A Marriage Made in Heaven or Hell: Monetary and Financial Stability


By José Viñals

Monetary stability seems almost a given today, even taken for granted. It wasn’t always like that. Not so long ago, high and volatile inflation routinely raised its ugly head and threatened living standards. Some of us even remember those days! It wasn’t pleasant. But since then, an effective antidote has pretty much wiped out rampant price instability. Over the past three decades, better monetary frameworks have caused the level and volatility of inflation to fall sharply. These frameworks enshrined price stability as the main monetary policy objective, and provided independence and constrained discretion in the pursuit of this objective, often set out through formal inflation targets.

As I said, it worked out well. Or did it? In reality, there was a gaping hole in the system. While monetary policy frameworks fortified the castle against inflation at the front, they didn’t pay much attention to back door vulnerabilities. I’m talking about financial stability.

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Listening to and Learning from Asia


By Dominique Strauss-Kahn

(Version in 中文,  日本語 and 한국어)

In Daejeon, Korea earlier this week, a remarkable event took place that enabled the world to hear the voice of Asia and to learn how the region has been able to show such great resilience in the face of the worst global financial crisis since the 1930s. On July 12 and 13, more than 1,000 officials, economists, bankers, analysts, and media assembled for a conference titled Asia 21: Leading the Way Forward, hosted by the Korean government and the IMF. I personally learned a great deal about Asia’s growing stake in the global economy—and the global economy’s growing stake in Asia. As the world strives to leave the crisis behind, the economic center of gravity is shifting increasingly eastwards, and Asia’s role is more vital than ever before.

Our objectives with this conference, jointly organized with the superb help of our Korean partners, were three-fold:  Continue reading

Turning up the Volume—Asia’s Voice and Leadership in Global Policymaking


By Naoyuki Shinohara

(Version in 中文,  日本語 and 한국어)

Asia’s voice is getting louder and the IMF—and, indeed, the world—is listening.

I am writing from Daejeon, Korea where the Fund and the government of Korea are hosting together a high-level international conference over the next two days.

The conference, entitled Asia 21: Leading the Way Forward, is an opportune time to reflect on exactly that: Asian leadership. Both the topics to be discussed and participants expected for the event speak volumes of the range and depth of expertise and experience in the region.

With broader recognition of the region’s economic, analytic and policy successes, Asia is now a leading voice in the global dialogue on economic and financial policies.

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Continuing the Momentum—Asia’s Updated Economic Outlook


By Anoop Singh

Asia’s leadership of the global economic recovery is continuing unabated. And, even though heightened risks mean there may be tough times ahead again, the region is well equipped to handle them.

Asia’s remarkably fast recovery from the global financial crisis continued in the first half of 2010, despite the recent tensions in global financial markets. In fact, GDP growth in the first quarter was generally stronger than we anticipated in our Regional Economic Outlook in April. And high-frequency indicators suggest that Asian economic activity remained brisk in the second quarter. Even more notable, this is true both for economies that escaped a recession in 2009, thanks to their relatively larger domestic demand bases (China, Indonesia, and India), and for the more export-oriented economies such as Japan, the Newly Industrialized Economies (NIEs), and the rest of the ASEAN.

Two growth engines

What explains the strong economic momentum across the region? It is simple. The two “engines of growth” that spurred Asia’s recovery in 2009— exports and private domestic demand—have remained robust in 2010.

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Asia and the IMF: A Closer Engagement


By Anoop Singh

In just a few days’ time, the Korean government and the IMF will jointly host a high-level international conference in Daejeon, Korea. At the Fund, we are trying continually to enhance our strategic dialogue with Asia, and the conference is an important part of this effort.

Asia’s leadership of the global recovery is undeniable, as I have said in earlier blogs. And the extensive reforms and improved macroeconomic policy frameworks that underpinned the region’s remarkable resilience to the global crisis will see Asia’s successes continue. In just two short decades, we expect it to become the largest economic region in the world.

The Korea conference will be an opportunity to showcase Asia’s economic successes, and also highlight the importance of regional integration and cooperation, which has been growing rapidly in Asia.

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Global Economy: Continuing Recovery But Clouds on the Horizon


By Olivier J. Blanchard 

The macroeconomic forecasts in the IMF’s latest  World Economic Outlook update reflect two opposing forces. Looking back, say over the first half of the year, numbers about economic activity have come in strong, indeed somewhat stronger than we had forecast. These would give reasons to be more optimistic than we were earlier.

Looking forward, however, strong clouds have appeared on the horizon.  They present real dangers and serious policy challenges, and give reasons to be less optimistic than we were earlier.

Assessing the balance of these two forces is a difficult exercise. Our forecast for world growth in 2010 is about 4½ %, a bit higher than our April forecast of around 4¼ %. This revision largely reflects the stronger activity during the first half of the year. Our forecast for 2011 is broadly unchanged, at about 4¼ %.

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The Priority of Growth and Jobs—the IMF’s Dialogue with the Unions


By Dominique Strauss-Kahn

I had the pleasure of addressing the 2nd World Congress of the International Trade Union Confederation (ITUC) in Vancouver a couple of weeks ago, and participating in a panel debate. I also met privately with some key union leaders.

For me, three main points emerged.

First, I was confirmed in my belief that, for the IMF, our interaction with the labor movement is extremely valuable. We make it a point to meet with unions, including in the context of our lending programs. Over the past few years, I have personally met international trade union leaders four times—on the eve of important G-20 meetings—as well as with individual union leaders. So the labor movement has a lot of influence on the way we work—even if they do not always think so.

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