Posted on April 16, 2013 by iMFdirect
By Carlo Cottarelli
(Versions in عربي , 中文, 日本語, and Español)
The 2008–09 global economic crisis pushed public debt ratios of advanced economies to levels never seen before during peacetime. These high debt levels expose countries to a loss of market confidence and, ultimately, damage long-term growth prospects. Since 2010 advanced economies have been on a journey: the goal is to bring their public finances back to safer territory. They are in it for the long haul, not a sprint, and, as a redress of the large fiscal imbalances created by the crisis, without derailing the still fragile economic recovery, it requires a steady and gradual pace of adjustment—at least for countries not subject to market pressures.
This year we see the process of gradual fiscal adjustment reaching two symbolic milestones. First, the average deficit of advanced economies as a share of GDP will fall to half of its 2009 level at the peak of the crisis. Second, the average debt ratio will stop rising, after increasing steadily since 2007. Indeed, it will actually decline slightly.
Filed under: Advanced Economies, Economic Crisis, Europe, Financial Crisis, Fiscal policy, International Monetary Fund | Tagged: deficit, Fiscal Monitor, France, GDP, Japan, public debt, United Kingdom, United States | Leave a Comment »
Posted on February 21, 2013 by iMFdirect
by Laura Papi and Rahul Anand*
So far 2013 has been a breath of fresh air in terms of economic news: financial markets have rallied and economic indicators have started to surprise on the upside. In India, the rupee has strengthened and the Bombay Stock Exchange index (Sensex) crossed the 20,000 mark for the first time in two years. Industrial production has started picking up.
So is India’s growth about to go back to 8-9 percent? The short answer is no. But we need to look back to understand why India’s growth has decelerated to a decade low and why the slump, which has hit investment particularly hard, has persisted for over a year. As structural problems are at the root of the slowdown, so structural reforms must be at the core of the solution.
Filed under: Economic Crisis, Emerging Markets, growth, IMF, International Monetary Fund | Tagged: cash transfers, economic growth, emerging markets, fiscal deficit, fuel subsidy spending, government deficits, IMF, iMFdirect, India, inflation, International Monetary Fund, investment, structural reforms | 1 Comment »
Posted on February 15, 2013 by iMFdirect
By Nemat Shafik
During the years that followed the euro’s introduction, financial integration proceeded rapidly and markets and governments hailed it as a sign of success. The widespread belief was that it would benefit both south and north—capital was finally able to flow to where it would best be used and foster real convergence.
But in fact, a lasting convergence in productivity did not materialize across the European Union. Instead, a competitiveness divide emerged. As the financial crisis gripped the euro area in 2010, these and other problems came to the fore.
Three years later, the financial symptoms of the crisis are thankfully receding with a new sense of optimism in markets. But the underlying problems—lack of convergence of productivity and the structural flaws in the architecture of the monetary union—have only been partially addressed.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: central banks, emerging economies, euro zone, Europe, European Union, financial integration, fiscal integration, fiscal union, Germany, IMF, iMFdirect, International Monetary Fund, Italy, monetary union, productivity, Spain | Leave a Comment »
Posted on February 4, 2013 by iMFdirect
by Carlo Cottarelli and Philip Gerson
Version in Español and عربي
We’re one month into 2013, and if past experience is any guide, by now many people will have all but forgotten the promises they made about the things they planned to do over the coming year.
It’s a time-honored tradition in many countries for people to make resolutions at the New Year, usually involving things that are good for them, like achieving a healthier weight. Unfortunately, it’s also traditional that these commitments quickly fall by the wayside, only to be taken up again next year, usually with the same results.
But unlike many of these resolutions, the ones made by most advanced economies to reduce their 2012 fiscal deficits were by and large kept. The average headline deficit in these countries fell by about ¾ percent of GDP last year, bringing the cumulative deficit decline to 3 percent of GDP since budget shortfalls peaked in 2009. This is good news.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: advanced economies, deficit reduction, fiscal consolidation, fiscal policy, government debt, government spending, IMF, iMFdirect, International Monetary Fund, Japan, United States, United States Federal Reserve | 2 Comments »
Posted on January 28, 2013 by iMFdirect
by David Moore
Latvia’s economy has attracted international attention out of all proportion to its size. Many observers know that Latvia returned to strong economic growth after a severe downturn in 2008 and 2009 and a tough austerity program. In late 2012, Latvia even repaid the IMF in full, several years early.
But the international consensus ends there. Critics of Latvia’s economic strategy point to continuing high rates of unemployment and poverty; advocates point to the benefits of frontloading spending cuts and tax increases to lay the foundations for recovery.
Filed under: Economic Crisis, Employment, Europe, Fiscal policy, Fiscal Stimulus, growth, IMF, International Monetary Fund | Tagged: credit, economic policy, economic reform, Economics, euro, growth, IMF, iMFdirect, International Monetary Fund, Latvia, poverty, unemployment, wages | 2 Comments »
Posted on January 23, 2013 by iMFdirect
by Olivier Blanchard
Version in Español and عربي
Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.
Compared to where we were at the same time last year, acute risks have decreased. The United States has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.
But we should be under no illusion. There remain considerable challenges ahead. And the recovery continues to be slow, indeed much too slow.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: banking union, Brazil, capital flows, China, debt, developing economies, emerging economies, euro area, Europe, European Central Bank, financial markets, fiscal cliff, fiscal consolidation, fiscal crisis, fiscal policy, France, Germany, government bonds, government debt and deficits, growth, IMF, iMFdirect, India, inflation, International Monetary Fund, Italy, Japan, Outright Monetary Transactions, Spain, United States, WEO, World Economic Outlook | 5 Comments »
Posted on January 2, 2013 by iMFdirect
By David Lipton
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
With the New Year, we all hope to put the global financial crisis behind us. We also need to do more to secure our future.
Beyond our current economic and financial problems, there are long-term issues that we all know about, but that get too little attention in an era when policymakers are so fully engaged in slogging away at more immediate problems. Unfortunately, long-term issues unaddressed today will become crises tomorrow.
So we had better lengthen our focus, see what looms on the horizon, and do more to steer the global economy in a better direction.
Filed under: Economic Crisis, Economic outlook, Financial Crisis, Globalization, growth, Inequality, International Monetary Fund, Politics | Tagged: advanced economies, Climate change, crisis, David Lipton, developing economies, emerging markets, global economy, global warming, Globalization, growth, Hurricane Sandy, iMFdirect blog, structural reforms, technology | 7 Comments »
Posted on December 21, 2012 by iMFdirect
The planet’s most successful species are the great cooperators: ants, bees, termites, and humans.
In an article in the new issue of Finance & Development magazine, President Bill Clinton shares his experience working with governments, business, and civil society as part of his Clinton Global Initiative.
He says they are making the most progress in places where people have formed networks of creative cooperation where stakeholders come together to do things better, faster and cheaper than any could alone.
Filed under: Advanced Economies, Africa, Asia, Civil Society, Debt Relief, Economic Crisis, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Globalization, growth, IMF, Inequality, International Monetary Fund, Latin America, Middle East, Multilateral Cooperation | Tagged: Africa, agriculture, Bolsa Familia, Brazil, business, business leaders, Canada, capital markets, Clinton Global Initiative, Coca-Cola, Colombia, cooperation, developing countries, domestic food security, Economics, economy, exports, farmers, Fundacíon Carlos Slim, Fundacíon Pies Descalzos, Gap Inc., governments, growth, Haiti, HIV/AIDS, IMF, iMFdirect, imports, infrastructure, International Monetary Fund, investment, Ira Magaziner, Ireland, Latin America, Malawi, mining industry, networks, NGOs, Norway, philanthropists, poverty, President Bill Clinton, private sector, small and medium-sized enterprises, the United Kingdom, tourism, United Nations General Assembly, vocational training | 4 Comments »
Posted on December 17, 2012 by iMFdirect
by María González-Miranda
(Version in Español)
Four years after the Lehman Brothers crisis, private companies in the largest and most financially integrated Latin American countries are doing relatively well, despite continuous bouts of global uncertainty. Like firms in other high-performing emerging markets in Asia, companies in Brazil, Chile, Colombia, Mexico, and Peru (the “LA5”) have benefited from abundant external financing, strong domestic credit, and generally robust demand growth.
These favorable conditions have resulted in robust corporate profitability and valuation, reasonably contained debt ratios, and lower short-term maturity exposures than those observed in other emerging markets.
But some vulnerabilities are starting to build up.
Filed under: Asia, Economic Crisis, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Latin America | Tagged: Brazil, Chile, Colombia, corporate sector, currency, growth, IMF, International Monetary Fund, LA5, Latin America, María González-Miranda, Mexico, Peru, vulnerable | 1 Comment »