ABSTRACT
The ongoing novel coronavirus (COVID-19) pandemic poses an unprecedented challenge to public health on a global scale. As governments are scrambling to safeguard peoples’ health, the contagion has fast extended to the economic sphere, creating an international economic crisis, unique in the scale and characteristics not seen since the Great Depression. COVID-19 unleashed simultaneous global demand and supply shocks, spanning across all nodes and centers of economic activity likely to shrink dramatically with significant adverse transmission effects to developing and emerging markets. The vulnerability of developing countries to the pandemic is particularly acute, given the limited capacity to weather the immediate health crisis and expected economic fallout due to high pre-existing poverty rates, larger informal sectors, shallower financial markets, and less fiscal space to broaden the social safety net or to stimulate their domestic economies. The resulting risks, uncertainties, and threats to economic and social stability threaten security, particularly in countries already suffering pre-pandemic. The responses to the COVID-19 era “new normal” require a mix of policy levers and incentives to mitigate the economic impacts on the most disadvantaged households and workers while avoiding measures that will constrain economic activity, deepen the economic slowdown, and lengthen post-COVID recovery.
JEL Codes: F17, F43, I15, C68
