A huge share of the world’s population will vote or have voted this year with elections happening in over g0 countries in 2024.This is the mo
Recent research highlights that elections often influence global economic policy, with increased government spending, looser central bank policies, and heightened economic uncertainty typically emerging as election day approaches.
Goldman Sachs Research's analysis of over 1,100 elections shows that, on average, primary fiscal balances drop by 0.4% of GDP in election years due to higher spending and lower revenues. This effect lingers into the following year but fades after two years.
The IMF has advised governments to exercise fiscal restraint to preserve sound public finances, activate decisive efforts to safeguard sustainable public finances and rebuild fiscal buffers. It is also important for revenue to keep up with spending over time.
Recommendations
Governments should promptly phase out crisis-era policies like energy subsidies and implement reforms to control rising spending while safeguarding the most vulnerable. In aging advanced economies, reforms are needed to manage healthcare and pension costs.
