The renewed lockdowns in the United States and Europe in the wake of new waves of Covid-19, as well as the tightening of restrictions in Hong Kong, Malaysia, Japan and Taiwan, are a reminder that even after raging for more than a year, the pandemic is far from over. The roll-out of vaccines should help contain the spread, but that will be a prolonged process. It will not be until well into the second half of 2021, at best, that the pandemic may possibly be brought under control. In these circumstances, economies will need continued fiscal support from governments. US lawmakers agreed on a new US$900 billion (S$1.2 trillion) package of relief measures - which President Donald Trump has now rejected - on top of the more than US$2 trillion passed earlier. This would have brought the total fiscal support this year to more than 13 per cent of gross domestic product. The incoming administration of president-elect Joe Biden has pledged even more stimulus next year.

Many European countries which are reeling from repeated lockdowns will also almost certainly need to step up fiscal assistance from already record levels. In October, the International Monetary Fund cautioned that one of the biggest risks in responding to the economic impact of the pandemic would be a premature withdrawal of fiscal support. That is even more true now.