The world’s strongest economy could face problems even after the coronavirus pandemic has ended, according to some experts. Unlike other countries, it has failed to rein in the increase in debt. At the same time, the economy is relatively dependent on fiscal impulses.
According to Bob Prince, investment strategist at Bridgewater Associates, the largest hedge fund, fiscal policy is crucial to the United States economy, and is likely to remain so after the coronavirus pandemic has teemed. But there are some risks. Fiscal momentum may drive the economy to growth, but at the same time, the already high level of federal public debt will continue to increase. By some estimates, this could reach 130 percent of America‘s GDP.
By contrast, other countries have so far been able to encourage their economies significantly cheaper in terms of fiscal policy. For example, Prince points out that China‘s economy is close to normal, which might start to interest investors. Other Asian countries are in similar terms. This may begin to persuade investors not to be so strongly oriented towards Western economies, because better investment opportunities may begin to emerge in Asia. And, as we know, investment is an important driver of economic growth.
