Jakarta – During the opening of the summit of Group of 20 finance ministers and central bank governors on Oct. 12, 2022, I warned that the world is facing increasing and compounding risks from high inflation, weak growth, energy and food insecurity, climate change, geopolitical fragmentation and rising debt distress. Low-income countries will bear the highest burden, but also middle-income and even advanced economies face the prospect of substantial pain.
The global economy has been heading into a perfect storm. The COVID-19 pandemic has left scars on all our economies, precipitating a drop in aggregate demand and then aggregate supply. The symptoms are similar to those of a “liquidity trap,” with third-party funding in the financial sector remaining high while the real economy stagnates. To solve this problem, the great 20th-century economist John Maynard Keynes proposed countercyclical…
