Governments around the world are scrambling to contain the unprecedented economic fallout of the COVID-19 pandemic. Many are expending resources in an effort to prevent the current health crisis from snowballing into a long-term economic depression.
However, the timeline for recovery is still uncertain, making the true cost of this crisis challenging to ascertain. The sudden jolt of this crisis has also come at a painful time. The global economy, particularly outside of the US, was slowing in recent years and economies have struggled to overcome the ‘three Ds’ of high debt, ageing demographics and disruptive technology (suppressing wages and inflation).
Governments have thus turned to both fiscal and monetary policy to soften the economic blow. However, because the marginal utility of monetary policy has declined since the 2008 Great Financial Crisis (“GFC”), fiscal stimulus is now the primary bailout mechanism for this pandemic. This is a welcome change that global central banks have been calling for repeatedly in recent years.
This paper, Fiscal Stimulus therefore intends to explore the potential effects of COVID-19 stimulus measures on the infrastructure investment landscape. While the themes discussed in this paper are global, the research for this paper relies heavily on lessons learned from the US given its rich history of transformational fiscal stimulus programs.
Read Fiscal Stimulus, Implications for institutional infrastructure investors here.