Governments around the world are struggling to balance containing the Covid-19 outbreak to protect public health against securing an economic recovery to safeguard people’s economic well-being, as infection rates spike in many countries . But instead of derailing the global economy and forcing another dip in economic activity, the latest outbreaks are more likely to dampen and delay a full recovery. In the United States, daily new infections accelerated from mid-June to average 50,000 cases a day. Latin America and South Asia are also struggling with a rise in new cases. Elsewhere, Spain , France, Germany, Japan and Hong Kong recently experienced a rebound in infections with the surges in Hong Kong and Japan surpassing their previous peaks in March and April . As the waves of outbreak roll on, economic recovery is losing momentum. High-frequency mobility data shows that the latest outbreak across the US has forced the public to cut back on activity as several states halted plans to reopen or reintroduced lockdown measures. The data may also decline in Spain as more social distancing policies return, and the rest of Europe could follow the same path. Against this backdrop, the first stage of recovery from the sharp recession in April and May, facilitated by generous government stimulus and early successes in flattening the infection curve, is beginning to stall. There are grim choices facing policymakers as they weigh up prospective economic losses against the measures necessary to fight the virus contagion and keep their public health systems from being overwhelmed. None of these trade-offs will be easy. A more sustained second-stage economic recovery will require the development and distribution of vaccines . Before this ultimate solution is within reach, there are some factors that can prevent the global economy from revisiting the lows seen earlier this year. First, more fiscal stimulus should be on the way. The European Union’s €750 billion (US$888 billion) recovery fund will provide additional firepower to European governments to support their economies. Importantly, it is also an unprecedented step towards a fiscal union within the EU. The US Congress is urgently expected to pass another fiscal package, although Washington lawmakers were still mired in debate at the time of writing. Americans could potentially receive another cheque for up to US$1,200 and enjoy an extension of the evictions moratorium. However, it is not yet clear whether the US$600 per week extra unemployment benefit will be continued. Meanwhile, governments are getting better at managing new waves of infection. Instead of national lockdowns or draconian stay-at-home orders, policymakers are exploring more efficient and targeted approaches to avoid unnecessary economic damage, such as only locking down cities or regions with more severe outbreaks, or only restricting activities that carry a high risk of spreading the virus. Businesses are also finding creative ways to resume operation. Many are allowing staff to work from home. Others have set up health check systems to keep staff and customers safe from infection. Some companies have adapted their business models to accommodate social distancing. Retailers are migrating their promotion campaigns online to boost sales. Sports events are being held in empty stadiums, or within a safety bubble, as TV broadcast revenue can often be higher than ticket sales. Still, some sectors will not be able to resume normal service until the pandemic is truly under control, such as airlines, travel and entertainment. If there is any silver lining to this situation, it can be found in the sheer magnitude of monetary medicine being dispensed in the form of rock-bottom interest rates around the world. The US Federal Reserve , determined to do whatever it can to help the ailing economy, recently extended several credit facilities to the end of the year. The Fed views the pandemic as the greatest source of economy uncertainty; as a result, it will pin its policy view to how the virus progresses and when we have a vaccine. Tai Hui is chief market strategist for the Asia-Pacific at JP Morgan Asset Management