This article appeared in the September 17, 2020 edition of the Monitor Daily.

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Resilience 2.0: The test as world risks a second wave

Kay Nietfeld/Reuters
German Finance Minister Olaf Scholz talks to European Central Bank President Christine Lagarde before the second session of the Informal Meeting of Ministers for Economics and Financial Affairs in Berlin, Germany, September 11, 2020.

Throughout the worst pandemic in a century, economies have shown remarkable resilience. Despite dramatic declines in activity in the face of near-total lockdowns around the world this spring, many (though not all) businesses and industries snapped back smartly this summer. Those who predicted a long period of stagnation turned out to be too pessimistic.

But a resurgence of coronavirus cases in Europe is causing new uncertainty around the world. Can economies weather a second wave? Will they be more resilient, because of their experience, or less resilient because of their weakened condition? The answer may depend on policymakers.

In the past two days, the U.S. and British central banks have signaled their support in terms of continued low interest rates, even exploring, in the latter's case, negative interest rates. But that’s probably not enough. Unemployment is still high. Some businesses won’t recover.

The British government, its plate already full with Brexit, faces the end of aid to furloughed workers and is trying to contain a new virus outbreak with restrictions that don't wreak the economic havoc of the spring. In the United States, where the number of coronavirus cases is falling after a worrying rise this summer, Congress is struggling to pass a new relief bill. These crises are potential political debacles for President Donald Trump, facing reelection, and the increasingly unpopular British Prime Minister Boris Johnson. But they also represent an opportunity for both leaders to get the coronavirus response right this time and make their economies more resilient going forward.


This article appeared in the September 17, 2020 edition of the Monitor Daily.

Read 09/17 edition
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