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 5, 2014 by iMFdirect
By Deniz Igan
(version in Español)
There was a time in the not-so-distant past when science fiction could make us look forward to a better world. We had uplifting visions of the future in shows like Star Trek and Back to the Future. Today, the menu of options only offers a dystopian world ruined by poverty and violence (think The Hunger Games, Divergent, or Elysium).
It sure is easy to get pessimistic these days. Six years after the financial crisis, the recovery in the United States has been fragile and weaker than anything we have seen in the post-WWII period. Growth figures, in large part, have been serial disappointments, disrupted by government shutdowns, debt ceiling showdowns, or meteorologically-triggered slowdowns.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Financial Crisis, Fiscal, Fiscal policy, Government, growth, Politics, Reform | Tagged: Article IV, deficit, education, global financial crisis, immigration, infrastructure, labor force, recovery, tax reform, 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 8, 2014 by iMFdirect
By José Viñals
(Versions in Español, 中文)
I have three key messages for you today:
1. Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges.
2. Banks are safer but may not be strong enough to vigorously support the recovery. And risks are shifting to the shadow banking system in the form of rising market and liquidity risks. If left unaddressed, these risks could compromise global financial stability.
3. In order to address this new global imbalance, we must promote economic risk-taking by improving the transmission of monetary policy to the real economy. And we must address financial excesses through better micro- and macroprudential policies.
Filed under: Advanced Economies, Asia, Emerging Markets, Europe, Finance, Financial Crisis, IMF, International Monetary Fund, Investment, Politics, Reform | Tagged: bank credit, banking sector, economic recovery, Europe, GFSR, Global Financial Stability Report, Japan, José Viñals, liquidity, macroprudential policies, monetary policy, shadow banking, United States | Leave a comment »
Posted on October 3, 2014 by iMFdirect
By Gaston Gelos and Nico Valckx
Shadow banking has grown by leaps and bounds around the world in the last decade. It is now worth over $70 trillion. We take a closer look at what has driven this growth to help countries figure out what policies to use to minimize the risks involved.
In our analysis, we’ve found that shadow banks are both a boon and a bane for countries. Many people are worried about institutions that provide credit intermediation, borrow and lend money like banks, but are not regulated like them and lack a formal safety net. The largest shadow banking markets are in the United States and Europe, but in emerging markets, they have also expanded very rapidly, albeit from a low base.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, growth, International Monetary Fund, Investment, Politics | Tagged: banks, euro area, Financial Stability Board, GFSR, Global Financial Stability Report, interest rates, investment, shadow banking, United States | Leave a comment »
Posted on September 22, 2014 by iMFdirect
Lurking conjures up images of spies, flashers and other dodgy types. The IMF’s chief economist Olivier Blanchard takes readers into the dark corners of the financial crisis in his latest article ‘Where Danger Lurks’ in our recent issue of Finance & Development Magazine, and looks at small shocks, sudden stops and liquidity.
Filed under: Advanced Economies, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, Globalization, IMF, International Monetary Fund, Politics | Tagged: central banks, Finance & Development magazine, financial crisis, global economy, macroeconomic policy, Olivier Blanchard, United States | Leave a comment »
Posted on September 17, 2014 by iMFdirect
By Ian Parry
The time has come to end hand wringing on climate strategy, particularly controlling carbon dioxide (CO2) emissions. We need an approach that builds on national self-interest and spurs a race to the top in low-carbon energy solutions. Our findings here at the IMF—that carbon pricing is practical, raises revenue that permits tax reductions in other areas, and is often in countries’ own interests—should strike a chord at the United Nations Climate Summit in New York next week. Let me explain how.
Ever since the 1992 Earth Summit, policymakers have struggled to agree on an international regime for controlling emissions, but with limited success. Presently, only around 12 percent of global emissions are covered by pricing programs, such as taxes on the carbon content of fossil fuels or permit trading programs that put a price on emissions. Reducing CO2 emissions is widely seen as a classic “free-rider” problem. Why should an individual country suffer the cost of cutting its emissions when the benefits largely accrue to other countries and, given the long life of emissions and the gradual adjustment of the climate system, future generations?
Filed under: Advanced Economies, Economic research, Global Governance, Globalization, IMF, International Monetary Fund, Politics, Reform | Tagged: Australia, carbon pricing, carbon tax, China, Climate change, CO2 emissions, energy taxes, environment, European Union, fossil fuels, Poland, United States | Leave a comment »