It is quite easy to boost demand, but not potential growth

The stimulus policies implemented in response to the COVID crisis in OECD countries have above all boosted households’ incomes and led them to build up savings. A portion of this support will be consumed and will therefore stimulate demand. But if the stimulus policies do not simultaneously boost corporate investment and productivity gains, then demand will grow faster than potential production and, as a result, growth will rapidly choke on a sharp deterioration in foreign trade. It is therefore very important to steer a significant portion of stimulus policies towards boosting potential growth.