After slipping precariously in the early days of the pandemic, commodity prices rebounded in the latter months of 2020, in some cases reaching record highs. Continuing the upward climb throughout 2021 depends on a number of factors such as US dollar weakness, economic recovery, supply and demand, monetary policy, fiscal stimulus, weather events and the type of commodity, with oil, base/precious metals and some agricultural products likely leading the charge.
Fiscal Policies
As calamitous as the pandemic’s effect has been on economies worldwide, in many cases, it has only fueled concerning issues that pre-dated it. COVID-19 will eventually be consigned to our past, but its effects will linger on for decades. What are the four questions we need to ask ourselves now to shape the best plan of action toward economic healing, sustained recovery, innovation, cooperation and prosperity while avoiding potential landmines?
Global growth is strong, but policymakers need to navigate uncharted waters and enact complex policy changes to keep the world economy on an even keel. The main risk lies not in economic conditions, but in economic policy debates too often distorted by partisanship. We have a chance to leverage new technologies to lift living standards on a sustainable basis—but we need a more level-headed discussion to chart the path forward.
It’s safe to say that the Brazilian government has had a trust problem in recent years, and that this disconnect from approved practices has detrimentally affected its once vigorous economy. The IMF, in its recent Fiscal Transparency Evaluation for Brazil, took a close look at the areas in which the South American titan is succeeding and failing to live up to fiscal-transparency expectations.
Since the global financial crisis, central banks have resorted to monetary policy to pull their economies out of the abyss. But the time may have arrived for fiscal policy to share centre stage as the limitations of monetary policy become more apparent, and national decision-makers turn away from further fiscal-austerity measures toward stimulus.
If it seems as if the world has changed, it is because it has. Economic growth, for example, lags behind the levels reached before the 2007/2008 financial crisis even in developed countries. The need for governments to step in with proactive fiscal policies to kick start their economies has never been greater.