IMF Director of the European Department Alfred Kammer said in a blog post that “safe and effective vaccines are now available” and “an end to the pandemic is in sight.” “Virus mutations and vaccination delays are the prime concern,” he said. And, “the biggest worry over the medium term is economic scarring”.
Kammer also said, “the number one priority is to boost vaccine production” both for Europe and the World. But at the same time, “policymakers need to continue supporting the economic recovery.” Fiscal policy “needs to play an increasing role” where monetary policy becomes less effecting in boosting output.
He said that labor market policies “should remain in place”. Corporate sector support policies “should be more targeted toward viable firms and focus on strengthening firms’ solvency instead of simply providing liquidity”. Financial policies “should continue to enable banks to keep credit flowing.”
Additional support that “set at a level of 3 percent of GDP over 2021-2022” could lift GDP by about 2% by the end of 2022. It would also bring inflation closer to target in many countries and help “rebuild monetary policy space.”
