Such a “supply shock” is very difficult to address with standard monetary and fiscal policy tools. The spread of the COVID‑19 virus interrupted international supply chains, notably with China, and is forcing workers to remain at home because they are quarantined, sick or subject to lockdowns. This crisis is of a different nature than previous ones, and it requires a different mix and timing of policy responses. Reinforcing health systems and medical research to ensure that appropriate care can be provided to all those infected by the virus comes first but governments also need to find fast and effective solutions to deal with the economic and social impact on workers and companies of both the disease itself and the effects of the containment measures taken to limit the spread of the virus. Containing the epidemic and protecting people is the top priority. The global economy faces its biggest danger since the financial crisis. The outbreak of the COVID‑19 virus poses an unprecedented, major challenge to economies and societies.

This note, and the accompanying policy table, contributes to evidence-sharing on the role and effectiveness of various policy tools. Many affected countries introduced or announced bold measures over the last days and weeks, often with a focus on supporting the most vulnerable who are bearing a disproportionate share of the burden. As companies are suffering from a sharp drop in demand, rapid financial support through grants or credits can help them bridge liquidity gaps. Workers who lose their jobs and incomes, including those in non-standard forms of employment, need income support. Short-time work schemes can help protect jobs and provide relief to struggling companies, as evidenced during the last financial and economic crisis. Working parents need help with unforeseen care needs as schools are closing and elderly relatives are particularly vulnerable. Reducing workers’ exposure to COVID‑19 in the workplace and ensuring access to income support for sick and quarantined workers are essential. An immediate employment and social-policy response is needed. But disrupted supply chains, containment measures that are limiting economic and social interactions and falling demand put people’s jobs and livelihoods at risk. Containing the pandemic and protecting people is the top priority. The unfolding COVID‑19 crisis is challenging people, households and firms in unprecedented ways.

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