Some economists and humanitarian groups believe that an additional issuance in SDRs by the IMF will boost global economic recovery and public health.
Dean Baker, senior economist at the Centre for Economic and Policy Research (CEPR), retweeted an article shared by CEPR on economists like Jayati Ghosh explaining the importance of special drawing rights (SDRs) with the help of which many countries can better respond to the Covid-19 pandemic.
Ghosh stated that the role of the IMF in providing financial stability and reviving the global economy from the Covid-19 pandemic and the economic fallout is absolutely crucial. She further added that this is particularly important because there has been so much inequality in the fiscal stance over the course of the pandemic, where advanced economies were on an average spending an additional 16% of their GDP to tackle the pandemic, while other low-income countries spent only 5% or 2% of their GDP. This has possibly hindered their recovery, she added.
Several humanitarian groups want the International Monetary Fund (IMF) to allocate trillions in SDRs as part of a global Covid response strategy, and this would be possible only if the Congress and the US Treasury agreed to allow another issuance of SDRs. The US has a controlling vote on allowing the additional issuance of SDRs, without which the Covid-19 flare-ups and a deepening recession could wipe out an entire civilisation, experts state.
The IMF had allocated $650bn worth in SDRs in August 2021, to assist its 189 member countries in increasing access to medical equipment, food, and other essentials, and to rescue them from a debt crisis during the pandemic. However, humanitarian organisations say the amount is too less than the $2tn in SDRs required to meet the global community’s needs.
Erik Meyerson, a macro research analyst and former assistant professor at the Stockholm Institute of Transition Economics (SITE) at the Stockholm School of Economics, shared an article on recent data and historical instances suggesting that wages are likely to rise only moderately in the euro area despite rapidly tightening labour markets. Therefore, economists expect inflation to fall slightly below the European Central Bank’s (ECB) target once the pandemic retreats.
Supply chain constrains continue to persist and are adding to the high inflation in the euro area, experts believe. This in turn is undermining recovery of the bloc from the pandemic. According to a new paper, the euro area’s manufacturing output in the fall of 2021 would have been 6% higher without supply chain blockages, say researchers. Additionally, the GDP would have been 2% higher, which equals to one year of growth in normal pre-pandemic times for many European countries.
The IMF data further reveals that factory closures and other supply chain issues weighed heavily on the GDP and manufacturing output in the euro area during the pandemic lockdowns. Some severely impacted countries included the Czech Republic and Germany, where manufacturing output would have been 14% higher in pre-pandemic times.
Armine Yalnizyan, Atkinson Fellow on the Future of Workers and former senior economist with the Canadian Centre for Policy Alternatives, tweeted about the She-cession not being over yet in Canada. Sharing the latest available mid-January data when the Omicron wave was at its peak, Yalnizyan highlighted that for all workers aged above 15 years in Canada, men had more jobs than their women counterparts than before the Covid-19 pandemic.
However, the data also revealed that more men went from full-time work to part-time jobs, whereas women just lost jobs. Women have been demanding more from their workplaces after the pandemic pressures. Yalnizyan stated that the quality of jobs is just as important as the number of jobs to bridge the gender gap in the labour market.