Fiscal Adjustment: Too Much of a Good Thing?

Posted on January 29, 2012 by iMFdirect

The IMF has argued for some time that the very high public debt ratios in many advanced economies should be brought down to safer levels through a gradual and steady process. Doing either too little or too much both involve risks: not enough fiscal adjustment could lead to a loss of market confidence and a fiscal crisis, potentially killing growth; but too much adjustment will hurt growth directly.

At times over the last couple of years we called on countries to step up the pace of adjustment when we thought they were moving too slowly.

Instead, in the current environment, I worry that some might be going too fast.

Filed under: Economic Crisis, Advanced Economies, Economic research, Fiscal policy, Public debt, Economic outlook, Finance | Tagged: , , , , , , , , , , , , | 11 Comments »

Lagarde in Davos: How to Avoid an Economic Deep Freeze

Posted on January 27, 2012 by iMFdirect

Amid the heaviest snowfall in Davos for decades, IMF chief Christine Lagarde has been making her case for urgent action to resolve the eurozone crisis, which is at the center of current global economic concerns. The Fund recently sharply revised downward its forecast for global economic growth and in a speech in Berlin Lagarde mapped a way forward.

Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, Fiscal policy, IMF, International Monetary Fund | Tagged: , , , , , , , , , , | 18 Comments »

How to Exit the Danger Zone: IMF Update on Global Financial Stability

Posted on January 24, 2012 by iMFdirect

Many of the root causes of the euro area crisis still need to be addressed before the system is stabilized and returns to health. Until this is done, global financial stability is likely to remain well within the “danger zone,” where a misstep or failure to address underlying tensions could precipitate a global crisis with grave economic and financial consequences.

Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Financial Crisis, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Driving the Global Economy with the Brakes On

Posted on January 24, 2012 by iMFdirect

The world recovery, which was weak in the first place, is in danger of stalling. The epicenter of the danger is Europe, but the rest of the world is increasingly affected.

Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, Fiscal Stimulus, G-20, Global Governance, growth, IMF, Inequality, International Monetary Fund, Latin America, Low-income countries, Middle East, Public debt, recession | Tagged: , , , , , , , , , , , , , , | 8 Comments »

Meeting the Employment Challenge in the GCC

Posted on January 19, 2012 by iMFdirect

The issue of how to create more jobs is high on the minds of policymakers everywhere. The economies of the six Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—are no exception.

By many measures, these economies are doing very well. However, economic activity is dominated by the oil/gas sector and that sector creates relatively few jobs directly—less than 3 percent of the region’s labor force.

Diversification strategies are in place, and the non-oil sector has grown fairly rapidly over the past decade. But can it deliver enough jobs for GCC nationals?

Filed under: Employment, growth, International Monetary Fund, Middle East, عربي | Tagged: , , , , , , , , , , , , , , | 3 Comments »

Remembering Michael Mussa

Posted on January 17, 2012 by iMFdirect

Sad to hear about the death of Michael Mussa, the IMF’s witty and trenchant former chief economist for nearly a decade.

Filed under: Economic research, Globalization, IMF, International Monetary Fund | Tagged: , , , , | 10 Comments »

Sins of Emission and Omission in Durban

Posted on January 9, 2012 by iMFdirect

As we slide into another year of tough economic times, it’s easy to understand why policymakers are preoccupied with the next few weeks. But they also need to be thinking about the longer term issue of leaving the planet in reasonable shape for future generations.

Without serious efforts to reduce greenhouse gases, scientists predict that by the end of this century global temperatures could be 2.5 to 6.0 degrees (celsius) higher than a couple of hundred years ago. That could mean more heatwaves, more droughts, higher sea levels, more violent storms—and so on. When you start to think about the potential impact of, say, droughts on the livelihood of farmers, especially in poorer countries… well, you get the point.

While some progress was made in the latest round of United Nations’ climate change negotiations in Durban, South Africa, we saw two major omissions. There was little progress on either carbon pricing or, related, financing for action against climate change. And there was not enough recognition of what economics has to offer to help tackle the problems.

Filed under: Advanced Economies, Emerging Markets, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: , , , , , , , , , , , | 4 Comments »

Trade Winds—Has the Spectre of Protectionism Blown Away?

Posted on January 5, 2012 by iMFdirect

The global crisis has pushed trade reforms off—or at least to the edge of—the political radar screen. But shying away from improving the trade system may actually jeopardize growth and jobs, and in these tough economic times that seems a little like cutting off your nose to spite your face.

The Fund may not be the main player on the trade ‘block’, but we certainly take an interest given its macroeconomic importance. And, in the spirit of moving forward the discussion, and indeed the policies in support of, trade integration, the Fund has three main lines of work in the pipeline.

Filed under: Advanced Economies, Emerging Markets, Globalization, growth, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: , , , , , , , , , , , , | 6 Comments »

Latin America: What’s Ahead in 2012?

Posted on January 4, 2012 by iMFdirect

A few days after the first sunrise of 2012 kissed the shores of Latin America, it is natural to ask: What does the New Year hold for the region’s economies, especially with Europe still under stress? For sure, a dimmer economic environment, here and abroad. Growth has softened in the larger countries of the region. Looking North, the United States is growing a bit more, but elsewhere activity is softening, including in China—an increasingly important customer for the region’s commodities. Perhaps more importantly, global financial markets are still strained, because many questions about advanced economies remain unanswered. What should countries do in the face of this risky outlook? A lot depends on their current macroeconomic situation.

Filed under: Economic Crisis, Economic outlook, Emerging Markets, Europe, Finance, Financial Crisis, growth, International Monetary Fund, Latin America | Tagged: , , , , , , , , , , , , , , , | 5 Comments »

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