Posted on April 11, 2014 by iMFdirect
By Reza Moghadam
Economic growth across Europe is slowly picking up, which is good news. But the recovery is still modest and measures to boost economic growth and create jobs are important.
Western Europe: picking up the pace
The recovery projected last October for the euro area has solidified. This is reflected in our revised forecasts—e.g., the 2014 forecast for the euro area is up from 1 percent last October to 1.2 percent now, with important upgrades in countries like Spain. These revisions reflect the stronger data flow on the back of past policy actions, the revival of investor confidence, and the waning drag from fiscal consolidation. The positive impact on program countries is palpable—improving economies, lower spreads, and evidence of market access. We’ve also seen a welcome pick-up in growth in the UK (almost 3 percent is expected for 2014).
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: banking union, ECB, euro area, inflation, loans, lowflation, macroeconomic policy, recovery, Regional Economic Outlook: Europe, Russia, Spain, Turkey, Ukraine, United Kingdom | 2 Comments »
Posted on April 9, 2014 by iMFdirect
By José Viñals
(Version in Español, Français, Русский, 中文 and 日本語)
Global financial stability is improving—we have begun to turn the corner.
But it is too early to declare victory as there is a need to move beyond liquidity dependence—the central theme of our report—to overcome the remaining challenges to global stability.
We have made substantial strides over the past few years, and this is now paying dividends. As Olivier Blanchard discussed at yesterday’s press conference of the World Economic Outlook, the U.S. economy is gaining strength, setting the stage for the normalization of monetary policy.
In Europe, better policies have led to substantial improvements in market confidence in both sovereigns and banks.
In Japan, Abenomics has made a good start as deflationary pressures are abating and confidence for the future is rising. And emerging market economies, having gone through several recent bouts of turmoil, are adjusting policies in the right direction.
Filed under: Advanced Economies, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Financial Crisis, growth, International Monetary Fund | Tagged: capital inflows, China, debt, deflation, euro area, Europe, exchange rate, financial stability, GFSR, Global Financial Stability Report, inflation, interest rates, Japan, shadow banking, Ukraine, United States | 1 Comment »
Posted on March 4, 2014 by iMFdirect
By Reza Moghadam, Ranjit Teja, and Pelin Berkmen
Recent talk about deflation in the euro area has evoked two kinds of reactions. On one side are those who worry about the associated prospect of prolonged recession. On the other are those who see the risk as overblown. This blog and the video below sift through both sides of the debate to argue the following:
- Although inflation—headline and core—has fallen and stayed well below the ECB’s 2% price stability mandate, so far there is no sign of classic deflation, i.e., of widespread, self-feeding, price declines.
- But even ultra low inflation—let us call it “lowflation”—can be problematic for the euro area as a whole and for financially stressed countries, where it implies higher real debt stocks and real interest rates, less relative price adjustment, and greater unemployment.
- Along with Japan’s experience, which saw deflation worm itself into the system, this argues for a more pre-emptive approach by the ECB.
Filed under: Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: competitiveness, deflation, euro area, Europe, inflation, Japan, Spain, unemployment | 5 Comments »
Posted on February 27, 2014 by iMFdirect
By Reza Moghadam
Is the recovery everyone has been waiting for finally here? Encouraging signs from Europe—rising share prices, lower sovereign bond yields, and increased risk appetite—reflect an upturn in high-frequency indicators, the first signs of positive domestic demand in the euro area, and the prospect of less drag from fiscal consolidation.
At the same time, there are formidable headwinds to overcome. Debt owed by households and businesses remains high, making a rapid pick-up in consumption and investment unlikely. Contracting bank lending, as well as relatively tougher credit conditions in the countries most in need of support, are also holding back recovery. And reducing unacceptably high levels of unemployment depends on strong growth.
Filed under: Economic research, Employment, Europe, Financial Crisis, International Monetary Fund | Tagged: book launch, euro area, recovery, unemployment, video | Leave a comment »
Posted on February 19, 2014 by iMFdirect
By Subir Lall
(Version in Português)
Today the IMF released a report on Portugal’s progress under the country’s Economic Adjustment Program. What is the latest assessment?
A strong start
There is no doubt that Portugal has made remarkable progress over the past three years. When the sovereign lost access to international bond markets in 2011, the outlook was grim. The economy was facing large domestic and external imbalances and dismal growth prospects. Unprecedented official financing from Portugal’s European partners and the IMF provided a window of opportunity to address the weaknesses at the root of the crisis and regain market confidence. While constrained by formal and informal strictures, the authorities rose to the occasion.
Filed under: Economic Crisis, Emerging Markets, Employment, Europe, Financial Crisis, growth, International Monetary Fund | Tagged: bonds, fiscal adjustment, labor market, Portugal, reforms, unemployment | Leave a comment »
Posted on January 28, 2014 by iMFdirect
By Christine Lagarde
(Version in Français and Español)
As we begin the new year, Europe confronts both good and bad news. First the good news. Growth is finally picking up in the euro area as it is slowly emerging from the deep recession. The bad news? Still nearly 20 million people are unemployed. Until the effects on employment have been reversed, we cannot say that the crisis is over.
Two trends are particularly troubling, now and for the future. First, the high level of long-term unemployment gives me great cause for concern: almost half of those without a job have been unemployed for more than a year. Second, I still worry about the large number of young people without jobs: nearly one quarter of Europeans under the age of 25 who are looking for a job cannot find one. In Italy and Portugal, more than one third of under-25s are unemployed, and in Spain and Greece more than one half are.
Filed under: Advanced Economies, Economic research, Employment, Europe, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: book launch, Christine Lagarde, Czech Republic, euro area, Europe, Germany, labor market, Slovakia, Spain, unemployment | Leave a comment »
Posted on January 24, 2014 by iMFdirect
The IMF’s Christine Lagarde is in Brussels on January 28 to talk about jobs and growth in Europe.
The good news is growth is finally picking up in the euro area as it is slowly emerging from the deep recession. But nearly 20 million people are unemployed.
The most effective way of boosting jobs is to get growth going again.
The IMF has a new book that analyzes today’s challenges head-on and proposes a roadmap for the continent’s recovery.
Christine Lagarde will discuss the book along with Wolfgang Schäuble, Finance Minister of Germany, and Luis de Guindos, Minister of Economy and Competitiveness of Spain. The event will be chaired by Fabian Zuleeg, Chief Executive of the European Policy Centre.
Watch the live webstream on this page from 8.00-9.30 a.m. (Central European Time).
Filed under: Advanced Economies, Economic research, Employment, Europe, Financial Crisis, growth, International Monetary Fund | Tagged: book launch, Christine Lagarde, economic recovery, Europe, Germany, Spain, unemployment | Leave a comment »
Posted on January 23, 2014 by iMFdirect
By José Viñals
Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl.
At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global financial regulatory reform agenda, launched five years ago. The explicit goal of the Australian G-20 presidency is to finally complete these essential reforms. As Prime Minister Tony Abbott said today in Davos, “Financial regulation is always a work-in-progress, but these reforms now need to be finalized in ways that promote confidence without eliminating risk.”
I strongly support this extra push to create a safer financial system that can better support the needs of the real economy, and better protect taxpayers. For far too long, critics have been able to portray the G-20 reform agenda as a regulatory supertanker stuck in the shallow waters of technical complexity, financial industry pushback, and diverging national views. This image is increasingly off the mark.
Filed under: Economic Crisis, Economic outlook, Employment, Europe, Financial Crisis, Fiscal policy, G-20, growth, IMF, International Monetary Fund, Politics | Tagged: Basel III, Ben Bernanke, Davos, economic reform, European Union, Financial Stability Board, G-20, global financial system, Japan, José Viñals, U.S. Fed, United Kingdom, United States, United States Federal Reserve | 3 Comments »
Posted on January 13, 2014 by iMFdirect
by Isabel Rial, Suchanan Tambunlertchai, and Alexander Tieman
(Version in Türk)
Turkey has received well-deserved praise for its growth performance over the last decade. Yet along with this success story has come a steady widening of the current account deficit, projected to come out at 7.4 percent of GDP in 2013. The counterpart of this deficit is a reliance on external financing, much of which is of a short-term nature, highlighting the Turkish economy’s main problem at the moment.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Public debt | Tagged: Article IV, competitiveness, monetary policy, public financial management, Turkey | 2 Comments »
Posted on November 1, 2013 by iMFdirect
By Olivier Blanchard
Several years out from the global financial crisis, the world economy is still confronting its painful legacies. Many countries are suffering from lackluster recoveries coupled with high and persistent unemployment. Policymakers are tackling the costs stemming from the crisis, managing the transition from crisis-era policies, and trying to adapt to the associated cross-border spillovers.
Against this background, the IMF’s 14th Jacques Polak Annual Research Conference, entitled “Crises: Yesterday and Today,” to take place on November 7-8, will take stock of our understanding of past and present crises.
This year’s conference will be a special one as we shall honor Stanley Fischer’s many contributions to economic research and policy. Stan has extensively studied economic and financial crises, first as a faculty member at the Massachusetts Institute of Technology, and then as a policymaker with many hats over the years―the Chief Economist of the World Bank, the First Deputy Managing Director of the IMF, and the Governor of the Bank of Israel.
Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Europe, Finance, Fiscal policy, Global Governance, IMF, International Monetary Fund, Latin America, Multilateral Cooperation | Tagged: central banks, East Asia, financial stability, fiscal policy, IMF Annual Research Conference, IMF Jacques Polak Research Conference, interest rates, Japan, Latin America, macroeconomics, Olivier Blanchard, Paul Krugman, stanley Fischer, United States | 2 Comments »