{ "title": "New Challenges and Opportunities in a New Era", "publication": "IMF News, November 5, 2020", "sourceUrl": "https://www.imf.org/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era", "canonical": "https://www.imf.org/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era", "overlayPath": "/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/index.md", "summary": "Near-term outlook: the global economy is recovering but \"a global recession for 2020 overall is a foregone conclusion.\"", "publishDate": "2020-11-05", "sections": [ { "heading": "Global growth prospects", "content": "- Near-term outlook: the global economy is recovering but \"a global recession for 2020 overall is a foregone conclusion.\"\n- IMF expects the global economy to shrink by 4.4 percent in 2020.\n- Upward revision since the June WEO is driven by strong Q2 GDP in major economies.\n- Country-specific Q3/quarterly outturns cited:\n - China is expected to be the only major economy to maintain positive growth throughout 2020, at 1.9 percent.\n - US grew by 7.4 percent quarter-on-quarter, or 33.1 percent at an annual rate (Q3).\n - China grew by 4.9 percent (Q3).\n- Recovery characteristics and risks:\n - Recovery described as a \"long, uneven, and uncertain ascent.\"\n - Pace and synchronization of recovery across regions remain uncertain.\n - Divergence across sectors, particularly services (example: October PMI for services strengthened in the US and the UK while weakening in Japan and some countries in the European Union).\n - Pandemic relapses in some countries cast a shadow over the next phase of recovery.\n - Outcomes depend on progress in vaccines, medicines, and treatments; slower-than-expected progress could weaken recovery." }, { "heading": "Global policy outlook", "content": "- Policy responses to COVID-19:\n - Total global fiscal support has now reached $11.7 trillion.\n - Monetary authorities of major advanced economies have provided $7.5 trillion in liquidity support.\n - These supports have supported disposable incomes, corporate cash flow, and banks' credit supply, helping avoid a repeat of the 2008–09 global financial crisis experience.\n- Monetary and macroprudential considerations:\n - Broad consensus that low interest rates will exist for a longer period of time.\n - Low interest rates help support recovery but may increase risk appetite and lead to excessive and lower-quality credit.\n - Policy challenge: balance accommodative monetary policy with flexible macroprudential policies.\n- Fiscal considerations:\n - Protecting livelihoods and preventing long-term structural scarring are priorities.\n - Global public debt has reached a record high, accounting for around 100 percent of global GDP.\n - Fiscal sustainability frameworks for the medium and long term are critical, especially for countries with weak economic fundamentals where debt sustainability challenges are more severe.\n- Implementation caveats:\n - Success in realizing policy goals will vary by country due to differences in policy tools, market sophistication, implementation capacity, and communication ability.\n - Policy selection and implementation must be flexible, precise, and adapted to local conditions.\n- Policy recommendation (high level):\n - Avoid premature withdrawal of macroeconomic support before consolidation of the recovery." }, { "heading": "Prospects for global recovery (longer term) — focus on green recovery", "content": "- Pre-existing structural challenges that COVID-19 may exacerbate:\n - Slowdown in global productivity growth.\n - Population aging in advanced economies.\n - High levels of corporate and household debt in some regions.\n - Intensifying income inequality within many economies.\n- Opportunity: pandemic creates transformational momentum for a smarter, greener, and more inclusive recovery; international cooperation should be strengthened.\n- Three key points on the green recovery:\n 1. Necessity\n - IMF research suggests that if no further action is taken to reduce greenhouse gas emissions, \"the earth will embark on a path of no return toward higher temperatures.\"\n - Natural disasters becoming more frequent; pressure from global warming increasingly obvious.\n - Analysis suggests the loss of global economic output will exceed 20 percent by 2100 if no further action is taken.\n - Urgent need to reduce greenhouse gas emissions.\n 2. Achievability\n - Early and comprehensive action can help achieve global carbon neutrality by the middle of this century.\n - Measures include raising carbon taxes or implementing carbon emissions trading, plus subsidies, guarantees, and investment to increase low-carbon energy supply, carbon capture, and carbon storage.\n - Raising the price of carbon emissions will provide incentives to improve energy efficiency and promote resource shifts from high-carbon to low-carbon industries.\n - Green investment can bolster transformation, quickly add aggregate demand, and provide buffers to absorb transition costs related to higher carbon prices.\n 3. Prioritization\n - Early-stage green investment can buoy growth and boost employment while supporting low-carbon industries, taking advantage of favorable fiscal and monetary policies.\n - Combined with a gradual phase-in of moderate carbon pricing, the net short-run effect on growth would be positive.\n - Carbon prices would need to be raised thereafter to achieve carbon neutrality by mid-century, but IMF research suggests the drag on growth during this transitional period would be negligible — no more than 0.1 percent annually compared with the base case.\n- Country example and encouragement:\n - China has made a commitment to achieve carbon neutrality by 2060.\n - IMF encourages other countries to scale up ambition in their submissions for COP26 next year." }, { "heading": "Conclusion and policy priorities", "content": "- Overall assessment:\n - The global economic recession in 2020 seems less dire than earlier expectations, but the recovery will be long, uneven, and uncertain.\n- Policy priorities going forward:\n - Maintain continuity of macroeconomic policy support and consolidate the recovery.\n - Prioritize resilient and sustainable growth, with particular emphasis on a green recovery.\n - Seize the opportunity for a more inclusive, smarter, and greener economic recovery path.\n\nSource: New Challenges and Opportunities in a New Era — 2020 CICC Forum Speech, November 5, 2020, IMF Communications Department\n\n---\n\n\n References\n\n- Tao Zhang\n- People's Republic of China and the IMF\n- Japan and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era" } ], "bullets": [ "[Markdown version](/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/index.md)", "[Structured JSON version](/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/index.json)", "[Bundle manifest](/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/bundle-manifest.json)", "Published: November 5, 2020", "Near-term outlook: the global economy is recovering but \"a global recession for 2020 overall is a foregone conclusion.\"", "IMF expects the global economy to shrink by 4.4 percent in 2020.", "Upward revision since the June WEO is driven by strong Q2 GDP in major economies.", "Country-specific Q3/quarterly outturns cited:", "Recovery characteristics and risks:", "Policy responses to COVID-19:", "Monetary and macroprudential considerations:", "Fiscal considerations:", "Implementation caveats:", "Policy recommendation (high level):", "Pre-existing structural challenges that COVID-19 may exacerbate:", "Opportunity: pandemic creates transformational momentum for a smarter, greener, and more inclusive recovery; international cooperation should be strengthened.", "Three key points on the green recovery:", "Country example and encouragement:", "Overall assessment:", "Policy priorities going forward:", "[Tao Zhang](https://www.imf.org/en/About/senior-officials/Bios/tao-zhang)", "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)", "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)", "[Speeches](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/index.md", "json": "/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/index.json", "bundleManifest": "/en/news/articles/2020/12/02/sp120220-new-challenges-and-opportunities-in-a-new-era/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:00:06.246Z" }