The great COVID-19 divergence: managing a sustainable and equitable recovery in the

Figure 1 shows expected cumulative growth over this period, highlighting the economic underper- formance of large parts of the EU relative to the US and China, and the underperformance of countries in the Mediterranean and of the United Kingdom. [...] Figure 2 shows that growth forecasts for the period 2019-2023 have been strongly revised downward in some countries in the south of Europe, in the Czech Republic and in the UK during the pandemic, while forecasts for 2023 for the US and Ireland have actually improved compared to pre-crisis forecasts. [...] Sapir (2020) suggested that the differential impact of the pandemic on economic performance can be explained by the strictness of the lockdowns necessary to contain the pandemic, the size of countries’ tourism sectors and the overall quality of their governance. [...] The evolution of the pandemic remains the biggest risk to the global outlook and policymakers need to prioritise the health emergency. [...] To boost aggregate demand, and given the significant distributional consequences of the COVID-19 crisis and the loss of income in some categories of the population, fiscal support could in part take the form of targeted support to low-income households with low savings and a high propensity to consume.