasons behind this K-shaped scar are (1) the imbalance in the supply of vaccines among countries and (2) the difference in the ability of governments to financially support the economy. Besides cross-country gap in growth rates, the discriminatory impact of the pandemic can also be seen in the labor market. With rising interest rates and shrinking financial market, governments should effectively allocate their limited resources to support the economy. First, they need to come up with an orderly exit plan for smooth restructuring of the economy. Second, they should restore supply chain networks and find alternative sources of goods to control inflation. Finally, governments need to engage in deeper international cooperation so that vaccines are distributed more evenly across countries.