First, the current crisis was caused by an external shock; that is, the spread of a new infectious disease.2 Taking past business cycles as an example, when a recession was due to a temporary external shock, the pace of economic recovery seemed to be fast. However, it should be noted that external shocks may persist due to the prolonged impact of COVID-19.
In addition, if the external shock leads to instability in financial markets or a financial crisis, the current economic crisis may become more severe. Second, the current crisis has originated from shocks to both aggregate demand and supply.