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99 Foreign Aff. 84 (2020)
The Pandemic Depression: The Global Economy Will Never Be the Same

handle is hein.journals/fora99 and id is 914 raw text is: The Pandemic Depression The Global Economy Will Never Be the Same Carmen Reinhart and Vincent Reinhart The covD-19 pandemic poses a once-in-a-generation threat to the world's population. Although this is not the first disease outbreak to spread around the globe, it is the first one that governments have so fiercely combated. Mitigation efforts-includ- ing lockdowns and travel bans-have attempted to slow the rate of infections to conserve available medical resources. To fund these and other public health measures, governments around the world have deployed economic firepower on a scale rarely seen before. Although dubbed a global financial crisis, the downturn that be- gan in 2008 was largely a banking crisis in 11 advanced economies. Supported by double-digit growth in China, high commodity prices, and lean balance sheets, emerging markets proved quite resilient to the turmoil of the last global crisis. The current economic slowdown is different. The shared nature of this shock-the novel coronavirus does not respect national borders-has put a larger proportion of the global community in recession than at any other time since the Great Depression. As a result, the recovery will not be as robust or rapid as the downturn. And ultimately, the fiscal and monetary policies used to combat the contraction will mitigate, rather than eliminate, the economic losses, leaving an extended stretch of time before the global economy claws back to where it was at the start of 2020. The pandemic has created a massive economic contraction that will be followed by a financial crisis in many parts of the globe, as nonper- forming corporate loans accumulate alongside bankruptcies. Sover- CARMEN REINHART is Minos A. Zombanakis Professor of the International Financial System at the Harvard Kennedy School. Subsequent to the completion of this article, she was named Chief Economist at the World Bank. VINCENT REINHART is Chief Economist and Macro Strategist at Mellon. 84 FOREIGN AFFAIRS

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