Group of Twenty IMF Note — G-20 Leaders' Summit

G-20 Surveillance Note

November 21-22, 2020

The Following executive summary is from a note by the Staff of the IMF prepared for the November 21-22 G-20 Leaders' Summit, Virtual Meeting, Riyadh Summit.
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Executive Summary

While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars. The virus has killed more than a million people and left tens of millions unemployed, especially among low-skilled workers, women, and youth. With infection rates still high in many parts of the world, social distancing continues to hold back momentum in the service sector. Global GDP is now projected to contract 4.4 percent in 2020 and stage an uneven and partial recovery next year. Moreover, persistent under-employment and school closures are likely to harm human capital; and excess bankruptcies may erode know-how and productivity. The surge in debt will add to challenges down the road. Alongside, uncertainty and risks are exceptionally high.

Policies should be focused on ending the crisis quickly and supporting a strong recovery.

  • End the health crisis. The fastest end to the global crisis lies in multilateral collaboration on the development, production, and distribution of therapies and vaccines, which would lower supply risks and costs for all. Until effective vaccines are widely available, continued social distancing, contact tracing, and use of masks are essential to control the spread of the virus and will allow economic normalization to take place earlier.
  • Bridge the economy through the crisis and minimize scarring. Extensive policy support has averted much worse outcomes and will need to be maintained until the crisis is behind us. In some economies, additional fiscal support beyond what has already been announced is warranted. Where fiscal space is insufficient, reallocations within the budget envelope may be necessary. As the impact of the crisis is better understood, focus will gradually need to shift toward (i) retraining and reskilling the jobless to facilitate employment in expanding sectors and (ii) supporting viable or strategic firms to minimize unnecessary bankruptcies. Monetary and financial sector policies should remain accommodative while maintaining
  • Bolster medium-term growth and build resilience. With large-scale public and private investment needs to rebuild from this crisis, now is an opportune time to address long-standing challenges. Enhancing access to opportunities, including through digitalization, can broaden inclusion and help lift the global growth potential. Mitigation of climate change, which requires zero net carbon emissions by 2050, can be done in a way that bolsters recovery and creates jobs.

Multilateral action is needed to end the crisis for everyone. A reduction in trade restrictions and an easing of broader trade tensions would help support the recovery. Efforts are also needed to strengthen the international financial safety net to ensure support is available for countries in need during this crisis and to reform the system of international taxation. Amid unprecedented debt levels, it is essential to make operational the common framework for debt resolution for economies with unsustainable sovereign debt.

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