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Federal Reserve Chairman Jerome Powell appears on a monitor at the KEB Hana Bank headquarters. Federal Reserve Chairman Jerome Powell appears on a monitor at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, March 17, 2022 (AP photo by Ahn Young-joon).

The Global Economy Has a Case of ‘Long COVID’

Tuesday, March 22, 2022

One of the more concerning things about the virus that causes COVID-19 is the potential for its symptoms to linger long after the initial infection has waned. No one knows exactly what is causing “Long COVID,” as the disease is now known, but we do know that dealing with it will impose costs on societies for years to come. Not dissimilar are the pandemic’s economic and financial impacts. The initial symptoms of the crisis were acutely painful—economic downturns, business closures and supply chain disruptions. But now, as governments reopen their societies, they are realizing that some of the pandemic’s challenges may not soon abate. The global economy has come down with its own version of “Long COVID.”

First among these challenges is ballooning global debt levels. During the society-wide lockdowns of the pandemic’s first wave, governments were forced to embark on massive borrowing sprees. Those funds were necessary to finance the huge fiscal programs that kept businesses and workers afloat through the unprecedented economic shock. But now, several waves of the pandemic later, governments must reckon with these new liabilities. ...

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