Reports

Many have hailed the EU’s July decision to partially mutualize its newly issued debt as a “historic step.” Massive as it is, the stimulus package is unlikely to fix Europe’s fragile and crisis-stricken economies, even if the Union’s show of unity has already firmed it politically. However, the change in ...

Switzerland devised an ingenious way to throw a lifeline to its enterprises during the pandemic-induced crisis. Its “liquidity facility” targets the core segment of the economy, relies on business owners’ sense of responsibility and does not burden the country’s public finances with intolerable debt.

Ecuador is facing a potential catastrophe: Covid-19 has hit it harder than any country in the region save Brazil, while its economy tanks as a result of low oil prices. With elections coming next year, the political scene is gridlocked. President Lenin Moreno has little choice but to open up ...

With the Covid-19 crisis pushing debt to record heights in many countries, it is worth wondering how they will ever pay it back. Several solutions have been proposed, from inflating the debt away, to deeply negative interest rates, to debt cancellation. All of these have severe flaws however, and in ...

The Covid-induced economic crisis has led policymakers to put in place large fiscal rescue packages including new spending, tax cuts and subsidies. Governments will now be tempted to spend more to boost the recovery. Soon, however, countries will have to pay for the debts they have rung up. Those that ...

After the financial crisis of 2008, EU leaders decided that the European Central Bank needed supervisory powers over banks. Initially, the project successfully helped rein in bad practices and clean up banks' balance sheets. However, if the ECB's supervisory and monetary policy-setting functions are not kept separate, it could lead ...

Six months into 2020, the effects of the Covid-19 crisis on the global economy are becoming clear. Not only has it disrupted supply chains and upended long-standing industry alliances, it has reinforced governments’ spendthrift habits and central banks’ tendency to print money. GIS experts have offered their analysis and predictions ...

Just a few months ago, most experts predicted robust global economic growth for this year. Now all of that has been thrown out the window, but the new predictions vary greatly. GIS examines the assumptions the experts are making, and sets out optimistic, pessimistic and realistic scenarios so that decision ...

Inequality, social injustice, economic downturns – lately the blame for such phenomena is laid at the feet of capitalism. Increasingly, and especially among the younger generation, socialism is touted as the cure for all these ills. Yet over and over, history has taught us that government meddling in the economy ...

Public debt levels are at an all-time high – in Europe the problem is particularly acute. The lessons from the Greek debt crisis seem not to have been learned, as Italy alone carries debt that is three times larger than the European Union’s emergency fund. Some economists now argue such ...

Japan is looking for ways to reduce its public debt, currently worth more than 200 percent of its GDP. Prime Minister Shinzo Abe has managed to raise the consumption tax, but the government’s budget for this year still relies on social programs to alleviate demographic limitations and convince consumers to ...

The diverse Caribbean region offers plenty of economic opportunity and room for growth, especially in tourism and other services, as well as the energy sector. The problem is that these small, open economies are all very vulnerable to external shocks. One of these is severe weather, as hurricane Dorian made ...

Low, near-zero and negative interest rates around the world are depriving savers of potential earnings. Just a couple of years ago, it seemed as if a normalization of interest rates was on the horizon. Now, however, economic and political realities portend a “low-for-long” scenario. In fact, central bankers – in ...

Latin America’s diverse economies are facing a series of common problems in 2019. After a years-long commodities boom, countries that failed to prepare for the current downturn in prices now deal with a loss of revenues and foreign investment. Corruption and quality of life issues have presented other challenges, and ...

For the global economy, the road ahead is unusually clear – it is headed for a gentle slowdown. But that is no reason for complacency. The next wave of trouble is already visible in the developing countries, which are highly vulnerable to rising interest rates. The EU could do much ...

The world has grown addicted to ceaseless injections of new money, which can only be generated by incurring debt. As relentless fiscal expansion continues on both sides of the Atlantic, politicians have no long-term plan for dealing with the crushing liabilities it generates. A financial meltdown can be delayed for ...

Prospects for a U.S.-China trade deal now seem to be hanging by a thread. Even before the most recent disagreement, however, the Trump administration had already begun drawing attention to a new question: whether China had been engaging in protectionism by manipulating its currency. But the administration’s argument reveals confused ...

After dropping interest rates close to zero and pumping 2.6 trillion euros into Europe’s economy through debt purchases, is the European Central Bank out of ammunition? Not necessarily. Through its “targeted longer-term refinancing operations” (TILTROs), the ECB is planning to use negative interest rates to pay commercial banks to make ...

Company earnings are a traditional gauge of economic health and a powerful driver of financial markets. Recently, however, they have been sending contradictory signals. One reason could be the expansionary credit policies of the past decade, which have distorted balance sheets and weakened competition. The most likely outcome of this ...

Some say the global economy is slowing down due to Brexit and the U.S.-China trade dispute – but these developments are not the real dangers. Far more insidious is the trend toward increased government influence in economies and large public debts. Yet, even many economists have adopted the notion that ...

Ecuador is a small country that embodies many of Latin America’s problems in miniature. Overdependence on commodity exports and Chinese loans, unsustainable public finances, poverty, corruption, crime, refugees and tensions with the U.S. are just a few items on the list. Most of all, its minority government must clean up ...

It has been a decade since global interest rates reached the zero lower bound, where monetary policymakers lose their ability to stimulate the economy using conventional policy tools. Among the largest global central banks, only the United States Federal Reserve has set its benchmark above 2 percent. Will this anomaly ...

As the European Central Bank winds down its quantitative easing program, none of its future policy options look especially promising for the euro. While investors would welcome a more neutral monetary stance, that could spur political tensions in the euro area that could roil financial markets. Meanwhile, regulation is on ...

In June, the European Central Bank made the fateful announcement that it would phase out its bond-buying program – called quantitative easing, or QE – by the end of this year. But putting an end to net bond purchases is not the same thing as ending the ECB’s ultra-lax monetary ...