Addressing the legacy of the crisis in the EM: the right policy mix in an uneven recovery

The duration of the epidemic will ultimately determine the shape of recovery. An uneven recovery and subdued inflation (barring any persistent supply shock) will call for a prolonged accommodative policy mix, in either monetary or fiscal policy. The merger of the two has to be careful monitored in emerging markets.

The current pandemic has hit all emerging economies without distinction, with the apex felt during the first half of 2020. Having said that, the depth of the scars it left has been different from country to country. Across the regions, Eastern Europe and CEE3 (Hungary, Poland and Czech) in particular have proven to be the most resilient, as well as North Asia (China, Taiwan and South Korea).

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