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Don’t Expect Miracles from the Multilaterals

Otaviano Canuto | Posted : September 11, 2020

Latin American and Caribbean economies need help, but organizations like the IDB are also stretched thin.

First appeared at Americas Quarterly

With Latin America and the Caribbean potentially facing years of difficulties due to the pandemic and related economic crises, attention has shifted to what multilateral institutions like the International Monetary Fund (IMF) might do to help. There’s no doubt they can play a crucial role in preventing another lost decade in the region. But these institutions will also face limitations because of capital constraints and other factors. 

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Global imbalances, coronavirus, and safe assets

Otaviano Canuto | Posted : August 10, 2020

The International Monetary Fund (IMF) released, on August 4th, its ninth annual External Sector Report, where current account imbalances and asset-liability stocks of 30 systemically large economies are approached. This time the report went beyond looking the previous year and tried to anticipate what will be some of the impacts of the still on-going COVID-19 crisis.

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The economic recovery from coronavirus may look like a square root

Otaviano Canuto | Posted : July 20, 2020

There are signs of recovery in various parts of the global economy, starting in May, after the depressive dip imposed by Covid-19. Such signs emerged after the easing of restrictions on mobility established to flatten out the pandemic curves, and also reflected policies of flattening the recession curve (income transfers to part of the population, credit lines to vulnerable companies and others).

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Higher Debt, Deeper Digitization, and Less Globalization Will be Coronavirus Legacies

Otaviano Canuto | Posted : June 10, 2020

Three features of the post-pandemic global economy can already be anticipated: the worldwide rise in public and private debt levels, accelerated digitization, and a partial reversal of globalization. The first arises from the public sector's role as the ultimate insurer against catastrophes, government policies to smooth pandemic curves and the coronavirus recession. These will leave a legacy of massive public-sector debt worldwide (as discussed in a previous post. Lower tax revenues and higher social and health expenditures reflect the choice of trying to avoid widespread destruction of people's productive and livelihood capacity during the pandemic. On the private-sector side, indebtedness will be the way to survive the sudden stop, if the result is not to be bankruptcy or closure.

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How shaped will the post-coronavirus economic recovery be?

Otaviano Canuto | Posted : May 11, 2020

Data recently released on the first-quarter global domestic product (GDP) performance of major economies have showed how significant the impact of COVID-19 has been on economic activity and jobs, with large contractions across the board. The ongoing global recession is poised to be worse than the “great recession” after the 2008-09 global financial crisis, especially from the standpoint of emerging market and developing economies. The depth and speed of the GDP decline will rival that of the Great Depression of the 1930s.

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Channels of transmission of coronavirus to developing economies from abroad

Otaviano Canuto | Posted : April 28, 2020

In a previous article, we highlighted how developing economies have faced simultaneous shocks from their external environment, as pandemic and recession curves have unfolded abroad (Canuto, 2020a). In addition to financial shocks, there have been declines in remittances, tourism receipts, and commodity prices (Canuto, 2020b). The combination of these shocks with the hardships related to flattening domestic infection curves has configured what we have called a ‘perfect storm’ for developing countries, brought by COVID-19 (Canuto, 2020c).

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More than one coronavirus curve to manage: infection, recession and external finance

Otaviano Canuto | Posted : April 06, 2020

The global reach of COVID-19 is now clear. In a short time, country after country has suffered outbreaks of the new coronavirus, with each facing a three-fold shock: epidemiologic, economic, and financial. In addition to dealing with their own local coronavirus outbreaks, emerging market and developing countries have faced additional shocks from abroad.

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How Coronavirus Poses New Risks to Latin America's Sputtering Economies

Otaviano Canuto | Posted : February 24, 2020

The outbreak in China has already affected economic sectors in Latin America. Is there more to come?

China’s economy has come to a sudden stop. Large parts of the country remain in shutdown mode after the end of the Lunar New Year holiday, with national passenger traffic declining by 85% on the Wednesday after the break compared to 2019.  

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