High productivity, lower oil prices, reduced geopolitical uncertainty, the waning effects of the stock market decline, and stimulative monetary and fiscal policies should all support spending, providing reasonable growth in final demand. However, a negative factor is weak growth abroad. When we disaggregate investment to the sectoral level, what do we find?
Even though in the first phase of the crisis, the central banks had to respond swiftly to stabilize their markets and avoid worse consequences, I believe we should not have overemphasized the so-called “market-maker-of-last-resort” narrative as its utilization may destroy the credibility achieved before the crisis. Because efforts to regain the credibility may be very painful for the EMs and their CBs.