IMF Blog: Healing the Fractures of the Global Economy

As the world seeks to comprehend the new normal, we face many unknowns. Will jobs come back? How will we travel again? What will recovery look like? Much is still a question mark. In fact, we are living in the most “unmeasurable of times,” writes the IMF’s Geoffrey Okamoto, making it hard to quantify high uncertainty and risk.

What we do know is that the age of COVID-19 has painfully exposed and widened existing economic and social divisions and created new ones. It has accentuated disparities among workers, especially the young, female, and least educated. It has made more acute frailties in public health systems, the precariousness of work, and the digital divide. It has challenged governments, which now face higher spending needs and ballooning debts. And it has brought to light the long simmering issue of racial injustice.

Yet this crisis and the fault lines it is exposing are inspiring calls for a rethinking of our priorities and reconsidering the very structure of the world economy toward a future that is more equitable, adaptable, and sustainable—more resilient.

This issue of Finance &Development gives voice to diverse contributors on what needs to be done.

“The networked problems of our time are amenable to networked solutions,” writes Ian Goldin, making the case for international cooperation not only among governments but also in civil society and business. Joseph Stiglitz argues for rewriting the rules of the economy to protect workers and the environment, calling for greater global and national solidarity. Carmen Reinhart, Kenneth Rogoff, and others consider ways to handle a coming wave of debt restructuring for the poorest countries. Kevin Watkins urges debt relief for the poorest countries, including by converting debt liabilities into investments that protect children. Other contributors focus on the role of new technologiesclimate, and public health, including vaccine development. Finally, the IMF’s Ratna Sahay and coauthors grapple with race and racism in the economics profession, recognizing that addressing biases begins at home.

The post-pandemic world will likely be transformed in important ways. If the crisis prompts a radical reset of our economic and social life with policies that invest in people and reflect a shared sense of our fate as human beings, so much the better. The world will emerge resilient from this dark chapter. In the words of songwriter Leonard Cohen, “There’s a crack in everything, that’s how the light gets in.”

Read full issue here.

By Gita Bhatt

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