Posted on December 15, 2014 by iMFdirect
By Gregorio Impavido and Uffe Mikkelsen
(Version in Türk)
Turkey is going through a time of economic transition, with slowing growth that risks the country being caught in a “middle-income trap,” unable to join the ranks of high income economies.
The country grew at 6 percent per year on average in the period 2010-13, with policies supportive of domestic consumption. This has generated a large current account deficit, mostly financed by short-term capital flows. The reliance on consumption at the expense of investment, slow export growth, and sizable investment needs have hurt potential growth, with the economy already growing more modestly. Moreover, Turkey’s low domestic savings and competitiveness challenges have limited investment as well as exports, which have also suffered from the slow growth in Europe.
With current policies, Turkey’s economy is expected to grow only 3.5 percent annually over the next five years. Going forward, the economy must be rebalanced to make it more competitive and to restore output and employment growth.
Filed under: Economic outlook, Economic research, Employment, Europe, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Investment, Public debt, Reform | Tagged: Article IV, banking sector, economic rebalancing, Europe, fiscal policy, inflation, Macroeconomic policies, middle income countries, savings, Turkey | Leave a comment »
Posted on December 10, 2014 by iMFdirect
By Min Zhu
(Versions in 中文)
For the past decade, house prices have steadily increased in the vast majority of the 30 countries that make up the IMF’s House Price Index for Emerging Markets released today at a conference organized by the IMF and the Indian Institute of Management in Bangalore, India (Figure 1).
The index shows a lull in the aftermath of the global financial crisis, followed by an increase for nine consecutive quarters since 2012. This run-up—four times as fast as that in advanced economies—would be even more pronounced if the larger countries in the group such as China and India receive greater weight in the index.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: China, credit, emerging market, Global House Price Index, house prices, housing market, India, macroprudential policies, Microprudential regulations, Min Zhu, monetary policy, public-private partnerships | Leave a comment »
Posted on November 11, 2014 by iMFdirect
By Bertrand Gruss and Fabiano Rodrigues Bastos
(version in Español and Português)
China is still a distant and exotic country in the mind of many people in Latin America. Yet, with the Asian giant rapidly expanding its ties with the region (the share of exports going to China is now ten times larger than in 2000), their economic fates seem to be increasingly connected. And in fact, a sharper slowdown in China now represents one of the key risks Latin Americans should be worried about—and prepare for. So, what is at stake? How much do shocks to China matter for economies in Latin America?
In an earlier study presented in our April 2014 Regional Economic Outlook, we analyzed growth spillovers in a large model of the global economy, focusing on the link through commodity prices. Here, we complement that analysis by using a simple yet novel approach that exploits the reaction of financial markets to the release of economic data. We find that growth surprises in China have a significant effect on market views about Latin American economies.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Español, Globalization, growth, IMF, International Monetary Fund, Investment, Latin America, Politics | Tagged: Brazil, Chile, China, Colombia, commodiity prices, exchange rate, Finance & Development magazine, financial market, fiscal policy, Latin America, Mexico, Peru, Poland, Regional Economic Outlook: Western Hemisphere, spillovers, Turkey | Leave a comment »
Posted on November 7, 2014 by iMFdirect
By Evan Papageorgiou
When the U.S. Federal Reserve first mentioned in 2013 the prospect of a cutback in its bond buying program, markets had a “taper tantrum.” Many emerging markets saw large increases in volatility, even though outflows from their domestic markets were small and short-lived. Now the Fed has ended its bond buying and is looking ahead to rate hikes, and portfolio flows continue to arrive at the shores of emerging market economies. So everything’s fine, right? Not quite.
In our latest Global Financial Stability Report, we show that the large concentration of advanced economy capital invested in emerging markets acts as a conduit of shocks from the former to the latter.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Fiscal policy, International Monetary Fund, Investment | Tagged: bonds, Brazil, Chile, Colombia, emerging market, euro area, Germany, Global Financial Stability Report, government bond, Hong Kong, Hungary, Indonesia, interest rates, investment, Ireland, Israel, Japan, Malaysia, Mexico, Netherlands, Philippines, Poland, Russia, South Africa, Thailand, Turkey, U.S. Federal Reserve, United Kingdom, United States | Leave a comment »
Posted on October 22, 2014 by iMFdirect
By Rabah Arezki
(version in Español)
Natural gas is creating a new reality for economies around the world. Three major developments of the past few years have thrust natural gas into the spotlight: the shale gas revolution in the United States, the reduction in nuclear power supply following the Fukushima disaster in Japan, and geopolitical tensions between Russia and Ukraine.
Over the last decade, the discovery of massive quantities of unconventional gas resources around the world has transformed global energy markets, and reshaped the geography of global energy trade (see map). Consumption of natural gas now accounts for nearly 25 percent of global primary energy consumption. Meanwhile, the share of oil has declined from 50 percent in 1970 to about 30 percent today.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Europe, Globalization, growth, IMF, International Monetary Fund, Investment, Politics | Tagged: energy prices, Fukushima disaster, gas supply, Japan, natural gas, Russia, shale gas, Ukraine, United States, World Economic Outlook | Leave a comment »
Posted on October 16, 2014 by iMFdirect
By Luis Brandão-Marques, Gaston Gelos, and Erik Oppers
The global financial crisis reminded us that banks often take risks that are excessive from society’s point of view and can damage the economy. In part, this is the result of the incentives embedded in compensation practices and of inadequate monitoring by stakeholders. Our analysis found the right policies could reduce banks risky behavior.
In our latest Global Financial Stability Report we take stock of recent developments in executive pay, corporate governance, and bank risk taking, and conduct a novel empirical analysis.
Filed under: Advanced Economies, Annual Meetings, Economic outlook, Economic research, Finance, Financial regulation, Fiscal policy, IMF, International Monetary Fund, Investment, Reform | Tagged: bank capital, banking sector, banks, financial system, Global Financial Stability Report, investment, policymakers, risk management, shareholders, United States | Leave a comment »
Posted on October 14, 2014 by iMFdirect
By iMFdirect editors
What a week it’s been. Practical and existential questions on how to do good and be good for the sake of the global economy and finance dominated the seminars at the IMF’s Annual Meetings in Washington.
Our editors fanned out to cover what the panelists, moderators, and audiences said in a variety of seminars, and two big themes caught our eye.
Filed under: Advanced Economies, Annual Meetings, Asia, Civil Society, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, Global Governance, growth, IMF, Inequality, International Monetary Fund, Investment | Tagged: Archbishop of Canterbury, Christine Lagarde, ethics, Europe, G-20, inequality, infrastructure, jobs, Larry Summers, Paul Krugman, seminars, shadow banking, Stanley Fisher, technology, unemployment, women | Leave a comment »