📚 Weekend Read: Optimistic but Cautionary Recovery | Focus on Latin America, Africa, France and Germany | Global Uncertainty | Making America More Equal


IMF Weekend Read

Dear Colleague,

In today's edition we focus on the global economic recovery, how the pandemic has impacted Latin America and the Caribbean, Africa, France and Germany, uncertainty around the world, how to make America more equal and more.

📣 But first, building off the latest issue of IMF’s Finance & Development Magazine on the future of jobs and opportunity, produced in partnership with the World Economic Forum, we are co-hosting a live panel discussion during Davos Agenda Week (Friday, January 29th) on the intersection of climate change and employment, and how investing in a greener, fairer and more inclusive recovery can also be a strategy for tackling the unemployment crisis as a result of the pandemic. Panelists include Martin Sandbu (European Economics Commentator, Financial Times), Petya Koeva Brooks (Deputy Director of Research, IMF) and Dominic Waughray (Managing Director, WEF). 

There will be plenty of time for Q&A with our panel, so please submit your questions in advance by Monday, January 25th directly to me at rkanani@imf.org with your name, affiliation and location.


In a new interview with Martin Wolf, the FT’s chief economics commentator, IMF Managing Director Kristalina Georgieva says that a durable exit from the COVID health crisis depends on two things. First, not withdrawing policy support prematurely but injecting stimulus where it is needed. And second, ensuring that vaccines are available everywhere, as fast as possible. “Having vaccines is not the same as having applied them universally,” she points out. Her message is optimistic but cautionary. “Vaccines are wonderful, but they’re not a magic wand,” she warns. Recovery is coming but it will be partial and uneven. To succeed, it must be supported by decisive and unified action by all quarters “acting together”. Such co-operation could deliver a growth rate in the world economy of 5.2 percent, a significant climb from the minus 4.4 percent expected by the IMF for last year.

Fresh stimulus could herald a “transformative” year for the climate economy, and new opportunities for investment in much-needed job creation, particularly in the digital skills sector. But tightening policy around non-banking financial intermediaries will be paramount, as will acting quickly to restructure debt and minimize bankruptcies. The ease of borrowing now for both companies and governments means we’ll need “incentives for good behavior” in the recovery. 

Read more here (subscription may be required).


Earlier this week, MD Georgieva spoke about the numerous health and economic challenges facing Latin America and the Caribbean, saying the countries in the region represent just 8 percent of world population, but, unfortunately, they account for 28 percent of total fatalities. In 2020, real global GDP is expected to shrink by around 4 percent and, in this region, real GDP is expected to shrink by about 8 percent.

What is particularly difficult are the job losses associated with the crisis. At the height of the crisis, Brazil, Chile, Colombia and Mexico had lost 30 million jobs. In the Caribbean, many countries have been affected even more severely because tourism – which has collapsed – is their main source of jobs and represents 50-90 percent of GDP.

Job losses are disproportionately hitting low-skilled workers, women and young people. In Colombia, almost twice as many women lost jobs as men.

Moving forward: Governments will have to focus on creating skills and helping workers enter high-growth sectors. We will also need a great deal of focus on job-rich investments. Fortunately, when we talk about climate resilience, most of the investments we need are in this category – they are labor-intensive. For example, resilient infrastructure, or reforestation, mangrove restoration or dealing with land degradation. These are all activities that can create jobs to help compensate for the impact of the pandemic.


This new in-depth interview with IMF's Africa Department Director Abebe Selassie, published by the Africa Report, covers a range of issues concerning the impact of the pandemic on sub-Saharan Africa’s regional economy, the policies that have been taken by governments, the IMF’s support in response to the pandemic, as well as the IMF’s views on topical issues such as debt and climate change.

"For us as staff members, one of our biggest reliefs has been our ability to lend about 10 times more in volume to Africa as a whole – despite the different surroundings that we’re working in. It is an operational nimbleness: we have our staff working all hours from home, with kids in the background. That has made me proud as a manager for us not having failed our region," notes Abebe. "This has been a year where Africa was tested, like never before, in terms of institutional capacity and its ability to deal with this pandemic.”


Global uncertainty reached unprecedented levels at the beginning of the COVID-19 outbreak and remains elevated, writes the IMF's Hites Ahir, Nicholas Bloom, and Davide Furceri in a new blog. The World Uncertainty Index—a quarterly measure of global economic and policy uncertainty covering 143 countries—shows that although uncertainty has come down by about 60 percent from the peak observed at the onset of the COVID-19 pandemic in the first quarter of 2020, it remains about 50 percent above its historical average during the 1996–2010 period.

Economic growth in key systemic economies, like those of the United States and European Union, is a key driver of economic activity in the rest of the world. Is this also true when it comes to global uncertainty? For example, given the higher interconnectedness across countries, should we expect that uncertainty from the U.S. election, Brexit, or China-U.S. trade tensions spill over and affect uncertainty in other countries?

Read the full blog here.


France has been severely affected by the global pandemic, both in terms of health and economic impact. The key priority for the country remains saving lives while minimizing the economic costs of the pandemic. In a new Country Focus, the IMF's Jeffrey Franks, Bertrand Gruss, Manasa Patnam, and Sebastian Weber explore why the government should maintain adequate fiscal support to households and firms, preserve financial stability, and facilitate a sustained economic transformation as the recovery strengthens.

The pandemic and lockdown measures caused the deepest post-war recession and continue to cloud the outlook. The COVID-19 infection swept rapidly and intensely through France, triggering an unprecedented health and economic crisis. The government launched several rounds of containment measures to slow the spread of the virus. The estimate for 2020 is a drop in output of around 9 percent. The recovery in 2021 is projected to be incomplete, reflecting a continued drag from the pandemic and uncertainty from downside risks, including from the new variant of the virus and a slow rollout of vaccines. Learn more about France's recovery in five charts.

According to the IMF’s latest economic assessment of Germany, priority should be placed on setting the economy on a sustained recovery path by minimizing labor market scarring, protecting vulnerable people, and ensuring that viable firms remain in business. Looking beyond the near term, emphasis should be on “building better for the future” by supporting the transformation toward a smarter, greener economy.

In a new Country Focus, the IMF's Mai Chi Dao and Aiko Mineshima write that Germany has to date been relatively successful at managing the pandemic, but the economic shock has still been profound. The country’s early and vigorous public health response has led to some of the lowest mortality rates in Europe. However, the containment measures caused a substantial drop in business activity, especially in contact-intensive sectors. Economic activity started recovering following the re-opening in late April, but a new wave of infections in the fall has triggered another round of lockdowns. Overall, the economy likely contracted by over 5 percent in 2020. Economic growth is expected to pick up in 2021 as vaccines become widely distributed, but output is not projected to return to its precrisis level before 2022. Learn more about Germany's recovery in five charts.


Earlier this week, Joe Biden became the 46th president of the United States. Among the many crises on his plate, inequality is perhaps the most pervasive. Heather Boushey, an incoming member of President-elect Biden's White House Council of Economic Advisors, carved out a blueprint to address this very issue in our latest edition of F&D.

She writes that workers and their families on the wrong side of the many US economic disparities are there for several reasons—including a stubborn reliance by policymakers on markets to do the work of government, and the racism and sexism, sometimes written into law, that blind policymakers to injustice and to economic sense.

Interested in learning more? Jump to the 1800-word piece or download the PDF. I've also included the full article below.


Inspired by last week’s blog about whether, legally speaking, digital money is real money, we ran two polls on Twitter, LinkedIn, Instagram and Facebook asking our audiences if they thought digital currencies, backed by central banks or not, are in fact money.

With over 150,000 responses, the results are in: 62 percent of people who responded agree that digital currencies are real money.  Of the 38 percent who don’t think digital currencies are money and the 45 percent who disagreed that central bank digital currencies are money, some said they thought this could change soon. Very interesting results indeed.

📣 What topics would you like to see us run polls on in the weeks ahead? Let us know by writing to my colleague Jacqueline at JDeslauriers@imf.org.


Check out our global policy tracker to help our member countries be more aware of the experiences of others in combating COVID-19. We are also regularly updating our lending tracker, which visualizes the latest emergency financial assistance and debt relief to member countries approved by the IMF’s Executive Board.

To date, 78 countries have been approved for emergency financing, totaling over US$32 billion. Looking for our Q&A about the IMF's response to COVID-19? Click here. We are also continually producing a special series of notes—more than 50 to date—by IMF experts to help members address the economic effects of COVID-19 on a range of topics including fiscal, legal, statistical, tax and more.


Next week we will be launching our latest World Economic Outlook Update, Global Financial Stability Update and Fiscal Monitor Update, so stay tuned for another jam-packed edition next week.

Thank you again very much for your interest in the Weekend Read. We really appreciate your time. If you have any questions, comments or feedback of any kind, please do write me a note.

And if you're on LinkedIn, subscribe to this newsletter in a more 📈 visual format.


Rahim Kanani

Rahim Kanani
Editor, IMF Weekend Read

P.S. Put on your headphones and take 30 minutes to listen to MD Georgieva's latest podcast discussion with Seneca's 100 Women to Hear: "The biggest lessons in my life: change for the better is unstoppable, and working to improve the lives of people is hard, but it is always worth it." The podcast covers leadership, gender equality, climate, and more.


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