This may indicate not only that the likelihood of succumbing to a sovereign debt crisis in the near future has declined for emerging economies, but also that they have some room to adopt an accommodative fiscal policy in the downturn phase of the economic cycle.
When policymakers work hand in hand towards the same goal, the results can be impressive. Consider that from the onset of the global financial crisis, it took seven years for euro area GDP to get back to its pre-crisis level. Today, we expect GDP to exceed its pre-pandemic level in the first quarter of this year.