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Which countries' finances will suffer the worst long-term scarring from Covid-19?


Having been badly hit by the Covid-19 pandemic, most governments have been forced to restrict domestic life, and with that, economic activity.

However, many have chosen to offer support to households and businesses, but at what cost?

This note follows on from “Will Covid leave scars on the world economy?” by Keith Wade and examines the long-term scarring for the global economy, specifically, the impact on public finances.

The paper - available as a PDF below - primarily uses data from the IMF Fiscal Monitor Report including the IMF’s forecasts, to draw out which countries are likely to suffer the biggest impact over the long-term.

You can also watch Azad Zangana discuss the paper by clicking play on the video in the top right hand corner of this article or below.

We consider recent and likely future borrowing, the impact on debt projections, and likely change in the debt servicing costs.

We also consider other long-term factors that will impact public finances, and finally, the paper presents analysis on which countries are expected to be ready for the next economic cycle, and which will be lagging behind, running the danger of not being able to respond to the next downturn. 

You can also watch Azad Zangana discuss the paper by clicking play on the video in the top right hand corner of this article.