The burdens of 2020 and the recovery of 2021
The global economy is witnessing decisive historical moments today, as the divergence regarding the effects of the emerging global crisis due to the Coronavirus has begun to appear among the countries of the world, especially the recent developments in the second wave of the pandemic. In addition, all the decisions that have been taken and financial measures, such as support for the most affected groups, are already running out, and it is unlikely that they will remain until next year, given that governments, headed by the G20 governments, are in the final stages of approving budgets for the next year 2021, and are heading for Expectations are for the elimination of much of the existing support now and mainly arising from the principle of combating the health and economic impacts of the pandemic. This decision has different dimensions,
as the International Monetary Fund presented a detailed study about it, and the report clearly indicated that the recovery is likely to be partial and uneven, as some countries may recover faster than others, and while there are initial signs that the worst is over. However, the uncertainty remains high as the infection continues to spread. With the ongoing uncertainty resulting from trade and geopolitical tensions and conflicts, an early withdrawal from support could be a costly decision, the report described. The year 2020 was a stressful year for public finances in all countries, and the G20 countries, led by Saudi Arabia, made a tremendous effort to bear the burdens of the pandemic, hoping to maintain the hopes of recovery in 2021, so the group’s countries spent more than $ 11 trillion, a sum that was not spent Before in the history of the group. It is this support that gave the global economy strong restraints and impulses against slipping into a catastrophic depression, as last month's International Monetary Fund report indicated that the global recession will be limited to 2020, 4.4 percent and that the world will witness a return to growth in excess of 5 percent.
The fund, as usual, returns to set limits to this optimism and warns that governments should not withdraw stimulus measures before the appropriate time, as the crisis is not over yet, and spending must continue wisely and competently. These phrases are as motivating as they are, but they are not without ambiguity, and governments must draw their economic policies for the year 2021 to benefit from the anticipated growth pie, address the damage to public finances and limit the aggravation of the deficit, and here the countries of the world need clearer directives. The international report confirmed that the main problem created by the pandemic was the increase in unemployment rates and layoffs, especially among the least skilled workers. Therefore, the IMF notes to maintain support for the poor and vulnerable groups that have been severely affected by the crisis more than others, as well as support directed at Companies that can operate successfully in order to keep the hiring activity going, and at the same time, the skills must be reshaped and built to match the post-Coronavirus phase.
But all of this is still linked in one way or another to ensuring a permanent recovery from the disease, and this means that estimates for public finances in the coming year should include public investment in the sectors of health care, education, and the physical and digital infrastructure to enhance recovery. The crisis also revealed the need for more digitization and a move towards advanced technology to penetrate all aspects of daily life, especially multiple government services, and to address insolvency and debt settlement systems. Among the critical measures that the Fund referred to when preparing budgets for the next year is the need to strengthen social safety nets and access to basic goods and services, and to enhance universal access to health care services, high-quality education, financial services, and technology, as this, on the whole, will increase overall demand, and thus the recovery of the economy.