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The International Monetary Fund (IMF) said on Monday that after the huge impact of the new corona epidemic, governments of rich countries should increase public investment to promote economic growth.
Today’s world economy is badly damaged by the new crown crisis, the service industry has stagnated, large numbers of people are facing unemployment, and government debt levels are skyrocketing.
The IMF predicted in June that global GDP will contract by 4.9% in 2020. However, IMF spokesman Gerry Rice said last month: “The latest data shows that the economic outlook may no longer are as tragic as when the World Economic Outlook was updated on June 24. Part of the world economy has begun to overcome difficulties. “
IMF President Kristalina Georgieva said last month that there are signs that the world economy is recovering from the severe recession caused by the new corona epidemic, but without the new corona vaccine, a recovery is unlikely. full economic. Currently, at least 128 vaccines are under development, 37 of which have entered the human testing stage. Historical experience has shown that when research and development reach this level, the chance of successfully developing a vaccine is up to 90%.
In this context, the IMF urges governments to increase public investment to help the economy recover and create jobs.
The IMF stated in its fiscal monitoring report: “For developed and emerging market economies … in these economies, increasing public investment by 1% of GDP will directly create 7 million jobs, taking into account the impacts macroeconomic indirect. In general, between 20 and 33 million jobs will be created. “
Due to the “magnification effect of public investment” in a period of high uncertainty, the IMF stated that increasing public investment by 1% of GDP “can improve people’s confidence in the economic recovery” and can “increase the GDP by 2.7% in two years and reduce A 10% increase in private investment will increase employment by 1.2% “, provided that” the investment is of high quality and the burden of public and private debt does not weaken the response of the private sector to the stimulus measures. “
The IMF added that when governments increase public investment it signifies their “commitment to growth and stability,” which also tends to promote private investment. The IMF recommends that more funds be used for health, social housing, digitization, and environmental protection. The IMF added that investment in digital infrastructure will be “essential” and that governments can promote the promotion of social distancing measures while reducing the digital divide within their societies.
Source: financial industry websiteReturn to Sohu to see more
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