The Global Economy Has a Case of ‘Long COVID’

The Global Economy Has a Case of ‘Long COVID’
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).

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.

A second challenge is rising inflation. In advanced economies, an entire generation of workers has never experienced inflation levels like those currently being recorded. It was only a few years ago that prominent economists were wringing their collective hands about the problem of persistent low inflation. Now, the combination of supply chain disruptions, easy monetary policy and fiscal stimulus is creating a cocktail potent enough to flip those concerns on their heads, kicking off what may be an extended period of high inflation.

Keep reading for free!

Get instant access to the rest of this article by submitting your email address below. You'll also get access to three articles of your choice each month and our free newsletter:

Or, Subscribe now to get full access.

Already a subscriber? Log in here .

What you’ll get with an All-Access subscription to World Politics Review:

A WPR subscription is like no other resource — it’s like having a personal curator and expert analyst of global affairs news. Subscribe now, and you’ll get:

  • Immediate and instant access to the full searchable library of tens of thousands of articles.
  • Daily articles with original analysis, written by leading topic experts, delivered to you every weekday.
  • Regular in-depth articles with deep dives into important issues and countries.
  • The Daily Review email, with our take on the day’s most important news, the latest WPR analysis, what’s on our radar, and more.
  • The Weekly Review email, with quick summaries of the week’s most important coverage, and what’s to come.
  • Completely ad-free reading.

And all of this is available to you when you subscribe today.

More World Politics Review