With vaccines being rolled out, the step to curb the impact of COVID-19 is already underway. However, for the global economy to turn around, it will take some time to regain an economic equilibrium.
Benjamin Gordon Palm Beach – His perception in brief
Although vaccinations are being made available to the population in most countries, there must be a balance between the demand and supply of the vaccines. It will be a time-consuming process before mass vaccinations can occur. Nevertheless, governments around the world are in a better position to initiate their processes of recovery on the economic front.
Every government must take measures that will prevent the respective nations from suffering permanent damage due to the financial stability brought about by the pandemic. As we all know that COVID-19 has led to shrinking GDPs.
The IMF or the International Monetary Fund ascertains that in the case of the emerging and developing nations, their national output will be curtailed by as much as 6%, which was estimated in 2020, excluding China.
An interesting aspect to keep in mind is that the rate of recovery will be widely apart for the different economies across the globe.
The Central Bank policies are aiming at recovery too. Even the Federal Reserve has assured that it will be keeping the rates of interest at an all-time low at least till the year 2023 till the time the economy does not significantly turn around.
Even the European Central Bank has decided to extend the “pandemic emergency purchase program” till March 2022. Simultaneously, it also intends to reinvest the proceeds till March 2023. This is a way to inject cash into the economy.
As such, the banks are striving hard to support the present condition of the economy. It is also a reflection of the fact that how much damage has been done due to the pandemic.
Revamp of financial policies – The need of the hour
The need is also being felt for the revamp of fiscal policies in most of the countries not just to turn around the economy but also to prevent the economies from being subjected to permanent damage due to the COVID-19 impact.
Every government must make an effort to prevent a condition like hysteresis. This is a condition when there is an unemployment shock that leads to the suppressed potential of growth for the economies aside from adversely impacting government spending.
As such, this is the ideal time to support jobs and generate employment that will add to the participation of the workers thereby contributing to the growth of the economy. The same is felt by Benjamin Gordon Palm Beach.
To wrap it up, the secret of economic recovery lies in the policy offered by the IMF.
In the latest World Economic Outlook, the IMF reveals that at times of financial uncertainty like the one caused by COVID-19, if a nation spends 1% of GDP on public infrastructure, it can improve employment by 1.2% and contribute towards 2.7% growth in GDP of that nation. Also, within 2 years, it will foster private investments as well.