Written By As the world continues to grapple with the unprecedented impact of COVID-19, global economic leaders are facing immense pressure to devise effective policies that will help mitigate the pandemic’s devastating effects. In a recent address, International Monetary Fund (IMF) Chief Kristalina Georgieva emphasized the urgent need for stronger economic policies and called on countries worldwide to take immediate action. With uncertainty looming over our financial future, now more than ever we must examine how these proposed measures can help us build a better and more resilient economy in this challenging time.
IMF chief calls for stronger economic policies in face of COVID-19 uncertainty
The International Monetary Fund (IMF) has called for stronger economic policies in the face of COVID-19 uncertainty, warning that global growth could be derailed if governments don’t step up to support their economies.
In its World Economic Outlook, published on Wednesday, the IMF said that although somecountries have seen strong performances so far this year, “much remains uncertain” about COVID-19 – a reference to the global pandemic of coronavirus. If this continues, then growth could be hit hard, with knock-on effects for both public finances and the jobs market.
Governments must take measures to mitigate these risks – including by bolstering spending on infrastructure and social programs – if they are to avoid a protracted period of weak growth, the IMF said. It also urged greater coordination across countries in order to minimize economic fallout from COVID-19.
The IMF’s report comes as policymakers around the world grapple with how best to respond to COVID-19. So far, most countries have been able to contain the outbreak relatively easily – but that could quickly change if more people catch the virus or it becomes more severe. In some cases, such as Saudi Arabia and Bahrain, COVID-19 has led to major disruptions in domestic travel and trade.
Despite these concerns, many governments are still expected to pursue deficit-reducing policies in 2019 and 2020 – even though doing so may set off further downward trends in growth and job creation. This
IMF urges countries to bolster resilience to pandemics
The IMF has called on countries to bolster their resilience to pandemics, as the global economy remains uncertain and the effect of COVID-19 continues to be felt.
IMF Managing Director Christine Lagarde said in a statement that policymakers need to make sure “the necessary preparations are in place” for unexpected events such as pandemics. She added that the IMF is providing assistance to countries hit hardest by COVID-19 in order to support their economic recovery.
Lagarde also urged policymakers to continue investing in social protection and public goods, like healthcare and education, which she says “can help reduce vulnerability.”
Trump administration unveils $4.5 trillion budget proposal
The Trump administration released its $4.5 trillion budget proposal for Fiscal Year 2019 on Monday, February 12th. The proposal includes significant cuts to government agencies and programs, as well as major increases in military spending and infrastructure investment.
The budget would reduce the Department of Education by $9 billion, the Environmental Protection Agency by $2.7 billion, and the State Department by $25 billion. It would also cut funding for Medicaid by $1.5 trillion over 10 years, privatize Medicare, and end social safety net programs like food stamps and housing assistance for low-income families.
Immigration enforcement would receive a significant boost under the Trump budget proposal, with a increase of $2.6 billion in funding for ICE agents and detention facilities. The proposal would also expand work requirements for welfare recipients and cut off federal funding to so-called “sanctuary cities” that refuse to cooperate with immigration authorities.
The Trump administration’s proposed cuts are likely to meet strong resistance from Congress, which is alreadyconsidering its own budgets for Fiscal Year 2019. The White House estimates that its budget will generate an additional $2 trillion in revenue over 10 years, partly through increased economic growth resulting from its proposed cuts to taxes and regulations
NAFTA talks reach deadlock
NAFTA talks have reached a deadlock with the United States insisting on tougher provisions from Mexico and Canada, according to the IMF’s latest report. The organization has called for stronger economic policies in order to bolster growth and prevent an impending trade war. NAFTA was formally ratified in 1994 and has since been one of the most important bilateral trade agreements in North America. Talks between the United States, Mexico, and Canada have been stalled for months over disagreements on issues such as immigration and auto tariffs.
The Trump administration is pushing for increased investment from Mexico in infrastructure projects as well as changes to immigration laws that would make it more difficult for Mexican workers to come into the United States. Canada has proposed increasing research and development spending, which would create jobs in both countries. However, these proposals are opposed by the United States because they argue that they would violate NAFTA’s free-trade principles.
If negotiations do not result in a compromise soon, there is a risk that trade tensions could escalate, which would lead to negative consequences for both economies. The IMF warned that if there is no resolution to the standoff within six months, there is a significant risk of a trade war breaking out between the United States and its NAFTA partners.
The Fed hikes rates, but does it go far enough?
The Federal Reserve raised rates for a third time this year on Wednesday, but the increase was small and there was little indication that the central bank plans to hike rates much more in coming months. With inflation still below the Fed’s 2% target, many economists say the central bank should be doing more to stimulate the economy.
IMF chief Christine Lagarde said Wednesday that stronger economic policies are needed to help return inflation to its target range and prevent further wage stagnation. “The global economy needs strong cyclical policies, including policy interest rates that are at or close to their historical norms, as well as unconventional measures such as additional liquidity provision by reserve managers,” Lagarde said in a statement released after her meeting with Mexican president Enrique Peña Nieto….
Many economists say monetary policy alone isn’t enough to spur growth. They argue that structural reforms, such as loosening regulations and improving infrastructure, are also needed to create jobs and improve business efficiency.
China reports slower growth in second quarter
China’s GDP growth slowed to 6.7% in the second quarter of 2018 from 6.9% in the first quarter, reported by the National Bureau of Statistics (NBS). The slowdown was due to softer exports and a dip in investment activity as businesses cautious about the future.
The IMF has warned that China’s growth may have peaked and that policy stimulus may be needed to keep the economy afloat heading into an uncertain future. China’s leaders are aware of these concerns and are currently debating what policies to implement in order to maintain sustained growth.
