Business sectors are in very different situations as a result of the COVID crisis

The COVID crisis will give rise to three groups of business sectors in OECD countries: Those where there is likely to be a long-lasting shortfall in demand (air transport, cars, aircraft, capital goods, commercial real estate, fossil fuels); Those where there is going to be a decline in supply as a result of the fall in productivity due to the health constraints (industry, construction, retail, restaurants, leisure culture); Those where, on the contrary, demand will be strong (technology and telecom services, e-commerce, logistics, personal services, healthcare and pharmaceuticals, agri-food). This juxtaposition of sectors with diverse situations raises many questions: Whether there is a decline in demand or in supply, there will be a decline in employment, and sectors enjoying strong demand are unlikely to be able to offset the job losses in other sectors; The overall effect on inflation is ambiguous at first sight: falling prices in sectors where demand is weak, rising prices in those where supply is falling and demand is strong, and an overall rise in unemployment, which may curb wages; It is clear, however, that there will be significant movements in relative prices, with relative prices rising in sectors where supply is falling and in those where demand is increasing; What overall economic policy should be adopted, given this dispersion of sectoral situations? An upswing in demand would have an impact only in sectors where demand is weak; policies that increase both supply and demand (especially for durable goods) are needed: corporate tax cuts , subsidies to companies where productivity is declining because of health constraints, accelerated depreciation.