The evolution of global financial imbalances in conditions of pandemic crisis

Abstract

Global imbalances combine all forms of relations between different elements of the world economy, which have a certain negative impact, ie they bring some negative consequences for the global economy as a whole or for certain regions and countries. Based on the recognition of their existence and their interconnection through different transmission channels, the Generalized Model of Global Imbalances Synergy was elaborated by authors Kovalev and Paseko, which in our opinion could be adjusted to the current situation. The application of this model makes the onset of new financial crises predictable. The purpose of this research was to test this hypothesis. Research on the applicability of the mentioned model started from the works of Model’s authors and continued by examining of international financial institutions reports, statistical reports published on the Internet, as well as analyses of experts in this field from different countries. The International Monetary Fund specialists’ works confirm, to a certain extent, the viability of nominated model. The research carried out allows highlighting of some global imbalances in the context of the COVID-19 crisis. It is about global monetary imbalances, imbalance between income and consumption in certain categories of countries, the imbalance between the size of world economy and global debt, the imbalance between the excess liquidity and investment mechanisms functioning. The pandemic crisis in turn contributed to creation of new global imbalances of anti-crisis economic and financial measures. It must be mentioned the discrepancy between developed and developing countries through the prism of economic-financial intervention as anti-crisis measures. However, undertaking these activities require the attracting of additional funds, which in itself generates new problems. The results of conducted research allow drawing certain conclusions regarding current trends in the functioning of global financial mechanisms and their impact on financial market in the Republic of Moldova.