Government loans and incentives have also helped mitigate the effects of the pandemic. This is a very different approach than we experienced in 2008. Let’s take a look at what makes this approach different and how it could help.
Why it matters
This approach is very different from what we were able to see in 2008 during the global financial crisis. At that time, leaders reduced spending and introduced austerity measures. In this pandemic, large government spending and a loose monetary policy of central banks have greatly mitigated the economic impact of the pandemic. According to the IMF, the impact could have been three times worse without government incentives and spending.
What you can hear
You can hear about the austerity measures of 2008 that helped the economy to recover and led to anemic growth in industrialized countries. Some of you may have noticed that it is very likely that this has helped to reduce the inflationary impulses of central banks’ extreme monetary policies. Treasury Secretary Janet Yellen said it was the responsibility of an advanced economy, such as the United States, to continue providing economic support through government spending. According to her, this is the only way to prevent the collapse of the path to a normal life and economy.
What it could mean
In essence, individuals are expected to spend more. At the beginning of the spring meeting, the IMF revised its growth forecast for this year and assumes world will experience 6% GDP growth. That would be the highest growth since the 1970s. Several factors could help the recovery: government assistance, vaccinations and economic adjustment.
What you can do
Economic recovery is a big deal and could help with many things. At the same time, it is necessary to know how the economy behaves and at least have an insight into one’s own finances. If you would like to learn something new, follow our articles, where you will learn very interesting and necessary information about the economy and the business world.