The world ahead is one still fraught with economic, social and health concerns. The basic message is while it’s bad, it’s less bad than it has been or could be. And that’s what counts for optimism in 2021.
“We are still faced with tremendous uncertainties” said IMF Managing Director Kristalina Georgieva in her first media appearance in 2021 as she addressed the exit from the COVID-19 health crisis, the outlook for the global economic recovery, the impact from an uneven vaccination rollout, and the potential for growing inequality and poverty.
“We need to be clear – 2020 is the worst year since the Great Depression. But now when we are stepping into 2021, the picture is less bad for three factors. One, the decisive and sustained monetary policy and fiscal measures in advanced economies: they raised to Mario Draghi’s “whatever it takes” level. Two, because we have seen countries adjusting these measures based on rapidly changing circumstances, for example in Japan and US there is now new fiscal stimulus that comes on the back of the pandemic moving from bad to worse. Three, we have been handling the pandemic better over time. Adjusting to the digital economy, like you and me meeting in this format. Adjusting to micro measures—masks, social distancing—that allows us to function with pandemic still with us. And of course, most importantly with vaccines in place and mass vaccinations starting. So that is my second message, there are reasons why, while it is bad, it is less bad,” said Georgieva.
Georgieva stressed on the IMF’s role in advocating for a sustainable and inclusive recovery and arresting and reversing the dangerous divergence between rich and poor countries.
“We will continue to make the case for sustained policy support until the recovery is firmly underway, and a gradual move to more targeted assistance for the most vulnerable. We will also work with our members on the concept of resilient economies, accelerating the transition to the new digital and climate economy. How we can do that? We have been advocating coordinated fiscal stimulus aimed largely at green and digital investment, and helping countries reduce high debt burdens and cope with volatile capital flows. Everywhere in poor and rich countries, we must help workers as they transition from shrinking to expanding sectors,” said Georgieva.
She concluded her remarks by highlighting the role the IMF will play in working with the member countries on the concept of resilient economies, accelerating the transition to the new digital and climate economy and confirmed that the IMF wants to be a systemically significant institution in this transition to the new climate economy.
“This climate crisis that has been hanging over our heads before the pandemic has gone nowhere. It is still with us. It is good for the economy because many of the measures related to the transition to the new climate economy, to climate resilience and low carbon growth, they can be in job rich sectors, reforestation, mangroves restoration, dealing with land degradation, buildings’ renovation that bring efficiency, building solar panels, moving to solar energy. There are many areas where a resilient infrastructure—maybe this is the biggest chunk of job creation that countries need. And given that that we have now seen finally a massive shift towards recognition that this climate investments need to happen, I’m kind of hopeful that they actually will happen. In parentheses at the Fund, we take this very much to heart. We want to be [a] systemically significant institution in this transition to the new climate economy,” said Georgieva.