Thread by @fsaraceno

The @IMFNews Spring #WEO is out and will need to be read carefully. It is a welcome and perilous exercise, in the middle of the pandemics
imf.org/en/Publication…

From a quick look, here are the main takeaways
1.

The numbers are large (far worse than in 2008-9) but not huge, except for my own country, Italy.
The #IMF believes (hopes?) in a V shaped crisis, with rebounds in 2021.
In advanced economies there will be a permanent loss of GDP, more than compensated by emerging economies
2.

Their faith in the V shaped recovery comes from a positive appreciation of the policy mix put in place.
Monetary+Fiscal support is what should be. It is aimed at keeping both potential output and incomes/purchasing power as healthy as possible

I agree with this assessment.

3.

My fear is that if health crisis is not managed quickly, the oxygen given by macro policy will not be enough to keep aggregate supply alive. Then V shape is a chimera
Pressure to reopen mounts (e.g., in the US), and a second wave becomes likely
4.

US GDP is forecasted to drop less than in the EU. Given the chaos in managing the pandemic, the US number may end up being off the forecast.
It goes without saying that EMU can also be way off the mark, if we don't get our act together at the next Council meeting

5.

In conclusion, the forecast is bad, but it might still be too optimistic.