Finance ministers and central bankers are gathering (virtually) this week for annual meetings of the IMF and World Bank.
7 months into the pandemic and with the economic recovery losing momentum, to say these meetings matter would be an understatement.
- Will a consensus be reached on continuing (or ramping up) stimulus spending?
- Will wealthy countries that can borrow at low interest rates organize sufficient transfers to low-income countries to fund COVID relief?
- Will major countries — particularly the U.S. and some EU states — pull back on stimulus too soon, threatening global recovery?
Power shift: Central banks are already running the money printers at full tilt, which means that there's only so much more monetary policy can do. Now the big decisions will be fiscal policy choices made by finance ministers and governments.
The big picture: A major politial battle is emerging over whether fiscal policy — taxing and spending by governments — will continue to be used as a mainly short-term fix for economic slumps or a long-term project to manage the economy and achieve political goals.