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The Threats to Recovery

Many of the monetary and fiscal measures in advanced economies over the past 12 months were necessary and unavoidable. But as policymakers eye a possible recovery in 2021-22, they must be vigilant about the side effects of prolonged stimulus.

NEW YORK – Over the past year, rich-country governments and central banks have provided unprecedented fiscal and monetary stimulus to help mitigate the economic impact of the COVID-19 pandemic. Getting back to economic normalcy – whatever modified form that takes in 2021 and 2022 – will require advanced economies to start weaning themselves off official support before too long, and thereby avoid dangerous new complications.