Justin Sandefur, Arvind Subramanian, 18 May 2020

The IMF is forecasting a substantially more muted impact of the COVID crisis on GDP for developing countries compared to advanced economies. This column argues that the discrepancy cannot be explained by external vulnerabilities, which afflict developing countries more. Nor can it be explained by the domestic shock, because social distancing and lockdowns have been similar across both groups, while fiscal policy responses have been significantly weaker in developing countries. Relative optimism should not guide international policy responses.

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