Posted on July 14, 2014 by iMFdirect
By Reza Moghadam and Ranjit Teja
As inflation has sunk in the euro area, talk of quantitative easing (QE)—and misgivings about it—have soared. Some think QE is not needed; others that it would not work; and yet others that it only creates asset bubbles and may even be “illegal.” In its latest report on the euro area, the IMF assesses recent policy action positively but adds that “… if inflation remains too low, the ECB should consider a substantial balance sheet expansion, including through asset purchases.” Given all the reservations, would the juice be worth the squeeze?
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Europe, Finance, growth, International Monetary Fund | Tagged: balance sheets, Bank of Japan, banks, bond markets, euro area, European Central Bank, Germany, inflation, quantitative easing, stock market | Leave a comment »
Posted on June 26, 2014 by iMFdirect
By Evridiki Tsounta and Kalpana Kochhar
(Versions in Español)
Emerging market economies have been experiencing strong growth, with annual growth for the period 2000-12 averaging 4¾ percent per year—a full percentage point higher than in the previous two decades. In the last two to three years, however, growth in most emerging markets has been cooling off, in some cases quite rapidly.
Is the recent slowdown just a hiccup or a sign of a more chronic condition? To answer this question, we first looked at the factors behind this strong growth performance.
Our new study finds that increases in employment and the accumulation of capital, such as buildings and machinery, continue to be the main drivers of growth in emerging markets. Together they explain 3 percentage points of annual GDP growth in 2000–12, while improvements in the efficiency of the inputs of production—which economists call “total factor productivity”—explain 1 ¾ percentage points (Figure 1).
Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, International Monetary Fund, Latin America, Middle East | Tagged: balance sheets, commodiity prices, emerging market, employment, investment, structural reforms, trade | Leave a comment »
Posted on March 5, 2014 by iMFdirect
By Serkan Arslanalp and Takahiro Tsuda
(Version in Español, Français, Português, Русский, 中文 and 日本語)
There are a trillion reasons to care about who owns emerging market debt. That’s how much money global investors have poured into in these government bonds in recent years —$1 trillion. Who owns it, for how long and why it changes over time can shed light on the risks; a sudden reversal of money flowing out of a country can hurt. Shifts in the investor base also can have implications for a government’s borrowing costs.
What investors do next is a big question for emerging markets, and our new analysis takes some of the guesswork out of who owns your debt. The more you know your investors, the better you understand the potential risks and how to deal with them.
Filed under: Advanced Economies, Debt Relief, Economic research, Emerging Markets, Financial Crisis, growth, International Monetary Fund, Investment, Public debt | Tagged: balance sheets, Brazil, China, Colombia, debt, emerging market economies, Global Financial Stability Report, government debt, Indonesia, interest rates, Latvia, Malaysia, Mexico, Poland, Romania, South Africa, Uruguay | Leave a comment »
Posted on October 2, 2013 by iMFdirect
By Erik Oppers
What’s up with weak credit? Five years into the economic crisis credit is still barely growing, and even declining in many advanced economies. Weak credit growth is a major factor holding back the economic recovery and governments have tried every policy they can come up with to jumpstart credit. Still, banks don’t seem to want to lend. Or is it the corporate sector and households that can’t afford to borrow? Many feel these policies are not working. What are policymakers to do?
Our analysis in the most recent Global Financial Stability Report tries to shed light on all this darkness to help countries figure out how to make these policies work. It turns out there is no cookie-cutter solution: the problem differs from country to country and changes over time. For example, in a number of euro area countries, a lackluster demand for loans limited credit growth early in the crisis, but then banks became reluctant to supply more loans as the crisis in Europe intensified in 2012.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Finance, Fiscal policy, growth, International Monetary Fund, Politics | Tagged: balance sheets, banks, credit, euro area, financial stability, GFSR, Global Financial Stability Report, lending | Leave a comment »
Posted on March 5, 2013 by iMFdirect
By Reza Moghadam
Even before the latest euro area GDP numbers and Italian elections cast a shadow over the continent, economists were struggling to reconcile the steady improvement in market sentiment with the more downbeat data on the economy, production, orders, and jobs.
This video looks at this puzzle from a somewhat different perspective than the usual—and still correct—narrative of weak banks and over-indebted public sectors caught in a vicious cycle. More specifically, we examine the role of household and corporate balance sheets in the countries under financial market stress and the implications for policy priorities.
Filed under: International Monetary Fund | Tagged: balance sheets, banking union, corporate debt, demand, Europe, European Central Bank, European Union, fiscal policy, growth, household debt, IMF, iMFdirect, International Monetary Fund, monetary policy | Leave a comment »
Posted on November 1, 2012 by iMFdirect
by Carlo Cottarelli
Version in Français
Without good fiscal information, governments can’t understand the fiscal risks they face or make good budget decisions. And unless that information is made public, citizens and their legislatures can’t hold governments accountable for those decisions.
Fiscal transparency—the public availability of timely, reliable, and relevant data on the past, present, and future state of the public finances—is thus crucial to the foundation of effective fiscal management.
A new paper from the IMF on fiscal transparency, accountability, and risk considers the progress we have made in opening up the “black box” of fiscal policymaking over the past decade, the lessons of the recent crisis for current fiscal reporting standards and practices, and the steps we need to take to revitalize the global fiscal transparency effort.
Filed under: Advanced Economies, Employment, Europe, Finance, Fiscal policy, growth, IMF, Inequality, International Monetary Fund, Politics, Public debt | Tagged: balance sheets, budget, Central African Economic and Monetary Community, compliance, economic crisis, European Union, financial crisis, fiscal data, fiscal policy, fiscal reporting, fiscal transparency, government, Government Finance Statistics Manual, Greece, IMF, iMFdirect blog, International Monetary Fund, International Public Sector Accounting Standards, standards, transparency, West African Economic and Monetary Union | 4 Comments »
Posted on July 17, 2012 by iMFdirect
By José Viñals
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
Our latest update of the Global Financial Stability Report has three key messages.
First, financial stability risks have increased, because of escalating funding and market pressures and a weak growth outlook.
Second, the measures agreed at the recent European leaders’ summit provide significant steps to address the immediate crisis, but more is needed. Timely implementation and further progress on banking and fiscal unions must be a priority.
And third, time is running out. Now is the moment for strong political leadership, because tough decisions will need to be made to restore confidence and ensure lasting financial stability in both advanced and emerging economies. It is time for action.
Now, why have financial stability risks increased?
Filed under: Advanced Economies, Europe, Financial Crisis, IMF, International Monetary Fund | Tagged: advanced economies, balance sheets, banks, capital flows, debt, emerging economies, euro zone, European Central Bank, European Stability Mechanism, financial markets, financial stability, fiscal consolidation, fiscal policy, GFSR, Global Financial Stability Report, growth, IMF, International Monetary Fund, Italy, lending, monetary policy, safe assets, Spain, United States | 3 Comments »