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Gifted Analysts

Research and Analytics

Fiscal Stimulus

Managing Divergent Recoveries

By Sheriffdeen AdeotiPosted on Posted in Africa & World EconomyTagged , , , , , , No Comments on Managing Divergent Recoveries

It is one year into the COVID-19 pandemic and the global community still confronts extreme social and economic strain as the human toll rises and millions remain unemployed. Yet, even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible. Thanks to the ingenuity of the scientific community hundreds of millions of people are being vaccinated and this is expected to power recoveries in many countries later this year. Economies also continue to adapt to new ways of working despite reduced mobility, leading to a stronger than anticipated rebound across regions. Additional fiscal support in large economies, particularly the United States, has further improved the outlook.

In our latest World Economic Outlook, We are now projecting a stronger recovery for the global economy compared with our January forecast, with growth projected to be 6 percent in 2021 (0.5 percentage point upgrade) and 4.4 percent in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3 percent in 2020.

Monetary Policy at a Crossroad: Policymakers Need to Break Promise of Easy Money to Avoid Boom-Bust

By Okeowo EbenezerPosted on Posted in Business & FinanceTagged , , , , , , No Comments on Monetary Policy at a Crossroad: Policymakers Need to Break Promise of Easy Money to Avoid Boom-Bust

The Federal Reserve’s new policy approach is that policymakers want to see “actual progress, not forecast progress” before deciding to change its policy stance. Substantial actual progress is occurring in the economy, some faster than others. How much monetary accommodation is needed to meet the ultimate employment and inflation objectives is debatable. But it is less than when the pandemic started and less after the passage of $1.9 trillion in federal stimulus.

Determining when a policy stance has become too accommodative is not an easy matter—but enabling excessive risk-taking to become well-entrenched is comparable to past policy mistakes by allowing a build-up of inflation and inflation expectations. Both are difficult to unwind, and past episodes have shown it is impossible without triggering significant adverse effects in the economy.

How Rising Interest Rates Could Affect Emerging Markets

By Aminu MusaPosted on Posted in Africa & World EconomyTagged , , , , , , No Comments on How Rising Interest Rates Could Affect Emerging Markets

Emerging and developing economies are viewing rising interest rates with trepidation. Most of them are facing a slower economic recovery than advanced economies because of longer waits for vaccines and limited space for their own fiscal stimulus. Now, capital inflows to emerging markets have shown signs of drying up. The fear is of a repeat of the “taper tantrum” episode of 2013, when indications of an earlier-than-expected tapering of US bond purchases caused a rush of capital outflows from emerging markets.

What to do When Low-for-Long Interest Rates are Lower and for Longer

By Okeowo EbenezerPosted on Posted in AgenciesTagged , , , , No Comments on What to do When Low-for-Long Interest Rates are Lower and for Longer

Central banks have played a pivotal role in easing financial conditions in response to the COVID-19 shock, and helped avert a catastrophic downturn. However, their work is far from done. Yet more monetary stimulus will be needed to support economic recovery, and central banks are implementing innovative new strategies to provide it.

A Long, Uneven and Uncertain Ascent

By Adebisi SamuelPosted on Posted in Africa & World EconomyTagged , , , , , , , No Comments on A Long, Uneven and Uncertain Ascent

This crisis is far from over. Employment remains well below pre-pandemic levels and the labor market has become more polarized with low-income workers, youth, and women being harder hit. The poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year. The ascent out of this calamity is likely to be long, uneven, and highly uncertain. It is essential that fiscal and monetary policy support are not prematurely withdrawn, as best possible.

Aging Economies may Benefit Less from Fiscal Stimulus

By Joshua OlorunsaiyePosted on Posted in AgenciesTagged , , , , , , No Comments on Aging Economies may Benefit Less from Fiscal Stimulus

A new IMF research finds that age matters when considering fiscal stimulus. Specifically, the study found that fiscal policy isn’t as effective in boosting growth in economies with older populations, compared to economies with younger populations.

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