The Covid-19 crisis is first and foremost a health and humanitarian crisis likely to have lasting impacts on how we live. The economic fallout from Covid-19 is unique for at least five reasons. First, unless you have lived through the Great Depression in the 1930s, the extent of the economic decline takes us into uncharted territory.
In order to manage the spread of Covid-19, governments are being forced to ask the population to stay at home, closing schools and universities, and restricting spending in restaurants and bars. In other words, our policy response is further reducing the level of demand. Furthermore, our health policy actions are also impacting on the supply side of the economy. Asking workers to stay at home impacts negatively on firms' ability to supply goods.
As the level and rate of infections increses, we can expect that not only will we have to deal with increasing costs of healthcare service provision, but the economic dimensions of the crisis will deepen. Both the demand and supply ide of the economy will have to be further constrained too.
