2021: an injection of economic hope

28/12/2020

Experts believe that 2021 will be the year that the world will leave behind the covid-19 nightmare, thanks to vaccination and fiscal and monetary incentives.

For those who prefer to see the glass half full, vaccination is not the only element on which the longed-for economic recovery revolves. In the coming months, the two major networks that reduced the impact of the covid-19 will continue to be extended: central banks and governments. In the first case, both the US Federal Reserve and the European Central Bank have confirmed that they will keep interest rates at ultra-low levels and continue to buy assets in the market. "The monetary policy carried out so far will be maintained in ultra-expansive terms and will support a liquidity provision that ensures that the financial resources are sufficient to satisfy the needs of the productive activity and public debt, minimizing in turn, the risk of insolvency. ", highlights the Instituto de Estudios Economicos, based in Madrid.

Source: El Pais

Regarding public aid, if only a decade ago, politicians (and many economists) were reluctant to turn on the fiscal tap and were quick to ask for the belt to be tightened, now the attitude is totally different. With the memory still fresh of austerity, which deepened the recession after the financial crisis, since the beginning of the pandemic, Governments not only promote fiscal spending in a general way to contain the effects of the crisis, but they do so in a more coordinated way with the central banks. Proof of this is that the public debt of developed countries will increase by 20 percentage points, until it represents, on average, 125% of GDP at the end of 2021, according to the IMF - and no one has declared the end of the world.

For more information go to: https://brasil.elpais.com/economia/2020-12-27/2021-uma-injecao-de-esperanca-economica.html