Healing the Fractures of the Global Economy

IMF Blog, September 1, 2020

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Authors: converting debt liabilities into investments that protect children. Other contributors focus on the role of
Published: September 1, 2020

Publication date: September 1, 2020
Author: Gita Bhatt
Framing: The COVID-19 crisis is described as the most “unmeasurable of times,” making it hard to quantify high uncertainty and risk (quote attributed to the IMF’s Geoffrey Okamoto).
Central observation: The age of COVID-19 has exposed, widened, and created economic and social fractures across the global economy.

Disparities among workers:
- Young workers
- Female workers
- Least educated workers
Public systems and structural vulnerabilities:
- Frailties in public health systems
- Precariousness of work
- The digital divide
Fiscal pressures:
- Governments face higher spending needs and ballooning debts.
Social justice:
- The pandemic has brought to light the long simmering issue of racial injustice.

Calls for rethinking priorities and economic structure toward a future that is:
- More equitable
- More adaptable
- More sustainable
- More resilient
International cooperation:
- Ian Goldin: “The networked problems of our time are amenable to networked solutions,” arguing for cooperation among governments, civil society, and business.
Rewriting economic rules:
- Joseph Stiglitz: Advocates rewriting rules to protect workers and the environment; calls for greater global and national solidarity.
Debt challenges and remedies:
- Carmen Reinhart, Kenneth Rogoff, and others: Consider approaches to handle a coming wave of debt restructuring for the poorest countries.
- Kevin Watkins: Urges debt relief for the poorest countries, including converting debt liabilities into investments that protect children.
Role of technology, climate, and public health:
- Contributors focus on new technologies, climate, public health, and vaccine development as key areas for action.
Addressing racism within economics:
- The IMF’s Ratna Sahay and coauthors: Grapple with race and racism in the economics profession and emphasize that addressing biases begins at home.

Transformation possibility: The post-pandemic world will likely be transformed in important ways.
Conditional optimism: If the crisis prompts a radical reset with policies that invest in people and reflect a shared sense of human fate, the world can emerge more resilient.
Closing metaphor: Quotation of Leonard Cohen — “There’s a crack in everything, that’s how the light gets in.”

Source: Healing the Fractures of the Global Economy, September 1, 2020.