2011 April « iMFdirect

Tipping the Scales—Rebalancing Growth in Asia

Posted on April 29, 2011 by iMFdirect

The center of global economic growth is moving from the West to Asia. Over the last 30 years, the Asian economy has grown by over 7 percent each year, doubling in size every decade. This success has been based in large part on outward-oriented growth strategies. But, there is growing awareness that Asia’s export-led growth needs to be balanced by a second engine of growth. How to achieve this rebalancing is a key theme of a new book from the IMF, launched in Hong Kong, on Rebalancing Growth in Asia—Economic Dimensions for China.

Filed under: Asia, Economic Crisis, Economic outlook, Emerging Markets, International Monetary Fund | Tagged: China, current accout surpluses, domestic demand, economic growth, economic rebalancing, export-oriented growth, exports, financial services, inequality, market forces, private consumption, private domestic demand, private investment, Rebalancing Growth in Asia—Economic Dimensions for China, social safety nets | Comments Off

The Next Phase of Asia’s Economic Growth

Posted on April 28, 2011 by iMFdirect

As the economic recovery has matured across much of Asia, the region has continued to be a driving force in the strengthening global recovery. Yet, recent tragic events—around the globe, and the earthquake and tsunami in Japan—are an all too poignant reminder of the fragility of our economic circumstances and, indeed, life.

Much of this weighs on my mind as I am here in Hong Kong to launch our April 2011 Regional Economic Outlook: Asia and Pacific. While the outlook is by no means gloomy, policies will need to tackle new downside risks that have emerged and how to manage the next phase of Asia’s growth.

Filed under: Asia, Economic outlook, Emerging Markets, International Monetary Fund | Tagged: capital inflows, commodity prices, domestic demand, economic growth, economic recovery, exports, financial risk, fiscal consolidation, global imbalances, global recovery, Macroeconomic policies, overheating, poverty, Regional Economic Outlook: Asia and Pacific, unemployment | Comments Off

Promises, Promises. Better Measuring the Effect of Pension Reform

Posted on April 26, 2011 by iMFdirect

We all hope to retire one day. Our pensions hold the promise of that. Good fiscal policy means thinking about ho w policy decisions—involving long-term promises, such as pensions—affect government finances both today and in the future.

With pension reform a priority for so many countries, it is a problem that traditional deficit and debt indicators focus on the health of public finances today, but fail to capture the future impact of pension promises.

We propose a new indicator—the “pension-adjusted” budget balance—that can help measure when changes in pension policies are improving or worsening long-term fiscal health. Used as a complement to traditional indicators, this new indicator could help avoid incentives to delay or even reverse pension reforms.

Filed under: Advanced Economies, Emerging Markets, Fiscal policy, International Monetary Fund, Public debt | Tagged: fiscal indicators, fiscal policy, fiscal sustainability, government deficits, pension liabilities, pension reform, pension-adjusted budget balance, pensions, public debt | 7 Comments »

Tax Matters for Developing Countries

Posted on April 22, 2011 by iMFdirect

For all too many low-income countries, government tax revenues are far from enough to meet the needs of their people. Some have made good progress, and this helped them weather the crisis better than many advanced economies—but there is an underlying, quiet crisis of inadequately resourced governments.

Filed under: Asia, Fiscal policy, International Monetary Fund, Latin America, Low-income countries | Tagged: corruption, domestic tax revenues, efficiency, equity, fairness, governance, Millennium Development Goals, political will, poverty reduction, preferrential tax treatment, tax administration, tax evasion, tax exemptions, tax policy | 3 Comments »

Old Dilemmas, New Challenges: Monetary Policy and Capital Flows into Emerging Economies

Posted on April 21, 2011 by iMFdirect

For a decade or more, we at the IMF have grappled with the idea that very large capital flows into successful emerging market countries were almost inevitable and would prove extremely difficult to manage. Since these topics were first broached at a theoretical level, we have witnessed developments in a number of emerging economies in Europe that reinforce the concerns and underscore the implications for policy.

Two lessons may be learned from the experience. First, the choice between fixed and flexible exchange rates is important, but perhaps not for reasons that are usually put forward. Second, monetary policy—and policy to stabilize the economy more generally—needs substantial reinforcement.

Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, International Monetary Fund | Tagged: asset price bubbles, capital flows, credit growth, current account deficits, exchange rate, exchange rate flexibility, exchange rate regimes, external vulnerability, fixed exchange rates, foreign currency exposure, foreign exchange risk, interest rates, investment, macroprudential policies, monetary policy, rates of return, risk premiums | 1 Comment »

Connecting the Dots Between Global Risks

Posted on April 21, 2011 by iMFdirect

Finance ministers and central bank governors from around the world, gathering at the Spring Meetings of the IMF and World Bank in Washington last week. With the recovery solidifying but still fragile, ministers put the spotlight on how to strengthen the IMF’s surveillance—its economic assessment and analysis—to help countries take the action needed to address risks and avoid future crises.

As the meetings were wrapping up in Washington DC, the IMF’s First Deputy Managing Director talked about the outcomes of the meetings. While there are concerns about risks in the global economy, there was important progress on a “multilateral cooperative approach on the various challenges we face.” Watch his interview to hear more about what Mr. Lipsky has to say about progress by the G-20 and about the likely changes to the IMF’s multilateral surveillance.

Filed under: Annual Meetings, Economic Crisis, Financial Crisis, IMF, International Monetary Fund | Tagged: commodity prices, G-20, global financial crisis, IMF surveillance, IMF-World Bank Spring Meetings, International Monetary and Financial Committee, multilateral surveillance, overheating, risks, Tharman Shanmugaratnam, unemployment | 2 Comments »

Global Challenges, Global Solutions

Posted on April 14, 2011 by iMFdirect

The April 2011 IMF-World Bank Spring Meetings are upon us here in Washington DC. With global challenges that require global solutions—the theme of the meetings—IMF Managing Director Dominique Strauss-Kahn reminds us that this is “not the time for complacency.” Here’s a snapshot of what you need to know to get you through the meetings….

Filed under: Annual Meetings, Civil Society, Economic outlook, Employment, IMF, Inequality, International Monetary Fund, Multilateral Cooperation | Tagged: capital controls, cooperation, Fiscal Monitor, Global Challenges Global Solutions, global economy, Global Financial Stability Report, global financial system, global imbalances, Globalization, IMF-World Bank Spring Meetings, inequality, international monetary system, policy coordination, unemployment, World Economic Outlook | 3 Comments »

Avoiding Another Year of Living Dangerously: Time to Secure Financial Stability

Posted on April 13, 2011 by iMFdirect

In various guises, the “Year of Living Dangerously” has been used to describe the global financial crisis, the policy response to the crisis, and its aftermath. But, we’ve slipped well beyond a year and the financial system is still flirting with danger.

Financial stability risks may have eased, reflecting improvements in the economic outlook and continuing accommodative policies. But those supportive policies—while necessary to restart the economy—have also masked serious, underlying financial vulnerabilities that need to be addressed as quickly as possible. Many advanced economies are “living dangerously” because the legacy of high debt burdens is weighing on economic activity and balance sheets, keeping risks to financial stability elevated. At the same time, many emerging market countries risk overheating and the build-up of financial imbalances—in the context of rapid credit growth, increasing asset prices, and strong and volatile capital inflows.

Here is our suggested roadmap for policymakers to address these vulnerabilities and risks, and achieve durable financial stability.

Filed under: Advanced Economies, Emerging Markets, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: asset quality, balance sheets, bank credit, bank restructuring, banking system, capital buffers, capital controls, capital inflows, debt sustainability, financial imbalances, financial sector risk, financial stability, global financial crisis, Global Financial Stability Report, government debt, household indebtedness, macroprudential policies, medium-term fiscal consolidation, overheating, sovereign funding | 5 Comments »

Shifting Gears: Where the Rubber Meets the Fiscal Road

Posted on April 12, 2011 by iMFdirect

Undertaking a sizable fiscal adjustment is a lot like driving up a tall mountain: it’s hard work, it can take a long time, and you don’t want to run out of fuel partway up the incline. Countries are starting the climb, cutting back government deficits and debt levels, but according to our analysis often current plans aren’t enough to get countries where they need and want to go.

The plans in place are large by historical standards, which brings with it difficult choices, and particular risks and uncertainties. Let me fill you in on what these are.

Filed under: Economic Crisis, Fiscal policy, International Monetary Fund, Public debt | Tagged: bank recapitalization, cyclically adjusted balance, debt sustainability, fiscal adjustment, fiscal consolidation, Fiscal Monitor, fiscal sustainability, government debt, interest rate-growth differential, medium-term fiscal consolidation, primary budget balance, public debt, sovereign risks | 1 Comment »

Global Recovery Strengthens, Tensions Heighten

Posted on April 11, 2011 by iMFdirect

The world economic recovery is gaining strength, but it remains unbalanced. Earlier fears of a double dip recession—which we did not share—have not materialized. And, although rising commodity prices conjure the specter of 1970s-style stagflation, they appear unlikely to derail the recovery.

However, the unbalanced recovery confronts policy makers with difficult choices. In most advanced economies, output is still far below potential. Low growth implies that unemployment will remain high for many years to come. And the problems in Europe’s periphery are particularly acute. On the other end of the spectrum, emerging market countries must avoid overheating in the face of closing output gaps and higher capital flows.

The need for careful design of macroeconomic policies at the national level, and coordination at the global level, may be as important today as they were at the peak of the crisis two years ago.

Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, International Monetary Fund, Low-income countries | Tagged: bank recapitalization, capital controls, capital inflows, commodity prices, economic recovery, exchange rate, Financial regulation, financial stability, financial supervision, fiscal consolidation, Fiscal Stimulus, fiscal sustainability, inflation expectations, inventory cycle, macroprudential policies, policy coordination, potential output, private demand, unemployment, World Economic Outlook | 8 Comments »

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The Next Phase of Asia’s Economic Growth

Promises, Promises. Better Measuring the Effect of Pension Reform

Tax Matters for Developing Countries

Old Dilemmas, New Challenges: Monetary Policy and Capital Flows into Emerging Economies

Connecting the Dots Between Global Risks

Global Challenges, Global Solutions

Avoiding Another Year of Living Dangerously: Time to Secure Financial Stability

Shifting Gears: Where the Rubber Meets the Fiscal Road

Global Recovery Strengthens, Tensions Heighten

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