What comes next? Recovery from an uneven recession

Key takeaways

• The effects of the Covid crisis have been felt unevenly across sectors, and the output of customer service industries could remain well below its pre-Covid trend for some time.
• Economies with large customer service industries could grow more slowly in the near term, even after accounting for the stringency of containment measures and the severity of virus outbreaks.
• Model projections suggest that large advanced economies could face a "98% economy" until constraints on customer service industries ease. The outlook for some economies, such as China, is more positive.
• While demand stimulus remains necessary in the near term, it will not be sufficient to return economic activity to its pre-Covid trend. That will require public health measures to control the spread of the virus and steps to ease resource reallocation to industries less affected by the pandemic.

Online appendix