Capital Flows to the Final Frontier

Posted on May 24, 2011 by iMFdirect

Sub-Saharan Africa’s “frontier markets”—the likes of Ghana, Kenya, Mauritius, and Zambia—were seemingly the destination of choice for an increasing amount of capital flows before the global financial crisis. Improving economic prospects in these countries was a big factor, but frankly, so too was a global economy awash with liquidity.

Then the crisis hit. And capital—particularly in the form of portfolio flows—was quick to flee these countries as was the case for so many other economies.

Fast forward to 2011. Capital flows are coming back to the frontier, but in dribs and drabs. In our recent Regional Economic Outlook we examined the experience of sub-Saharan Africa’s frontier markets, with a view to understanding how they can best make use of these inflow to meet their own development and growth objectives.

Filed under: Africa, Economic outlook, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , | 1 Comment »

Keeping Asia from Overheating

Posted on May 19, 2011 by iMFdirect

Asia’s vigorous pace of growth has seen the region play a leading role in the global recovery. But there are signs that higher commodity prices are spilling over to a more generalized increase in inflation. Expectations of future inflation have picked up. And accommodative macroeconomic policy stances, coupled with limited slack in some economies, have added to inflation pressures.

Against this backdrop, the need for policy tightening in Asia has become more pressing than it was six months ago, especially in economies that face generalized inflation pressures. How should policymakers address these challenges?

Filed under: Asia, Economic outlook, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , | 5 Comments »

The Next Phase of Asia’s Economic Growth

Posted on April 28, 2011 by iMFdirect

As the economic recovery has matured across much of Asia, the region has continued to be a driving force in the strengthening global recovery. Yet, recent tragic events—around the globe, and the earthquake and tsunami in Japan—are an all too poignant reminder of the fragility of our economic circumstances and, indeed, life.

Much of this weighs on my mind as I am here in Hong Kong to launch our April 2011 Regional Economic Outlook: Asia and Pacific. While the outlook is by no means gloomy, policies will need to tackle new downside risks that have emerged and how to manage the next phase of Asia’s growth.

Filed under: Asia, Economic outlook, Emerging Markets, International Monetary Fund | Tagged: , , , , , , , , , , , , , , | Comments Off

Avoiding Another Year of Living Dangerously: Time to Secure Financial Stability

Posted on April 13, 2011 by iMFdirect

In various guises, the “Year of Living Dangerously” has been used to describe the global financial crisis, the policy response to the crisis, and its aftermath. But, we’ve slipped well beyond a year and the financial system is still flirting with danger.

Financial stability risks may have eased, reflecting improvements in the economic outlook and continuing accommodative policies. But those supportive policies—while necessary to restart the economy—have also masked serious, underlying financial vulnerabilities that need to be addressed as quickly as possible. Many advanced economies are “living dangerously” because the legacy of high debt burdens is weighing on economic activity and balance sheets, keeping risks to financial stability elevated. At the same time, many emerging market countries risk overheating and the build-up of financial imbalances—in the context of rapid credit growth, increasing asset prices, and strong and volatile capital inflows.

Here is our suggested roadmap for policymakers to address these vulnerabilities and risks, and achieve durable financial stability.

Filed under: Advanced Economies, Emerging Markets, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , | 5 Comments »

Global Recovery Strengthens, Tensions Heighten

Posted on April 11, 2011 by iMFdirect

The world economic recovery is gaining strength, but it remains unbalanced. Earlier fears of a double dip recession—which we did not share—have not materialized. And, although rising commodity prices conjure the specter of 1970s-style stagflation, they appear unlikely to derail the recovery.

However, the unbalanced recovery confronts policy makers with difficult choices. In most advanced economies, output is still far below potential. Low growth implies that unemployment will remain high for many years to come. And the problems in Europe’s periphery are particularly acute. On the other end of the spectrum, emerging market countries must avoid overheating in the face of closing output gaps and higher capital flows.

The need for careful design of macroeconomic policies at the national level, and coordination at the global level, may be as important today as they were at the peak of the crisis two years ago.

Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, International Monetary Fund, Low-income countries | Tagged: , , , , , , , , , , , , , , , , , , , | 8 Comments »

Getting the Diagnosis Right: Avoiding a Housing Price Bubble in Hong Kong SAR

Posted on December 21, 2010 by iMFdirect

Like many countries in the region, Hong Kong has been the destination for an extraordinary amount of global capital over the past two years and has seen a sharp increase in property prices.

Filed under: Asia, Economic outlook, 中文 | Tagged: , , , , , , , , , , , | 1 Comment »

What Drives Inflation in Asia and Why it Matters

Posted on November 1, 2010 by iMFdirect

Of all the things policymakers have had to worry about in the past couple of years, inflation wasn’t one of them. Some even heralded the end of inflation. Today, inflation still isn’t a ‘problem’ in Asia. For the most part, it remains relatively modest, but it is on the rise in some countries in the region. And understanding what is driving that inflation matters. Policymakers need to consider the sources of inflation in choosing policy actions and policy tools. The issue of what drives inflation—or so-called inflation dynamics—is examined in our October 2010 Regional Economic Outlook for the Asia and Pacific region. In this post, Anoop Singh discusses the findings.

Filed under: Asia, Economic Crisis, Economic outlook | Tagged: , , , , , , , , , , , , , , | 2 Comments »

Sustaining Asia’s Recovery

Posted on October 21, 2010 by iMFdirect

I am in Asia this week to launch our October 2010 Regional Economic Outlook: Asia and Pacific (REO) in Jakarta and Singapore. As I have inevitably found during visits to Asia over so many years, the mood here is confident about future economic prospects. Yet it is also watchful for risks that may be lurking over the horizon. This mood matches closely the main messages of our current assessment of the outlook for the region.

In the first of several blogs posts from the region, here I reflect on the self-sustaining recovery under way across Asia, the risk external risk factors and, the pressing issue for Asian policymakers, policy options for managing the tide of large capital inflows.

Filed under: Asia, Economic outlook, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , | Leave a Comment »

Emerging Europe—Lessons from the Boom-Bust Cycle

Posted on October 20, 2010 by iMFdirect

Almost unnoticed amidst the difficulties in western Europe, the other half of the continent has begun to recover from the deepest slump in its post-transition period. In our fall 2010 Regional Economic Outlook, the emerging economies in central and eastern Europe are projected to grow by 3¾ percent this year and next—a relief after the 6 percent decline in 2009.

But the boom years before the crisis had left much of the region addicted to foreign-financed credit growth, making it very vulnerable to a disruption in capital inflows. So, as the region emerges from the crisis, the big question is how do we avoid a repeat?

Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, International Monetary Fund | Tagged: , , , , , , , , , , , , , , | 12 Comments »

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