According to the IMF´s latest World Economic Outlook (WEO April 2021), the pandemic recession is the deepest since the end of WWII, with a 3.5% output contraction in 2020, which represents a 7% loss relative to the IMF´s 3.4% growth forecast back in October 2019. More importantly, the consequences of the shock will likely be long-lasting. While the medium-term costs are still uncertain and vary significantly across countries, it is safe to say that developing economies will suffer the most. Whereas the IMF projects that the world GDP will be 3% lower in 2024 relative to the no-Covid scenario, the number doubles to 6% for the developing world despite the fact that the shock, as measured by Covid-related deaths, was more muted in low-income economies. In a recent paper (Levy Yeyati and Filippini 2021), we run a preliminary assessment of these long-term costs by countries and regions.

How big is big?

First, we compute the…

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