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Why Sustainable Food Systems are Needed in a post-COVID World

1 day ago

By Nicoletta Batini, James Lomax, and Divya Mehra
Food systems are essential to economic activity because they provide the energy that we need to live and work. However, macroeconomists have long ignored them in the belief that the global agri-food industry, now highly mechanized, subsidized and concentrated, offers all we could wish for when it comes to food.

2020 will be a year of reckoning for the world’s food systems.

2020 will be a year of reckoning for the world’s food systems. In just months, COVID-19 shut down half the globe. Images of panic buying, empty grocery shelves and miles-long queues at food banks have suddenly reminded us how important food systems are in our lives and how imbalanced they have become.
Pandemic-induced runs on food, however, do not merely reflect human

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Toward an Integrated Policy Framework for Open Economies

2 days ago

By Tobias Adrian and Gita Gopinath
While capital mobility provides many benefits, capital flows to emerging market and developing economies are often volatile and depend critically on global financial conditions. The risks posed by volatile capital flows to macroeconomic and financial stability are often difficult to address with conventional monetary policy tools. Hence, policymakers have complemented interest rate policy with additional tools—including foreign exchange intervention, capital flow measures, and macroprudential actions—to achieve their objectives.
A significant shortcoming of this more eclectic approach is the lack of clear frameworks to guide how these tools should be used in concert to achieve central bank objectives. Accordingly, IMF staff have been engaged in a major

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Toward a More Resilient Europe

2 days ago

By Poul M. Thomsen
中文, Français, Português, Русский 
Europe, like the rest of the world, faces an extended crisis. An element of social distancing—mandatory or voluntary—will be with us for as long as this pandemic persists. This, coupled with continued supply chain disruptions and other problems, is prolonging an already difficult situation. Based on updated IMF projections released last month, we now expect real GDP in the European Union to contract by 9.3 percent in 2020 and then grow by 5.7 percent in 2021, returning to its 2019 level only in 2022. If an effective treatment or vaccine for COVID-19 is found, the recovery could be faster—but the opposite would hold true if there are large new waves of infection.

Some European countries will face a tougher recovery path than others.

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Fiscal Policies for a Transformed World

5 days ago

By Vitor Gaspar and Gita Gopinath
The ongoing COVID-19 pandemic has already prompted an unprecedented fiscal policy response of close to $11 trillion worldwide. But with confirmed cases and fatalities still rising fast, policymakers will have to keep the public health response their No. 1 priority while retaining supportive and flexible fiscal policies and preparing for transformational economic change.

Policymakers should tackle the rising poverty and inequality, as well as the structural weaknesses exposed by the crisis to better prepare for future shocks.

In the face of a sharp decline in global output, a massive fiscal response has been necessary to increase health capacity, replace lost household income and prevent large-scale bankruptcies. But the policy response has also

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Teleworking is Not Working for the Poor, the Young, and the Women

8 days ago

By Mariya Brussevich, Era Dabla-Norris, and Salma Khalid
The COVID-19 pandemic is devastating labor markets across the world. Tens of millions of workers lost their jobs, millions more out of the labor force altogether, and many occupations face an uncertain future. Social distancing measures threaten jobs requiring physical presence at the workplace or face-to-face interactions. Those unable to work remotely, unless deemed essential, face a significantly higher risk of reductions in hours or pay, temporary furloughs, or permanent layoffs. What types of jobs and workers are most at risk? Not surprisingly, the costs have fallen most heavily on those who are least able to bear them: the poor and the young in the lowest-paid jobs.
In a new paper, we investigate the feasibility to

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Digital Financial Inclusion in the Times of COVID-19

14 days ago

By Ulric Eriksson von Allmen, Purva Khera, Sumiko Ogawa, and Ratna Sahay
 中文, Español, Français, 日本語, Português, Русский 
The COVID-19 pandemic could be a game changer for digital financial services. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking. Financial inclusion as a result of digital financial services can also boost economic growth. While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players and highlighted unequal access to digital infrastructure. Several actions will need to be taken to ensure maximum inclusion going forward.

Low-income households and small firms can benefit greatly from advances in mobile money, fintech

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Reopening Asia: How the Right Policies Can Help Economic Recovery

15 days ago

By Chang Yong Rhee
 中文, Español, Français, Русский 
For the first time in living memory, Asia’s growth is expected to contract by 1.6 percent—a downgrade to the April projection of zero growth. While Asia’s economic growth in the first quarter of 2020 was better than projected in the April World Economic Outlook—partly owing to early stabilization of the virus in some—projections for 2020 have been revised down for most of the countries in the region due to weaker global conditions and more protracted containment measures in several emerging economies.

Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering.

In the absence of a second wave of infections and with unprecedented policy stimulus to support the recovery, growth in Asia is

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Chart of the WeekLow Internet Access Driving Inequality

16 days ago

By Mercedes García-Escribano
COVID-19 and the Great Lockdown triggered a mass migration from analog to digital and highlighted that access to the Internet is crucial for socioeconomic inclusion.
High-speed Internet is key for working from home, for children’s education when they can’t attend school in person, for telemedicine, for benefiting from social support programs, and for enabling access to financial services for everyone, especially for those living in remote areas.

The digital divide is more like a chasm, both within and between countries.

Still, Internet usage remains a luxury: half of the world’s population does not have access to the Internet, either through a mobile device or through fixed line broadband.
As the map in this chart of the week shows, the digital divide—the

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Outlook for Latin America and the Caribbean: An Intensifying Pandemic

19 days ago

By Alejandro Werner
Latin America and the Caribbean have become the new COVID-19 global epicenter. The human cost has been tragic, with over 100,000 lives lost. The economic toll has also been steep. The World Economic Outlook Update now estimates the region to shrink by 9.4 percent in 2020, four percentage points worse than the April projection and the worst recession on record. A mild recovery to +3.7 percent is projected in 2021.

Latin American countries should be cautious in reopening their economies and allow science and data to guide the process.

The pandemic
The rates of COVID-19 infections and deaths per capita are approaching those in Europe and the United States, with the total number of cases accounting for about 25 percent of the worldwide total.

Against this

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Financial Conditions Have Eased, but Insolvencies Loom Large

20 days ago

By Tobias Adrian and Fabio Natalucci
عربي, Español, Français, 日本語
Amid the human tragedy and economic recession caused by the COVID-19 pandemic, the recent surge in risk appetite in financial markets has caught analysts’ attention. After sharp declines in February and March, equity markets have rallied back, in some cases to close to their January levels, while credit spreads have narrowed significantly, even for riskier investments. This has created an apparent disconnect between financial markets and economic prospects. Investors seem to be betting that lasting strong support from central banks will sustain a quick recovery even as economic data point to a deeper-than-expected downturn, as shown in the June 2020 World Economic Outlook Update.
Tug of war
In the newest Global Financial

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Reopening from the Great Lockdown: Uneven and Uncertain Recovery

21 days ago

By Gita Gopinath
عربي, 中文, Español, Français, Русский 
The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression. Over 75 percent of countries are now reopening at the same time as the pandemic is intensifying in many emerging market and developing economies. Several countries have started to recover. However, in the absence of a medical solution, the strength of the recovery is highly uncertain and the impact on sectors and countries uneven.

We are now projecting a deeper recession in 2020 and a slower recovery in 2021.

Compared to our April World Economic Outlook forecast, we are now projecting a deeper recession in 2020 and a slower recovery in 2021. Global output is

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You’ve Got Money: Mobile Payments Help People During the Pandemic

23 days ago

By Sonja Davidovic, Delphine Prady and Herve Tourpe
Español, Português
The practical challenge of quickly getting financial support in the hands of people who lost jobs amid the COVID-19 economic crisis has baffled advanced and developing economies alike. Economic lockdowns, physical distancing measures, patchy social protection systems and, especially for low-income countries, the high level of informality, complicate the task. Many governments are leveraging mobile technology to help their citizens.
Togo, a small West African nation of 8 million, was able to quickly distribute emergency financial support to half a million people in less than two weeks using mobile phones. The technology helped deliver benefits to women in particular, and it supported a transparent rollout of the program.

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Migration to Advanced Economies Can Raise Growth

26 days ago

By Philipp Engler, Margaux MacDonald, Roberto Piazza, and Galen Sher
عربي, Español, Français, 日本語, Português, Русский 
Migration has been the focus of intense political debate in recent years. While most people have positive perceptions about immigrants, there are misconceptions and concerns. For instance, some think that migrants are a burden on economies.
Our new study in Chapter 4 of the April 2020 World Economic Outlook looks at the economic impact of migration on recipient countries and finds that migration generally improves economic growth and productivity in host countries.

Immigrants in advanced economies increase output and productivity both in the short and medium term.

But the pandemic has led to an abrupt stop to migration. While the Great Lockdown is temporary, the

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The Great Lockdown through a Global Lens

29 days ago

By Gita Gopinath
عربي, 中文, Español, Français, 日本語, Русский 
The Great Lockdown is expected to play out in three phases, first as countries enter the lockdown, then as they exit, and finally as they escape the lockdown when there is a medical solution to the pandemic. Many countries are now in the second phase, as they reopen, with early signs of recovery, but with risks of second waves of infections and re-imposition of lockdowns. Surveying the economic landscape, the sheer scale and severity of the Global Lockdown are striking. Most tragically, this pandemic has already claimed hundreds of thousands of lives worldwide. The resulting economic crisis is unlike anything the world has seen before.

Aside from its unprecedented scale, the Global Lockdown is playing out in ways that are very

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Combating COVID-19: How Should Banking Supervisors Respond?

June 15, 2020

By Tobias Adrian  and Ceyla Pazarbasioglu
عربي, 中文,  Español, Français,Русский 
The massive macro-financial shock caused by the pandemic continues to ravage the global economy and has put both banks and borrowers under severe strain. Supervisors find themselves confronted with unprecedented challenges which call for decisive action to ensure that banking systems support the real economy while preserving financial stability. This blog introduces nine joint IMF-World Bank recommendations to help supervisors navigate these uncharted waters and calls for vigilance regarding policy measures taken that are not consistent with international standards. This is critical to prevent the health and economic crisis morphing into a financial crisis.

The role of the bank supervisor has never been so

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The Global Economic Reset—Promoting a More Inclusive Recovery

June 11, 2020

By Kristalina Georgieva 
عربي, 中文, Español, Français, 日本語
The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality. And it could jeopardize development gains, from educational attainment to poverty reduction. New estimates suggest that up to 100 million people worldwide could be pushed into extreme poverty, erasing all gains made in poverty reduction in the past three years.

Policymakers must do everything in their power to promote a more inclusive recovery, one that benefits all segments of society.

That is why policymakers must do everything in their power to promote a more inclusive recovery, one that benefits all segments of society.
Our new research, prepared jointly with the

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Strengthening Economic Institutions for a Resilient Recovery

June 10, 2020

By Antoinette Sayeh
Exceptional times call for exceptional action. In response to COVID-19, the IMF has moved with unprecedented speed and magnitude of financial assistance to help countries protect lives and livelihoods. Economic stabilization and a sustainable recovery, however, will require more than financial assistance. For recovery to be sustainable, policymakers will need to strengthen economic institutions that enable resilient, inclusive policies.

Strengthening economic foundations can have the greatest long-term impact on the economic and social wellbeing of people.

Integrating capacity development with financial support
Governments today face difficult policy decisions—but many lack the strong economic foundations and technical know-how to design and implement the necessary

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Safeguarding Africa’s Food Security in the Age of COVID-19

June 4, 2020

By Pritha Mitra and Seung Mo Choi
Food security in sub-Saharan Africa is under threat. The ability of many Africans to access sufficient, safe and nutritious food to meet their dietary needs has been disrupted by successive natural disasters and epidemics. Cyclones Idai and Kenneth, locust outbreaks in eastern Africa, and droughts in southern and eastern Africa are some examples. The COVID-19 pandemic is just the latest catastrophe to have swollen the ranks of 240 million people going hungry in the region. In some countries, over 70 percent of the population has problems accessing food.
Sub-Saharan Africa is the world’s most food-insecure region, and in the June 2020 sub-Saharan Africa Regional Economic Outlook , we show that climate change is increasing that insecurity.
The sub-Saharan

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Courage under Fire: Policy Responses in Emerging Market and Developing Economies to the COVID-19 Pandemic

June 3, 2020

Martin Mühleisen, Vladimir Klyuev, Sarah Sanya
The coronavirus crisis is a crisis like no other, and for emerging market and developing economies (EMDE), it has triggered a policy response like no other, both in scope and magnitude.
Despite their diversity, and in some cases, strained resources, this large group of countries—consisting of emerging markets and low-income countries—have bolstered the provision of health services and extended unprecedented support to households, firms, and financial markets. While limited policy space has kept the response at a smaller magnitude than in advanced economies, some even managed to help other countries.
A whole new world
Economic activity in EMDEs has decelerated at a pace unseen in at least 50 years as the impact of the COVID-19 pandemic ravages

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How the Great Lockdown Saved Lives

June 2, 2020

By Pragyan Deb, Davide Furceri, Jonathan D. Ostry and Nour Tawk
عربي, 中文, Español, Français, 日本語, Русский 
Since the COVID-19 outbreak was first reported in Wuhan, China in late December 2019, the disease has spread to more than 200 countries and territories. In the absence of a vaccine or effective treatment, governments worldwide have responded by implementing unprecedented containment and mitigation measures—the Great Lockdown. This in turn has resulted in large short-term economic losses, and a decline in global economic activity not seen since the Great Depression. Did it work?

The Great Lockdown, despite its enormous short-term economic costs, has saved hundreds of thousands of lives.

Our analysis, based on a global sample, suggests that containment measures, by reducing mobility,

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A Turning Point for Political Economy

June 1, 2020

By Gita Bhatt
Five months ago we set out to write in this issue of Finance & Development about political economy—how politics affects the economy and the economy affects politics. Few suspected then that, instead of exploring an academic question, we would be witnessing real-world political economy dynamics unfolding, tragically, in real time. The pandemic, with its appalling loss of life, has brought the Great Lockdown and frozen the wheels of commerce. People’s lives have been turned upside down, punctuated by furloughs, facemasks, and fear.
While this health crisis reoriented our focus, the issue of political economy is more relevant than ever. It underscores the notion that policies are made not just on the basis of economic analysis but under the influences of non-economic social

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Equity Investors Must Pay More Attention to Climate Change Physical Risk

May 29, 2020

By Felix Suntheim and Jérôme Vandenbussche
عربي, 中文, Español, Français, 日本語, Русский 
The damage from the 2011 floods in Thailand amounted to around 10 percent of Thailand’s GDP, not even considering all the indirect costs through a loss in economic activity in the country and abroad. By some estimates, the total costs of the 2018 wildfires in California were up to $350 billion, or 1.7 percent of U.S. GDP. Every year, climatic disasters cause human suffering as well as large economic and ecological damage. Over the past decade, direct damages of such disasters are estimated to add up to around US$ 1.3 trillion (or around 0.2% of world GDP) on average, per year.

Direct damage from floods, heatwaves and droughts adds up to $1.3 trillion a year, on average.

As scientists warn that global

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Keeping Economic Data Flowing During COVID-19

May 26, 2020

By Louis Marc Ducharme, James Tebrake, and Zaijin Zhan
عربي, 中文
Accurate and timely economic data are crucial for informing policy decisions, especially during a crisis. But the COVID-19 pandemic has disrupted the production of many key statistics. Without reliable data, policymakers cannot assess how badly the pandemic is hurting people and the economy, nor can they properly monitor the recovery.
We are working with member countries and other international agencies to address these data disruptions and keep economic data flowing.

The significant data disruptions due to the COVID-19 pandemic require innovative data collection methods and data sources.

Three key statistical challenges
First, many staff in national statistical offices are now working from home due to lockdowns, often with

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COVID-19 Worsens Pre-existing Financial Vulnerabilities

May 22, 2020

By Tobias Adrian and Fabio Natalucci
عربي, 中文, Español, Français, 日本語, Português, Русский
Much the same way COVID-19 hits people with pre-existing health conditions more strongly, so is the pandemic-triggered economic crisis exposing and worsening financial vulnerabilities that have built up during a decade of extremely low rates and volatility.
Our recently released chapters 2-4 of the  Global Financial Stability Report focus on three potential weak spots: risky segments in global credit markets, emerging markets, and banks. Should the ongoing economic contraction last longer or be deeper than currently expected, the resulting tightening of financial conditions may be amplified by these vulnerabilities, causing more instability or even a financial crisis.

Vulnerabilities in credit

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Chart of the WeekTracking the $9 Trillion Global Fiscal Support to Fight COVID-19

May 20, 2020

By Bryn Battersby, W. Raphael Lam, and Elif Ture
Governments have put forward swift and significant emergency lifelines to protect people in response to the pandemic. We measured these in the April 2020 Fiscal Monitor and as countries have stepped up their efforts, we have updated the numbers.

The upward revision was largely because of a second wave of measures by governments as the economic fallout from the pandemic proves more severe.

So, where does the global fiscal support stand now?
The total is about $9 trillion, or $1 trillion more than the estimates just over a month ago. The breakdown looks like this: direct budget support is currently estimated at $4.4 trillion globally, and additional public sector loans and equity injections, guarantees, and other quasi-fiscal operations

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Dampening the Impact of Global Financial Shocks on Emerging Market Economies

May 19, 2020

By Damiano Sandri 
عربي, Español, Français, 日本語, Português, Русский
The COVID-19 pandemic is impacting emerging markets through an unprecedented combination of domestic and external shocks. Among the latter, the pandemic has led to a sharp increase in global risk aversion and an abrupt retrenchment in foreign capital flows. Based on historical experience, these types of global financial shocks can significantly affect macroeconomic conditions in emerging markets, even if the exchange rate is flexible.
Our research in chapter 3 of the latest World Economic Outlook shows that emerging markets can enhance resilience to global financial shocks using macroprudential regulation.

Emerging markets can enhance resilience to global financial shocks using macroprudential regulation.


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Making Economies More Resilient to Downturns

May 18, 2020

By John Bluedorn and Wenjie Chen
عربي, 中文, Español, Français, 日本語, Português, Русский
The world is in the grip of the COVID-19 pandemic and the ensuing Great Lockdown has pushed many countries into deep recessions—worse than during the 2008–09 global financial crisis. In response, governments and central banks all over the world have introduced strong discretionary (one-off and specific) fiscal and monetary measures to counteract the economic fallout caused by the spread of the coronavirus. Existing automatic stabilizers (such as income-based taxes and unemployment and household benefits), which differ across countries, have generally operated freely, providing some further cushion.
But with interest rates at record lows and public debts at historical highs in many countries, how can

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Chart of the WeekTracking Trade During the COVID-19 Pandemic

May 14, 2020

By Diego Cerdeiro, Andras Komaromi, Yang Liu, and Mamoon Saeed
With the current fast-changing developments, policy makers need to know what is happening to the economy in real time, but they often must settle for data telling them what happened many weeks ago. And international trade, which links countries through a complex web of supply chains, is an area where timely information is especially valuable from a global perspective.
Most trade takes place by sea, and—for navigational safety purposes—virtually all cargo ships report their position, speed, and other information many times a day. A new IMF methodology using these data can help better inform us how international trade is affected by the COVID-19 pandemic.
Building on machine-learning techniques, we can provide better answers to

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Emerging from the Great Lockdown in Asia and Europe

May 12, 2020

By Changyong Rhee and Poul M. Thomsen
عربي, 中文, 日本語, Русский
Several countries in Asia and Europe, where the COVID-19 outbreak appears to have peaked, are gradually reopening their economies. Without a vaccine or effective treatment, policymakers will be balancing the benefits of resuming economic activity against the potential cost of another increase in infection rates. They face difficult choices, in part, because the costs of erring in either direction could be very large.

The timing, sequencing, and pace of the planned exits differ across countries.

Given this, authorities are adopting a gradual and sequenced approach to reopening, along with the adoption of further prevention and containment measures. While some Asian countries have already moved down this path with some success,

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How Pandemics Leave the Poor Even Farther Behind

May 11, 2020

By Davide Furceri, Prakash Loungani, Jonathan D. Ostry
عربي, 中文, Español, Français, 日本語, Português, Русский
The COVID-19 crisis is now widely seen as the greatest economic calamity since the Great Depression. In January, the IMF expected global income to grow 3 percent; it is now forecast to fall 3 percent, much worse than during the Great Recession of 2008-09. Behind this dire statistic is an even grimmer possibility: if past pandemics are any guide, the toll on poorer and vulnerable segments of society will be several times worse. Indeed, a recent poll of top economists found that the vast majority felt the COVID-19 pandemic will worsen inequality, in part through its disproportionate impact on low-skilled workers.
Our evidence supports concerns about the adverse distributional

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