Posted on December 15, 2013 by iMFdirect
By Olivier Blanchard, Jonathan D. Ostry, and Atish R. Ghosh
International policy coordination is like the Loch Ness monster: much discussed but rarely seen. Going back over the decades, and even further in history to the period between the Great Wars, coordination efforts have been episodic.
Coordination seems to occur spontaneously in turbulent periods, when the world faces the prospect of some calamitous outcome and the key players are seeking to avoid cascading negative spillovers. In quieter times, coordination is rarer—though not unheard of; the Louvre and Plaza accords are examples.
Today, policy coordination has resurfaced as a hot topic: while the worst of the global financial crisis is behind us, no one would claim that a return to “Great Moderation” is in the cards, and policymakers around the globe appear worried about policy transmissions across many dimensions.
Filed under: Employment, Finance, Financial Crisis, Fiscal policy, Globalization, growth, IMF, International Monetary Fund | Tagged: exchange rate, interconnected, monetary policy, policy coordination, spillover | 1 Comment »
Posted on December 6, 2013 by iMFdirect
By Christine Lagarde
(Versions in 한국의 and 中文)
My arrival in Seoul was somewhat delayed when dense fog caused my plane from Phnom Penh to be temporarily diverted from Seoul to Daegu. Still, better late than never! I was delighted to be back in Seoul, capital of one of the world’s most dynamic and innovative economies. Just remember: in a remarkably short period of time, Korea has risen from close to the bottom to close to the top—becoming the thirteenth most prosperous economy with an income per capita that is higher than the European Union average.
With such a track record, Korea plays an increasingly important role on the global stage. It held the annual presidency of the Group of Twenty advanced and emerging economies at the height of the global financial crisis in 2010. It is host to the Green Climate Fund, whose aim is to help developing countries respond to climate change—surely one of the greatest challenges of the 21st century. And it is playing ever increasing leadership roles in other international institutions, including the IMF.
Filed under: Asia, Emerging Markets, Employment, IMF, International Monetary Fund, Low-income countries | Tagged: capacity building, Christine Lagarde, Climate change, Korea, OECD, women | Leave a comment »
Posted on December 4, 2013 by iMFdirect
By Christine Lagarde
Cambodia is the first leg of my Asia trip. This is a country that has already grown by leaps and bounds, and now stands at the frontier of becoming an emerging market economy in the heart of the most dynamic hub of the global economy.
I could feel this energy and excitement everywhere. Cambodians, especially young Cambodians, have big dreams and substantial societal aspirations. They want dignity and respect, so that they can fulfill their potential, both as individuals and as a nation. They want to embrace the wider world and all that it has to offer. They want good governance and strong institutions, which are essential to underpin economic development, empower people and ensure that prosperity is broadly shared.
I heard these themes consistently—from inspiring women leaders, from dynamic young economists, and from the students at the Royal School of Administration, where I gave a speech on how Cambodia can keep its forward momentum.
Filed under: Asia, Emerging Markets, Employment, IMF, International Monetary Fund, Low-income countries, Politics | Tagged: cambodia, capacity building, Christine Lagarde, education, macroeconomic stability, women | Leave a comment »
Posted on November 12, 2013 by iMFdirect
By Christine Lagarde
(Versions in عربي)
Two days ago, I had the pleasure of visiting Kuwait, a member country of the Gulf Cooperation Council (GCC). It was a whirlwind visit, with many places to see and people to meet, in a thriving corner of the global economy. Kuwait has extended to me its emblematic tradition of hospitality— a testament to its ancient and noble culture. I was awed by the magnificent artifacts of the al-Sabah collection, which I saw in the beautifully restored Dar al-Athar al-Islamiyyah cultural center.
Back to economics. The member countries of the council—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—have some of world’s highest living standards. The region has also become a major destination for foreign workers and a source of remittances for their families back home. And it is a financial center and a hub for international trade and business services.
Filed under: Economic outlook, Emerging Markets, Employment, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Middle East, عربي | Tagged: Bahrain, Christine Lagarde, economic growth, education, GCC, Kuwait, MENA, Middle East, Oman, Qatar, Saudi Arabia, United Arab Emirates | 4 Comments »
Posted on October 31, 2013 by iMFdirect
By Antoinette M. Sayeh
When meeting with people outside Africa, I’m often asked whether Africa’s growth takeoff since the mid-1990s has been simply a “commodity story”—a ride fueled by windfall gains from high commodity prices. But finance ministers and other policymakers in the region, and I was one of them, know that the story is richer than that.
In this spirit, in our latest Regional Economic Outlook: Sub-Saharan Africa a team of economists from the IMF’s African Department show that Africa’s continued success is more than a commodity story. In fact, quite a few economies in the region have become high performers without basing their success on natural resources—thanks in no small part to sound policymaking.
Filed under: Africa, Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, growth, IMF, International Monetary Fund, Low-income countries | Tagged: agriculture, commodity prices, emerging market, Ethiopia, fiscal space, Mozambique, natural resources, regional economic outlook, Regional Economic Outlook: Sub-Saharan Africa, Rwanda, Tanzania, ugan, Uganda | 1 Comment »
Posted on October 21, 2013 by iMFdirect
By Anoop Singh
Almost one year ago, the term Abenomics first surfaced in Japan. The idea of a coordinated policy effort to revive Japan’s economy and end deflation seemed a bold idea, but also a long-shot. Back in February, several young investment bankers told me that ending deflation within the next few years stood at most, a 20 percent chance. They noted that they had never experienced rising prices in their lifetimes. By June they had upped the chances of success to 40 percent. With Abenomics approaching the one-year mark, is the new strategy working?
Lot of policy action
The year started with a flurry of new policy initiatives: in January, the Bank of Japan (BoJ) adopted a 2 percent inflation target, followed by new fiscal stimulus, and a decision to join negotiations over the Trans-Pacific Partnership (TPP), a proposal for a free trade agreement spanning countries from Australia, Brunei, to Chile, Canada, and the U.S. Shortly after, Haruhiko Kuroda took the helm at the Bank of Japan and introduced Quantitative and Qualitative Monetary Easing—an aggressive plan to reach 2 percent inflation in about 2 years mainly through large-scale bond purchases. Just, a few days ago, the government agreed to go ahead with the consumption tax increase in 2014 and announced further fiscal stimulus to soften the growth impact. Discussions on growth reforms are next on the agenda, with a special Diet session starting this month. Plenty of action, but has this whirlwind of activity paid off?
Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, growth, IMF, International Monetary Fund | Tagged: Abenomics, Bank of Japan, interest rates, Japan, Regional Economic Outlook: Asia | 1 Comment »
Posted on October 11, 2013 by iMFdirect
By Nemat Shafik
Europe faces a stark choice: risk stagnation or pursue integration. It can continue to muddle through, and hope that growth in the world economy will eventually pick up enough steam to pull its economy out of the doldrums. Or it can make a decisive push to revitalize its economy and complete the reforms needed to achieve a fully integrated economic and monetary union
Five years into the crisis, recovery in the euro area remains fragile. Important actions at both the national and euro-wide levels have tackled the immediate threats to the single currency. These include the European Central Bank’s announcement in 2012 that it stands ready to undertake outright monetary transactions in secondary sovereign bond markets, the completion of the European Stability Mechanism, which created a financial firewall around the euro area, and efforts to restore the health of public finances and implement structural reforms.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: banking union, euro area, Europe, iMFdirect, Nemat Shafik, public finances, structural reforms | Leave a comment »
Posted on October 9, 2013 by iMFdirect
By Martine Guerguil
(Versions in 中文, Français, 日本語, Русский, and Español)
Five years into the crisis, the fiscal landscape remains challenging. On the positive side, deficit-cutting efforts and the first signs of recovery reduced the fiscal stress felt in many advanced economies; but debt ratios often remain at historical peaks. At the same time, slowing growth and rising borrowing costs, combined with unabated demands for improved public services, puts pressure on government budgets in emerging market economies.
So we created an index of ‘fiscal difficulty’ that shows the biggest challenge ahead for advanced economies is to maintain budget surpluses until debt ratios return to lower levels. We expect this will take several years.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Employment, Finance, growth, International Monetary Fund, Low-income countries, Public debt | Tagged: Asia, budget, debt, deficit, emerging market, Fiscal Monitor, Middle East and North Africa, tax | 1 Comment »
Posted on October 9, 2013 by iMFdirect
By José Viñals
(Versions in 中文, Français, 日本語, Русский, and Español)
The global financial system faces several major transitions along the road to greater financial stability. These transitions will be challenging because they are accompanied by substantial risks.
So what are these transitions?
- The first one is the transition in the United States from a prolonged period of monetary accommodation towards a normalization of monetary conditions. Will this transition be smooth or bumpy?
- Second, emerging markets face a transition to more volatile external conditions and higher risk premiums. What needs to be done to keep emerging markets resilient?
- Third, the euro area is moving to a stronger union and stronger financial systems. This report focuses on the close links between the corporate and banking sectors. What are the implications of the corporate debt overhang for bank health?
- Fourth, Japan is moving towards the new policy regime of Abenomics. The stakes are high. Will Japan’s policies be comprehensive enough to ensure stability?
- And finally, there is the global transition to a safer financial system, where much remains to be done.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, International Monetary Fund, Low-income countries, Public debt | Tagged: banking, emerging market, euro area, financial regulatory reform, GFSR, Global Financial Stability Report, Japan, José Viñals, monetary policy, United States | Leave a comment »
Posted on October 8, 2013 by iMFdirect
By Olivier Blanchard
(Versions in عربي, 中文, Français, 日本語, Русский, and Español)
The issue probably foremost on everyone’s mind, is the fiscal situation in the United States, and its potential implications.
While the focus is on the shutdown and the debt ceiling, we should not forget the sequester, which is leading to a fiscal consolidation this year which is both too large and too arbitrary. The shutdown is yet another bad outcome, although one which, if it does not last very long, has limited economic consequences.
Failure to lift the debt ceiling would, however, be a game changer. Prolonged failure would lead to an extreme fiscal consolidation, and surely derail the U.S. recovery. But the effects of any failure to repay the debt would be felt right away, leading to potentially major disruptions in financial markets, both in the U.S. and abroad. We see this as a tail risk, with low probability, but, were it to happen, it would have major consequences.
Filed under: Advanced Economies, Annual Meetings, Economic outlook, Emerging Markets, Employment, Europe, Finance, Financial Crisis, growth, International Monetary Fund, Low-income countries, recession | Tagged: debt ceiling, economic forecasts, economic growth, Europe, forecast, government shutdown, Japan, Olivier Blanchard, sequestration, United States, WEO, World Economic Outlook | Leave a comment »