Economic scarring is a term widely used in analysis and discussion of the macroeconomic impact of the pandemic. This short video looks at the meaning of economic scarring and how it might manifest itself over time.
Economic scarring refers to the medium-long term damage done to the economies of one or more countries following a severe economic shock which then leads to a recession.
Scarring can manifest itself in several ways including a slowdown or absolute fall in a country’s estimated potential GDP and their long-term trend growth rate.
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