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 July 28, 2014 by iMFdirect
By Ruy Lama
House prices are rising rapidly in the UK at an annual rate of 10.5 percent. House price inflation is particularly high in London (20 percent per year), and it is gradually accelerating in the rest of the country. The recent increases in house prices have been getting a lot of attention, and understandably have raised questions about living standards and whether another “boom-bust” cycle has begun.
The current UK housing cycle raises two important questions. What is driving the rise in house prices? And how should macroeconomic policies respond?
Macroeconomic policies should tackle two crucial issues in the housing market: (i) mitigating systemic financial risks during upswings in house prices and leverage; and (ii) encouraging an adequate supply of housing in order to safeguard affordability. In this blog, we discuss how the UK authorities are addressing these two issues and what additional policies may be necessary to manage risks from the housing market.
Filed under: Advanced Economies, Economic outlook, Economic research, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, house prices, housing market, inflation, Loan-to-income ratio, loan-to-value ratio, Macroeconomic policies, mortgages, United Kingdom | Leave a comment »
Posted on June 11, 2014 by iMFdirect
By Min Zhu
(Versions in عربي, Español, 日本語, 中文, Français, and Русский)
House prices are inching up. But is this a cause for much cheer? Or are we watching the same movie again? Recall how after a decade-long boom, house prices started to fall in 2006, first in the United States and then elsewhere, contributing to the 2008-9 global financial crisis. In fact, our research indicates that boom-bust patterns in house prices preceded more than two-thirds of the recent 50 systemic banking crises.
While a recovery in the housing market (Figure 1) is surely a welcome development, we need to guard against another unsustainable boom. Housing is an essential sector of every country’s economy and has systemic implications, which is why we at the IMF are focusing on it not only in individual countries but on a cross-country basis.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, Australia, Belgium, Canada, Estonia, Global House Price Index, Hong Kong, house prices, housing market, income, Ireland, Korea, macroprudential policies, Min Zhu, Norway, Peru, Spain, Sweden, Thailand | Leave a comment »
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 27, 2013 by iMFdirect
By Martin Kaufman and Mercedes García-Escribano
(Version in Español and Português)
Since the early 2000s, Brazil’s economy has grown at a robust clip, with growth in 2010 reaching 7.5 percent—its strongest in a quarter of a century. A key pillar of its hard-won economic success has been sound economic policies and the adoption of far-reaching social programs, which resulted in a substantial decline in poverty.
In the last couple of years Brazil’s growth slowed down. Although other emerging market economies experienced a similar slowdown, the growth outturns in Brazil were particularly disappointing. And the measures taken to stimulate the economy did not produce a sustained recovery. This is because unleashing sustained growth in Brazil requires measures geared not at stimulating domestic demand but at changing the composition of demand towards investment and at increasing productivity.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Português, Public debt | Tagged: Article IV, Brazil, BRICs, fiscal consolidation, infrastructure, macroeconomic policy, recovery, unemployment | Leave a comment »
Posted on August 5, 2013 by iMFdirect
By Jerry Schiff
(Versions in 日本語l and 中文)
Discussions in Japan of the “three arrows” of Abenomics—the three major components of Prime Minister Shinzo Abe’s economic plan to reflate the economy—are rampant among its citizens as well as economists, journalists and policy-makers worldwide. Even J-Pop groups are recording paeans to the economic policy named after the newly-elected premier. It is clear that “Abenomics” has been a remarkable branding success. But will it equally be an economic triumph?
We think it can be, and initial signs are positive. But such success is not assured. It will require difficult decisions as the country moves into largely uncharted territory. And much will depend on changing expectations within the country.
Filed under: Advanced Economies, Asia, Economic Crisis, Finance, growth, IMF, International Monetary Fund, Public debt | Tagged: Abenomics, Article IV, Bank of Japan, deflation, fiscal policy, growth, IMF, iMFdirect, International Monetary Fund, investment, Japan, monetary policy, public debt, quantitative easing, stimulus | 1 Comment »
Posted on July 30, 2013 by iMFdirect
By Deniz Igan
(Version in Español)
Much has changed on the fiscal front since we started worrying about U.S. fiscal sustainability. The federal government budget deficit has fallen sharply in recent years―from almost 12 percent of GDP in 2009 to less than 7 percent in 2012. And recent budget reports show that the deficit is shrinking faster than expected only a few months ago, to a projected 4½ percent of GDP for the current fiscal year, which ends September 30. Plus, health care cost growth has slowed down dramatically since the Great Recession, alleviating the pressure on public health care programs at least temporarily.
Does this mean we can stop worrying? Not quite. Recent developments certainly mean that things are better than we thought just a few years ago and the fiscal adjustment needed to restore sustainability is smaller. But if the choice and timing of policy measures is not right, the deficit reduction may turn out to be too much in the short run—stunting the economic recovery—and not enough in the long run.
So, in our recent annual check-up of the U.S. economy, our advice is to slow the pace of fiscal adjustment this year—which would help sustain growth and job creation—but to speed up putting in place a medium-term road map to restore long-run fiscal sustainability.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: Article IV, deficits, economic recovery, fiscal sustainability, IMF, iMFdirect, International Monetary Fund, public debt, United States | 3 Comments »