Following the Covid-19 blockade that took place during 2020, the global fiscal recovery for 2021 is seen to be moving slowly.
According to a report by rating agency Fitch Ratings, among the reasons for the slowdown in the global fiscal recovery are the influence of high commodity prices, soaring inflation, rising borrowing costs, sluggish gross domestic product (GDP) growth and the Russia-Ukraine war.
Clearly, the surge in inflation accompanied by sluggish economic growth is not the same as the policy dilemma faced by fiscal authorities with central banks.
He added that the Fitch -linked government had introduced support measures to help households and businesses in preparing for rapid price increases and more policies if prices continue to rise.
In addition, Fitch also stated that the policy of increasing rate hikes has marked the end of the era of low government borrowing costs and indirectly adversely affected developed market rulers.
In addition, the fiscal position of emerging markets is seen to be different than before the pandemic.
He argued that this could be attributed to the surge in commodity prices supporting government revenue and nominal GDP growth in commodity -exporting regions including the Gulf Cooperation Council and Latin America.
Meanwhile, Fitch also stated that large fiscal differences have led to larger rating differences.
As such, the number of governments rated ‘CCC’ or low is at an all -time high since late 2020, and current global credit conditions and Fitch’s expectations for next year suggest continued fiscal and rating pressures.
