“The recovery is uneven, highly uncertain and subject to elevated downside risks, including those arising from renewed virus outbreaks in some economies,” the G-20 said in a draft communique seen by Bloomberg. “We are determined to continue to use all available policy tools as long as required to safeguard people’s lives, jobs and incomes, support the global economic recovery, and enhance the resilience of the financial system.”
The final wording could still change after the virtual meeting.
A Bloomberg Economics index of high-frequency data shows activity contracting since the middle of last month. It previously began a rapid recovery in May that petered out at about 80 per cent of its normal level in July. “Countries have started to climb back from the depths of the Covid-19 crisis,” IMF
Managing Director Kristalina Georgieva
said in a blog post. “But the resurgence in infections in many economies shows just how difficult and uncertain this ascent will be.” The fund urged governments and central banks not to prematurely withdraw policy support. The Federal Reserve and European Central Bank are debating further stimulus as soon as next month even amid mounting confidence that a vaccine for the virus is nearing. Georgieva said some economies have room for greater fiscal support next year beyond current budgets, and warned against cutting off lifelines such as expanded unemployment benefits.
But talks over another stimulus package among US politicians seem to have stalled and some previous measures are set to expire. In Europe, a massive recovery fund is at risk because of disagreements over conditions.