The main message from both organisations was directed at governments, which they believe must be prepared to step up their spending now that the private sector has seen the warning signs of recession and stopped investing.
The last time the global economy dealt with a shock, governments played a part in the rescue. That was in the days when leaders such as Gordon Brown could command the attention of his peers in arguing for a comprehensive and costly lifeboat. Then, after the 2008 crash, the job of rebuilding crisis-hit economies was left to central banks. Hence the era of ultra-low interest rates.
The justified fear is that the next crisis will be characterised by governments pleading poverty to justify inaction. Either they will argue they are bereft of the necessary funds or that borrowing is already too high.
Georgieva knows central banks have little firepower left after a decade of providing cheap money, which is why she is right to call on governments to open their wallets now, and not wait until it’s too late
When we have a recession then governments must spend lot,s lots, more. When we don;t have a recession then governments must spend lots, lots, more.
Why not just admit that you’re not doing macroeconomics about the business cycle any more you’re just shouting that there must be more government?