Dhaka, April 4 -- Recessions wreak havoc and the damage is often long-lived. Businesses shut down, investment spending is cut, and people out of work can lose skills and motivation as the months stretch on. But the recession brought on by the Covid-19 pandemic is no ordinary recession. Compared to previous global crises, the contraction was sudden and deep-using quarterly data, global output declined about three times as much as in the global financial crisis, in half the time.

Systemic financial stress-associated with long-lasting economic damage-has been largely avoided so far, owing to the unprecedented policy actions taken. However, the path to recovery remains challenging, especially for countries with limited fiscal space, and is m...