The defining features of post-COVID economies

Economies will be marked by four defining features after COVID: The shape of production after the COVID crisis will be “square root”-shaped . This equates to a sudden fall in activity followed by a rapid recovery , but low growth in the medium term. This holds not only for developed countries , but also for China. Companie s will be less profitable and will react accordingly, and income distribution will worsen globally . We are seeing clear signs of this in spite of government policies. The massive use of expansionary fiscal policies supported by the negative real interest rates stemming from highly expansionary monetary policies and fiscal deficit monetisation will yield the related negative consequences;  Global financial instability could be one of the key unintended consequences of the pandemic, both because of increasingly volatile flows in emerging economies but also doubts about the dollar ’ s reserve currency role .