The medium-term macro-fiscal prognosis

For rich economies, the pandemic is an aberration

The International Monetary Fund’s (IMF’s) latest fiscal monitor and world economic outlook make interesting reading. They take stock of the macro and fiscal fallout of the pandemic, and attempt an assessment of how, and to what extent, countries need to focus on reshaping macroeconomic and fiscal policies going forward, after implementing expansionary macroeconomic and fiscal policies at a scale that is unprecedented in recent times.

The headline conclusion is stark and depressing. Variation in country performance depends on local vaccination rates, the stage of the pandemic, and the ability of governments to access low-cost borrowing. On all these counts, rich countries