Jobs. Jobs. Jobs. Getting the Labor Markets Working Again

Posted on November 7, 2012 by iMFdirect

By Olivier Blanchard

The sharp and persistent rise in unemployment in advanced economies since the 2008-09 financial crisis is a hotly debated policy issue.  Rightly so:  High persistent unemployment has major human and economic costs, from loss of morale to loss of skills.  More broadly, it seems to undermine the very fabric of society.

Against this backdrop, the theme for the IMF’s 13th Jacques Polak Annual Research Conference, “Labor Markets through the Lens of the Great Recession,” could not be timelier. This year’s conference program weaves together a number of contributions by researchers both inside and outside the IMF, aiming to shed light on those labor market issues that are central to the current economic and social landscape.

Cyclical vs. structural

Peter Diamond, Nobel Prize winner in Economics and Professor of Economics at MIT, will give the keynote Mundell-Fleming lecture on the controversial issue of cyclical vs. structural unemployment.

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Filed under: Advanced Economies, Asia, Economic Crisis, Economic outlook, Economic research, Employment, Europe, Financial Crisis, Globalization, growth, IMF, Inequality, Investment, Politics | Tagged: , , , , , , , , , , , , , , , , | 4 Comments »

Latin America and the Caribbean: Dealing with Another Food Price Shock

Posted on October 25, 2012 by iMFdirect

By Luis Cubeddu and Sebastián Sosa

(Version in Español)

World food prices are on the rise again owing mainly to global weather-related shocks. This has led to concern that the rise could result in higher inflation and hurt the most vulnerable.

Two points to note are that the recent increase in food prices has been less acute than the two previous episodes (in mid-2008 and early 2011), and features important differences across commodities. For example, while the price of soybeans, corn and wheat are up sharply, coffee and sugar prices are down. Market projections suggest that corn, soy, and wheat prices will stay high through end-2012, but then decline gradually as supply conditions normalize.

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Filed under: Africa, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Fiscal policy, Globalization, growth, IMF, Inequality, Investment, Latin America, Politics | Tagged: , , , , , , , , , , , , , , , , | 2 Comments »

Tharman Sees “Greater Global Policy Resolve”

Posted on October 14, 2012 by iMFdirect

“Although the economic environment has weakened, the policy resolve has strengthened.” This is how Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister and Minister for Finance , who is Chair of the IMF’s policy-setting committee, described the outcome of the IMF-World Bank annual meetings in Tokyo.

“Growth is slower than anyone expected,” he admitted in a video interview.  ”It is slower in Europe, it is not as fast as it should be in the United States, not as fast as it should be to bring unemployment down, and it is slowing in Asia to a greater extent than was expected. Tharman is chair of the 24-member IMFC.

“But we are now in a much better situation than six months ago when it comes to policy solutions.” He said there had been major steps forward in Europe “despite some disagreement on individual pieces.”  But underlying problems in the Eurozone, budget problems in the United States, and structural problems in global economy are longer term problems and “cannot be fixed quickly.”

For a quick brief on the outcomes from the meetings in Tokyo, take a look at:

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Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Civil Society, concessional lending, Debt Relief, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Financial Crisis, Financial sector supervision, Fiscal policy, Global Governance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, LICs, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt | Tagged: , , , , , , , , , , , , , , , , | 9 Comments »

Time Not On Our Side: Tough Decisions Needed to Strengthen Financial Stability

Posted on October 10, 2012 by iMFdirect

By José Viñals

(Versions in  عربي, 中文, Español, Français, Русский, 日本語)

Recent policy actions in Europe, the United States, in emerging markets, and here in Japan, where I’m attending the IMF-World Bank annual meetings, have improved investor sentiment and helped markets rebound in recent months.

Yet our latest assessment is that confidence is still very fragile and risks have increased, when compared to the IMF’s last report in April. Policymakers need to do more to gain lasting stability.

The principal risk remains the euro area. The forces of financial and economic fragmentation have widened the divide between countries at the core and the “periphery” of the euro zone. Faltering confidence and policy uncertainty have led to a pullback of cross-border private capital flows from the periphery—quite an extraordinary phenomenon within a currency union.

This has driven up funding costs to governments and banks, as well as for companies and households, and, in turn, threatening a vicious downward economic spiral.

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Filed under: Advanced Economies, Annual Meetings, Asia, Economic Crisis, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Globalization, IMF, International Monetary Fund, Politics, Public debt | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments »

Taking Stock: Public Finances Now Stronger in Many Countries

Posted on October 9, 2012 by iMFdirect

By Carlo Cottarelli

(Versions in  عربي, 中文, Español, Français, Русский, 日本語)

The slow global recovery is making fiscal adjustment more difficult around the world, but this doesn’t mean that little has been accomplished.

In fact, significant progress in many countries has been made during the past two years in strengthening their fiscal accounts after the 2008–09 deterioration.  The IMF’s latest Fiscal Monitor takes stock of this progress.

Deficits are lower, and in many cases debt is too

Let me first say something about advanced economies, which is where the most urgent fiscal problems exist.

Most advanced economies have made good progress lowering their fiscal deficits (the imbalance between spending and revenues). Deficits, adjusted for the economic cycle, fell by about ¾ of a percentage point of GDP in 2011 and 2012, and are projected to do so by about 1 percentage point of GDP in 2013.

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Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Global Governance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt | Tagged: , , , , , , , , , , , | 3 Comments »

Global Economy: Some Bad News and Some Hope

Posted on October 8, 2012 by iMFdirect

By Olivier Blanchard

(Versions in  عربي, 中文, Español, Français, Русский, 日本語)

The world economic recovery continues, but it has weakened further.  In advanced countries, growth is now too low to make a substantial dent in unemployment.  And in major emerging countries, growth that had been strong earlier has also decreased.

Let me give you a few numbers from our latest projections in the October World Economic Outlook released in Tokyo.

Relative to the IMF’s forecasts last April, our growth forecasts for 2013 have been revised down from 1.8%  to 1.5% for advanced countries, and from 5.8% down to 5.6% for emerging and developing countries.

The downward revisions are widespread.  They are however stronger for two sets of countries–for the members of the euro area, where we now expect growth close to zero in 2013, and for three of the large emerging market economies, China,  India, and Brazil.

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Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Financial Crisis, Fiscal policy, Fiscal Stimulus, Global Governance, growth, Inequality, International Monetary Fund, Investment, Latin America, LICs, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt | Tagged: , , , , , , , , , , , , , , , , , | 7 Comments »

Tokyo links — IMF-World Bank Annual Meetings

Posted on October 7, 2012 by iMFdirect

The 2012 annual meetings of the IMF and the World Bank are being held this year in Tokyo at a crucial time for the world economy. Track everything through the live events schedule  (all Tokyo times).

Key reports out this week are

banner in Tokyo

Stay up-to-date through timely reports from IMF Survey online, through iMFdirect blog, World Bank Voices, and through regular video briefings and YouTube.  Also track news and commentary through Google +.

Extensive Japanese  (日本語) language content and updates are also available.

The Meetings bring together more than 10,000 central bankers, ministers of finance and development, private sector executives, academics, and journalists to discuss global economic issues and the interconnected world.

Filed under: Economic Crisis, Annual Meetings, Financial Crisis, Global Governance, Globalization, Advanced Economies, Emerging Markets, Low-income countries, Multilateral Cooperation, International Monetary Fund, IMF, LICs, Africa, Latin America, Economic research, Asia, Europe, G-20, Fiscal policy, Public debt, Economic outlook, Middle East, Finance, Politics | Tagged: , , , , , , , , , , , , , , , , , , , | 4 Comments »

Restoring Jobs by Restoring Growth

Posted on October 3, 2012 by iMFdirect

By Min Zhu

Over 200 million people are unemployed around the world, with double-digit jobless rates in many European countries and in many emerging markets. Youth unemployment and long-term unemployment are at alarming levels.

The number of unemployed people is nearly 16 million higher today than in 2007 among countries where labor markets are tracked regularly by the IMF. Much of this increase has been in advanced economies (Chart 1).

The need to tackle the unemployment crisis in these economies is self-evident. But what is to be done?

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Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Employment, Europe, Finance, Fiscal policy, growth, Inequality, International Monetary Fund, Politics | Tagged: , , , , , , , , , , , , , | 10 Comments »

United States: How Inequality Affects Saving Behavior

Posted on September 13, 2012 by iMFdirect

By Oya Celasun

(Version in Español)

The incomes of U.S. households have become more unevenly distributed over the past three decades. For example, the Congressional Budget Office estimates that after-tax income almost tripled for the top 1 percent of households between 1980 and 2007, but grew only 22 percent for the bottom 20 percent.

Recent research has focused on the link between income inequality and growth, but less attention has been paid to the link between inequality and savings. So together with a few colleagues we have looked at how income distribution is linked to saving behavior.

Saving rates matter because they are an important factor for the U.S. economic outlook. The decline in the saving rate in the years leading up to the crisis (from 10 percent of after-tax income in 1980 to 1.5 percent in 2005) is the mirror image of the unsustainable boom in consumer spending during the bubble years.

Following the crisis, sharp losses in the values of houses and financial assets, as well as difficulties in obtaining new credit, forced American families to save more and rebuild their wealth. The ensuing rise in the saving rate, which stood at 4 percent in the second quarter of 2012, has been an important reason why the recovery from the 2008–09 recession has been sluggish.

Therefore, our study looked at which types of households drove the aggregate saving rate down before the crisis and those that drove it up afterwards, so as to improve our ability to assess the potential for future U.S. growth.

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Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Finance, Financial Crisis, Fiscal policy, growth, IMF, Inequality, International Monetary Fund, Politics, Public debt, recession | Tagged: , , , , , , , , , , , | 5 Comments »

Capital Controls: When Are Multilateral Considerations of the Essence?

Posted on September 7, 2012 by iMFdirect

By Jonathan D. Ostry

One of the main arguments against capital controls is that, though they may be in an individual country’s interest, they could be multilaterally destructive in the same way that tariffs on goods can be destructive.

A particular concern is that a country might impose controls to avoid necessary macroeconomic and external adjustment, in turn shifting the burden of adjustment onto other countries.

A proliferation of capital controls across countries, moreover, may not only undercut warranted adjustments of exchange rates and imbalances across the globe, it may lead in the logical extreme to a situation of financial autarky or isolation in the same way that trade wars can shrink the volume of world trade, seriously damaging global welfare.

So should multilateral considerations trump national interests?

Possible rationales for controls

To begin, it is worth reviewing some of the reasons why countries may wish to impose controls.

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Filed under: Advanced Economies, Africa, Asia, Economic research, Emerging Markets, Employment, Europe, Finance, Global Governance, Globalization, growth, Inequality, International Monetary Fund, Investment, Latin America, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt | Tagged: , , , , , , , , , , , , , , , , , , , , , | 3 Comments »

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