Emerging markets are seeking to emulate Chinese fiscal stimulus success. New numbers out of Beijing confirm their four trillion yuan stimulus package announced in November is already taking effect. Construction on several billion dollar projects started in December, offering employment for some and raising property values for others, amongst other effects. While it is indisputable that China has huge pockets with which to finance its Keynesian experiment, the same cannot be said for many other emerging economies. Fortunately, the IMF is seeking to expand its emergency aid package size nearly tenfold to $600 Billion in 2009 to assist emerging economies weather the downturn.
My Opinion: As with many things in today’s global economy, timing of an event is sometimes more important than the event itself. This is especially so with stimulus packages which need to be implemented as soon as possible. With November’s announcement of China’s massive stimulus came the quick reactions we have become accustomed to with Chinese projects. Construction on infrastructure and public housing projects broke ground less than 30 days later in December, and by February the effects of the stimulus are already showing up in some stats.
Now the IMF is following suit, looking to aid emerging countries with $600 billion in capital for fiscal spending. The IMF should take a cue from China – and move swiftly.
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