It should not be forgotten that recessions reduce potential growth

When we look at the shape of the economic recovery, it is important to not forget that recessions reduce potential growth via several mechanisms: Per capita capital is reduced; Human capital is reduced by the rise in unemployment and the change in the sectoral structure of the economy; There is no “Schumpeterian process” at all; on the contrary, the proportion of zombie firms rises ; Companies accumulate precautionary cash reserves, which is an inefficient use of savings. Growth should therefore be expected to be even lower after the COVID crisis than before it.