International Monetary Fund Current Affairs - 2020

COVID-19: International Monetary Fund launches Government Policy Tracker

The International Monetary Fund recently launched the “IMF Policy Tracker”. The platform will provide all the key economic responses launched by Governments all over the world to fight against Corona Virus.

Highlights

Currently, the virus has spread to almost all parts of the world and the measures taken by the Governments to tackle the situation might become inadequate. The platform thus will help fill in gaps and learn from each other’s experience. It will also help governments adopt successful innovate approaches implemented on other parts of the world.

Significance

The tracker is to be updated based on the press release of the IMF Communication Department.

Key Features of the Tracker

The tracker will summarize key economic measures taken by the governments in different parts of the world. The tracker claims that it cannot be used for comparisons of measures in different countries. Rather, the tracker is to be used to learn the adaptations. This is because, policy responses vary based on the nature of the crisis.

IMF: World Economic Outlook, 2019

The World Economic Outlook is a biennial report that is released in April and October. According the report released recently on October 15, 2019, the global economy is at its slowest pace of growth at 3%. This is a serious climb down from 3.8% in 2017.

Key highlights of the report

  • The Global growth rate is projected to improve to 3.4% by 2020.
  • The growth of advanced economies is projected to slow down by 1.7%
  • The emerging and developing economies are projected to experience a growth pick up from 3.9% in 2019 to 4.6% in 2020.
  • The report downgraded India’s growth projections to 6.1% in 2019 and 7% in 2020.
  • According to the report, China is projected to grow at 6.1% in 2019 and 5.8% in 2020.
  • The trade volume reached the lowest since 2012. It reduced by 1% since 2012.

Justifications

  • About half of the economic slow down comes from shallower recessions in stressed emerging markets like Argentina, Turkey, Iran
  • Higher tariffs and prolonged uncertainty in the trade policy are the major reasons for dented investment and the slowdown in the growth. This is very well seen in the effects of trade wars and imposed sanctions
  • The automobile industry is contracting mainly due to the disruptions from new standard emission standards. This predominantly has effect in China.
  • Trade barriers and geopolitical tensions like Brexit is hampering investment, confidence and growth

Recommendations

  • The countries should support the economy slow down with tax-base enhancing measures, rationalizing subsidy-spending, efficient credit allocation and governance of public sector banks.
  • India should keep its Fiscal Deficit under check