Posted on December 21, 2011 by iMFdirect
By Olivier Blanchard
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
What a difference a year makes …
We started 2011 in recovery mode, admittedly weak and unbalanced, but nevertheless there was hope. The issues appeared more tractable: how to deal with excessive housing debt in the United States, how to deal with adjustment in countries at the periphery of the Euro area, how to handle volatile capital inflows to emerging economies, and how to improve financial sector regulation.
It was a long agenda, but one that appeared within reach.
Yet, as the year draws to a close, the recovery in many advanced economies is at a standstill, with some investors even exploring the implications of a potential breakup of the euro zone, and the real possibility that conditions may be worse than we saw in 2008.
I draw four main lessons from what has happened.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Financial Crisis, Fiscal policy, Fiscal Stimulus, G-20, growth, International Monetary Fund, Multilateral Cooperation, Public debt, recession | Tagged: consolidation, debt, euro area, financial sector regulation, IMF, iMFdirect, International Monetary Fund, investors, Italy, liquidity, multiple equilibria, Olivier Blanchard, perception, recovery, United States. capital flows, year in review | 57 Comments »
Posted on October 19, 2011 by iMFdirect
By Masood Ahmed
(Version in عربي)
As we launch the IMF’s Arabic blog, Economic Window, we are witnessing an historic shift in the Middle East and North Africa (MENA). It is clear that the popular uprisings that began 10 months ago were born of a desire for greater freedom and for a more widespread and fairer distribution of economic opportunities.
But the scale of protests in the region and the associated deplorable loss of life came as a surprise to everyone, including us at the IMF.
Like others, we had pointed to the ticking time bomb of high unemployment, but we did not anticipate the consequences of the unequal access to opportunities. We had focused our efforts on helping countries in the region build solid macroeconomic foundations, liberalize economic activity, and introduce market-based reforms that would generate higher economic growth. IMF lending, policy advice, and technical assistance have indeed contributed to improving the economic indicators of many countries in the region. However, with hindsight, it is clear that we were not paying enough attention to how the benefits of economic growth were being shared.
Filed under: Economic Crisis, Emerging Markets, Employment, Financial Crisis, Fiscal Stimulus, growth, Inequality, Middle East, Public debt, عربي | Tagged: Arab Spring, IMF Arabic blog, jobs, lessons, Masood Ahmed, subsidies, unemployment | 6 Comments »
Posted on August 1, 2011 by iMFdirect
By Ajai Chopra
The U.K. government should be nimble in its policy response if it looks as though the economy is headed for a prolonged period of weak growth, high unemployment, and subdued inflation. Currently, we don’t expect this scenario to happen. But if such a scenario appears to be in prospect, we recommend responding quickly with some combination of further quantitative easing by the Bank of England and temporary tax cuts.
The most likely scenario for the U.K. economy is that it will gradually recover, although it will face continued headwinds from a soft housing market, household and financial sector deleveraging, and ongoing consolidation of the budget. Against this, the economy should get a push from private investment and an increase in exports driven by the global recovery. Labor productivity may also rebound and improve competitiveness.
Led by these forces, the IMF is expecting a bumpy and uneven recovery in the U.K. and our updated growth forecast for the near term, taking into account the recent GDP release for the second quarter, will be published with the September World Economic Outlook. Over the medium term, we expect growth to accelerate gradually to about 2½ percent. (more…)
Filed under: Advanced Economies, Europe, Fiscal policy, Fiscal Stimulus | Tagged: commodiity prices, competitiveness, exports, fiscal adjustment, housing market, inflation, quantitative easing, tax cuts, unemployment | 8 Comments »
Posted on March 27, 2011 by iMFdirect
By Dominique Strauss-Kahn
(Version in Español)
Earlier this month, I had the opportunity to discuss Latin America’s regional outlook with government leaders, parliamentarians, and university students in Brazil, Panama, and Uruguay.
The key conclusion that I took away from these meetings is that Latin America faces two principal economic challenges: to increase the sustainable rate of economic growth and to reduce the volatility of growth.
In my meeting in Calgary on March 26 with Finance Ministers of the region, I focused on the second challenge so that favorable conditions today do not come at the expense of a bust tomorrow.
It’s a nice coincidence that this meeting of Finance Ministers of the Americas and the Caribbean was held here in Calgary. Canada is a good example of “managing the good times,” but as in many countries across the globe, some challenges remain. (more…)
Filed under: Economic Crisis, Economic outlook, Employment, Español, Fiscal Stimulus, Globalization, growth, Latin America | Tagged: Brazil, Calgary, Canada, credit bubble, Dominique Strauss-Kahn, inequality, macroprudential regulation, overheating | Leave a Comment »
Posted on January 7, 2011 by iMFdirect
By Christoph Rosenberg
Two years ago, the eyes of the financial world were not on Europe’s Western periphery but on its North-Eastern corner. The three Baltic states—Estonia, Latvia and Lithuania—were among the first victims of the global financial crisis.
After a spectacular boom, with several years of Chinese-style growth rates, these small and open economies faced an equally spectacular bust. Credit―and with it property prices, consumption, and investment―collapsed. Exports were hit by the global depression. And the financial sector came under severe stress. Indeed, Latvia was forced to nationalize its largest domestic bank and had to ask for a bailout from the European Union and the IMF.
The conventional wisdom at the time was that these three countries would have to give up their long-standing currency pegs against the euro and devalue. After all, this is what countries facing a trade and financial shock most often choose to do.
Filed under: Economic Crisis, Emerging Markets, Employment, Europe, Fiscal Stimulus | Tagged: bailout, Baltics, banks, crisis, currency, Estonia, EU, euro, euro area, Europe, European Union, eurozone, growth, Ilmars Rimsevics, IMF, Ingrida Simonyte, jobs, Jurgen Ligi, Latvia, Lithuania, loan, markets, meltdown, recovery, unemployment | 11 Comments »
Posted on January 4, 2011 by iMFdirect
By John Lipsky
(Version in Español | 中文 | Français | 日本語 | Русский | عربي )
2011 represents a pivotal year for the global economic recovery and for international policy cooperation—as well as for the role of the Fund in addressing these two principal challenges.
With the crisis of 2008-09 receding, and following the unprecedented efforts expended in 2010 developing the outlines of a new, post-crisis world, 2011 will be the year in which post-crisis plans will be implemented, tested, and assessed. If they are deemed to be successful, it will not be an exaggeration to claim that a new model for global economic and financial governance will be under way. If unsuccessful, however, the sense of failure likely would undermine confidence while adding to the formidable list of challenges to be overcome. (more…)
Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic outlook, Employment, Europe, Financial Crisis, Financial regulation, Fiscal policy, Fiscal Stimulus, G-20, Global Governance, Globalization, growth, International Monetary Fund, Latin America, Low-income countries, Middle East, Public debt, recession, 中文, عربي | Tagged: 2011, capital flows, forecast, FSAP, G-20, John Lipsky, look ahead, Seoul | 3 Comments »
Posted on January 3, 2011 by iMFdirect
While 2011 is still shiny as a new penny we thought you might like a quick review of 2010’s hot topics in the global economy. The iMF Direct Blog has picked our list of must read posts covering the highs and lows of global finance and government budgets and spending.
- The Ten Commandments for advanced economies to keep the economic recovery on track
- The financial world remains the Achilles Heel of the global economic recovery
- We explain the right mix of ingredients for countries to provide sufficient support to economic activity, and reassure markets in How to Bake a Fiscal Pie
- Fixing the financial sector – Just Do It
- Stable prices and financial stability go hand in hand, or do they? A Marriage Made in Heaven or Hell
- What Must Be Done – the top five reforms to the financial system
- When it comes to supervising the financial rules of the global economy, It’s Hip to Be Square
- Watch This Fiscal Space to figure out how much room to maneuver governments have when it comes to controlling debt and deficits
- Financial markets and regulators need to break their Credit Rating Addiction
- The global financial tornado means We’re Not in Kansas Anymore, but what will the future financial system look like?
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Employment, Europe, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, Fiscal Stimulus, G-20, Globalization, growth, International Monetary Fund, Public debt, recession | Tagged: financial markets, Financial regulation, financial sector, fiscal policy, global financial system, must read, top blogs, top posts for 2010 | 3 Comments »
Posted on December 30, 2010 by iMFdirect
Interesting interview with the IMF’s Chief Economist Olivier Blanchard in the Fund’s IMF Survey magazine. He says the two-speed global economic recovery is likely to dominate 2011, with weak growth in advanced economies barely enough to bring down unemployment and emerging markets facing the challenges of success, including how to avoid overheating and handle strong capital inflows.
In an assessment of the global economy at the end of 2010, and the prospects for 2011, Blanchard said that countries should continue to focus on rebalancing their economies in the coming year, including structural measures and exchange rate adjustments.
“Without this economic rebalancing, there will be no healthy recovery,” he says. Read the full interview here.
Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic outlook, Economic research, Europe, Fiscal Stimulus, IMF, Latin America, Middle East | Tagged: 2011 forecast, economic forecasts, Olivier Blanchard | Leave a Comment »
Posted on July 20, 2010 by iMFdirect
By José Viñals
Monetary stability seems almost a given today, even taken for granted. It wasn’t always like that. Not so long ago, high and volatile inflation routinely raised its ugly head and threatened living standards. Some of us even remember those days! It wasn’t pleasant. But since then, an effective antidote has pretty much wiped out rampant price instability. Over the past three decades, better monetary frameworks have caused the level and volatility of inflation to fall sharply. These frameworks enshrined price stability as the main monetary policy objective, and provided independence and constrained discretion in the pursuit of this objective, often set out through formal inflation targets.
As I said, it worked out well. Or did it? In reality, there was a gaping hole in the system. While monetary policy frameworks fortified the castle against inflation at the front, they didn’t pay much attention to back door vulnerabilities. I’m talking about financial stability.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, Fiscal Stimulus, IMF, International Monetary Fund | Tagged: asset price bubbles, central banking, financial reform, Financial regulation, financial stability, global financial crisis, global financial linkages, inflation, inflation targets, international trade, monetary policy, price stability | 3 Comments »
Posted on July 9, 2010 by iMFdirect
By Anoop Singh
Asia’s leadership of the global economic recovery is continuing unabated. And, even though heightened risks mean there may be tough times ahead again, the region is well equipped to handle them.
Asia’s remarkably fast recovery from the global financial crisis continued in the first half of 2010, despite the recent tensions in global financial markets. In fact, GDP growth in the first quarter was generally stronger than we anticipated in our Regional Economic Outlook in April. And high-frequency indicators suggest that Asian economic activity remained brisk in the second quarter. Even more notable, this is true both for economies that escaped a recession in 2009, thanks to their relatively larger domestic demand bases (China, Indonesia, and India), and for the more export-oriented economies such as Japan, the Newly Industrialized Economies (NIEs), and the rest of the ASEAN.
Two growth engines
What explains the strong economic momentum across the region? It is simple. The two “engines of growth” that spurred Asia’s recovery in 2009— exports and private domestic demand—have remained robust in 2010.
Filed under: Asia, Economic Crisis, Emerging Markets, Financial Crisis, Fiscal Stimulus, growth | Tagged: ASEAN, Asia, Australia, capital flows, China, domestic demand, exports, Fiscal Stimulus, global economy, India, Indonesia, International Monetary Fund, Japan, New Zealand, policy stimulus, private domestic demand, regional economic outlook, World Economic Outlook | Leave a Comment »