In December, the Center for American Progress outlined how G20 countries—the club of 20 large economies—had responded to the global economic meltdown. Since then, more countries have fallen officially into recessions and world trade flows have stalled. As a result, the count of countries taking action on either monetary policy (in the form of interest rate cuts) or fiscal policy (in the form of stimulus packages) has increased.
The map below shows how each of the G20 countries has responded to the growing financial crisis using both fiscal and monetary policy.
The U.S. Is Still Falling Short in Its Response to the Economic Crisis
Roll over a G20 country for details about its response to the global financial crisis
Our previous map showed that eight countries (Australia, Britain, China, France, Germany, Italy Japan, and South Korea) had adopted aggressive interest rate-cutting strategies along with fiscal stimulus packages in order to get their economies going again. Four more countries (Canada, India, Saudi Arabia, and the United States) had aggressively cut interest rates but had not yet announced stimulus packages. Argentina had done the reverse and passed a stimulus package but had not cut interest rates. The United States stood out, alongside Canada, as a country that had not yet passed a stimulus package despite a big need and strong foundations because of its wealth and low public debt.
Since December, Britain, Canada, India, Indonesia, Japan, Mexico, Saudi Arabia, Turkey, and the United States have all cut interest rates in an attempt to get their economies moving again. Over the same period, Argentina, Australia, Canada, France, India, and Saudi Arabia have all announced new or extended stimulus packages. Canada, India, Mexico, and Saudi Arabia have therefore joined the list of countries with both stimulative monetary and fiscal policies. Five of the remaining seven countries that have not taken both steps (Argentina, Brazil, Russia, South Africa, and Turkey) cannot because of fundamental weaknesses in their economies that prevent more aggressive action including weak fiscal conditions and the risk of capital flight.
The United States has no such limitation. While it has implemented an aggressive monetary policy, it is lagging behind other countries in implementing a stimulative fiscal package, to the detriment of the nation.
Read about CAP’s recommendations for economic recovery:
Interactive Maps: Recovery Beyond the Beltway
Infographic: Four Reasons We Can’t Afford Not to Have One
Note: Fiscal policy figures were derived from ft.com, Associated Press, Reuters, Bloomberg.com, and the respective governmental web sites of the G20 countries. In some cases numbers are disputed. Interest rate figures vary by country. We used the interbank rate in Argentina, Canada, China, Mexico, and Turkey; the policy rate in Australia, Brazil, Indonesia, Japan, South Korea, and the United Kingdom; the European Central Bank’s deposit facility rate for France, Germany, and Italy; the refinance rate in India, Russia, Saudi Arabia, and South Africa; and the Fed Funds Rate in the United States.