From Windfall to Windmill: Harnessing Asia’s Dynamism for Latin America


By Andre Meier and Fabiano Rodrigues Bastos

(Versions in Español and Português)

Latin America’s recent economic fortunes highlight the region’s closer economic ties with Asia. China, in particular, has grown into a crucial source of demand for Latin American commodities over the past two decades, providing significant gains to the region. The flip side is that the ongoing structural slowdown of Chinese investment is weighing considerably on the prices of those commodities, and the countries that export them.

But Asia can be much more than just a source of episodic windfall gains (and losses) for Latin America. Like a windmill, Asia could help to power a stronger Latin American economy—by providing an example of successful regional trade integration and through greater direct links across the Pacific that benefit both sides. However, securing these benefits will require clear and realistic objectives, a long-term strategy, and attention to the political and social implications of greater economic integration. 

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The Key to Raising Business Investment: Keep Pushing the Accelerator


David Lipton By David Lipton 

Why have businesses in advanced economies not been investing more in machinery, equipment and plants? Business investment is the largest component of private investment, and its weakness has puzzled many of us.

Some believe that the key to more business investment is less uncertainty about fiscal policy, regulation, and structural reforms. Some believe that it is providing better financing, including for small and medium-sized enterprises (SMEs).

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The Global Impact of Lower Oil Prices


by iMFdirect

Remember when oil was the big story? Yeah, us too.  And we’re still thinking through the issues and what they mean for oil importers and exporters, as well as the global economy.

This week IMF economists released a new paper, and we interviewed the lead author in this podcast, that delves into the benefits of lower oil prices for consumers and for the global economy.

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From Taper Tantrum to Bund Bedlam


By Yingyuan Chen, David Jones and Sanjay Hazarika

(Versions in 中文 and deutsch)

Global financial markets traditionally take their cue from the United States. Unexpected Fed rate hikes have unsettled global markets in the past. The entire global financial system threw a tantrum when then Fed Chairman Ben Bernanke merely suggested in May 2013 that the end to bond-buying and other policies could soon begin. However for the past year, the gears of global markets seem to have been thrown into reverse — it is German government bonds, known as Bunds, rather than U.S. bonds, known as Treasuries, that appear to be driving prices in global bond markets. This role reversal could add a new layer of complexity to investor calculations as they prepare for the beginning of Fed interest rate hikes, which are expected later in 2015. Also, as developments in Greece lead to rises and falls in Bund and Treasury yields, this is a trend worth keeping an eye on.

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Behind the News in Greece and China, Moderate Growth Continues


 By Olivier Blanchard

(Versions in Español and عربي)

Today we published the World Economic Outlook Update.

But first, let me talk about the elephant in the room, namely Greece.

The word elephant may not be right: As dramatic as the events in Greece are, Greece accounts for less than two percent of the Eurozone GDP, and less than one half of one percent of world GDP.
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Inequality’s Toll on Growth


by iMFdirect

Inequality is one of the defining issues of our time, so you may want to tune in to this interview with the authors of a new study that shows that  higher inequality leads to lower growth.  You can also read their blog here.

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Financial Stability Committees: Learning from the Experts


By Jorge Roldos and Alejandro Werner

(Versions in Español and Português)

Macroeconomists and financial sector experts need to talk to each other. Such communication is important to help identify and measure systemic risks as well as to coordinate and/or conduct macroprudential policies—rules that reduce instability across the financial system.

The creation of financial stability committees, including in Latin America, have been a forum for precisely this—working together to share information about evolving risks, develop monitoring and mitigating tools, and to define the decision-making authority, accountability, and communication to the general public. But institutional design and governance of these councils differ across countries.

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