over 2 years ago • 1 min
America is forecast to be a rare bright spot in the global economy in coming years as the government spends big to goose growth.
According to the International Monetary Fund (IMF), the US economy will be bigger in 2024 than it would have been had the coronavirus pandemic never happened. Almost every other economy in the world, meanwhile, will be smaller than forecast – with emerging markets hit particularly hard.
To combat the effects of COVID, the US government plans to spend trillions of dollars on infrastructure and payments to citizens. While some have welcomed the policies, others reckon this jump in so-called fiscal stimulus will lead to inflation.
“Rather than worrying about whether the United States is ‘doing too much’ fiscal stimulus, the discussion needs to focus on whether the rest of the world is ‘doing too little,’” research firm TS Lombard argued in a report on Tuesday. “The big risk is not doing enough to fight scarring, inequality, and secular stagnation, rather than the reawakening some inflation bogeyman nobody has seen since ABBA were topping the music charts.”
European stocks have performed worse than US ones for five straight years: from 2016 to 2020. With stocks in each region roughly neck-and-neck so far this year, 2021 could finally be Europe’s time to shine – if their politicians can learn from America’s free-spending example.
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