Why budget stimulus during corona crisis is essential

The unexpected outbreak of coronavirus, which has inevitably changed the social behavior of consumers as well as many corporations, has important implications for the government’s fiscal policy.

Illustrative stock photoIllustrative stock photo (Source: TASR)

In the current economic situation, the lack of macroeconomic response from the fiscal policy could exacerbate the resulting path of the menacing economic slowdown.

Just as encouraging social distancing can help slow down the progress of the virus and flatten the curve of affected people, an effective macroeconomic response from the government is necessary to flatten the negative curve of the economic weakening due to the extraordinary and temporary situation during the virus outbreak.

The example of China, which is gradually re-launching economic activity after 1.5 months of strict preventive measures against the virus, is an important reminder that the economic shock can be temporary and hence requires effective bridging measures especially for small and medium-sized companies, as well as for self-employed tradesmen.

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