Posted on January 29, 2012 by iMFdirect
By Carlo Cottarelli
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
The IMF has argued for some time that the very high public debt ratios in many advanced economies should be brought down to safer levels through a gradual and steady process. Doing either too little or too much both involve risks: not enough fiscal adjustment could lead to a loss of market confidence and a fiscal crisis, potentially killing growth; but too much adjustment will hurt growth directly.
At times over the last couple of years we called on countries to step up the pace of adjustment when we thought they were moving too slowly.
Instead, in the current environment, I worry that some might be going too fast.
Risk to recovery
The latest update of the Fiscal Monitor shows that fiscal adjustment is proceeding pretty quickly in the advanced economies—on average the deficit is projected to fall by a total of 2 percentage points of GDP in 2011-12. The decline is even larger in the euro area—about 3 percentage points of GDP. In a reasonably good growth environment this pace of adjustment would be fine. But in the current weaker macroeconomic environment bringing deficits down this quickly could pose a risk for the economic recovery. Continue reading
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Finance, Fiscal policy, Public debt | Tagged: bond spreads, confidence, economic recovery, fiscal adjustment, Fiscal Monitor, government bonds, IMF, iMFdirect, International Monetary Fund, market behavior, medium-term fiscal consolidation, public debt, public deficits | 11 Comments »
Posted on January 4, 2012 by iMFdirect
By Nicolás Eyzaguirre
(Version in Español, Português)
A few days after the first sunrise of 2012 kissed the shores of Latin America, it is natural to ask: What does the New Year hold for the region’s economies, especially with Europe still under stress?
For sure, a dimmer economic environment, here and abroad. Growth has softened in the larger countries of the region. Looking North, the United States is growing a bit more, but elsewhere activity is softening, including in China—an increasingly important customer for the region’s commodities.
Perhaps more importantly, global financial markets are still strained, because many questions about advanced economies remain unanswered: Continue reading
Filed under: Economic Crisis, Economic outlook, Emerging Markets, Europe, Finance, Financial Crisis, growth, International Monetary Fund, Latin America | Tagged: balance sheets, banking assets, commodity prices, confidence, dollarization, fiscal policy, global financial crisis, global financial markets, IMF, iMFdirect, International Monetary Fund, liquidity conditions, monetary policy, Nicolás Eyzaguirre, weak growth, year ahead | 5 Comments »
Posted on September 27, 2011 by iMFdirect
By Christine Lagarde
(Versions in عربي, 中文, 日本語 and Español)
This past weekend, 187 countries came together in Washington D.C. to focus on the economic crisis facing the world.
They were here for the 2011 Annual Meeting of the IMF and World Bank, at which finance ministers and central bank governors mix with businesspeople, civil society, labor leaders, and parliamentarians to discuss the critical issues we face.
Coming in to this Meeting, I had warned of a dangerous new phase now facing the global economy and had called for bold and collective action. Coming out of the Meeting, I feel strongly that the global community is beginning to respond.
Why? Three reasons: a shared sense of urgency, a shared diagnosis of the problems, and a shared sense that the steps needed in the period ahead are now coming into focus. Continue reading
Filed under: Advanced Economies, Annual Meetings, Economic outlook, Emerging Markets, growth, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: 2011 World Bank-IMF Annual Meetings, Annual Meetings, competitiveness, confidence, Financial regulation, financial sector reform, fiscal policy, household balance sheets, IMF, IMF lending, IMF surveillance, iMFdirect, International Monetary and Financial Committee, International Monetary Fund, medium-term fiscal consolidation, monetary policy, political will, sovereign and financial balance sheets, structural reform, technical assistance, unemployment, weak balance sheets, weak growth | 71 Comments »
Posted on September 21, 2011 by iMFdirect
By José Viñals
(Versions in عربي, Français, 日本語, and Русский)
We are back in the danger zone. Since the IMF’s previous Global Financial Stability Report, financial stability risks have increased substantially—reversing some of the progress that had been made over the previous three years.
Several shocks have recently buffeted the global financial system: unequivocal signs of a broader global economic slowdown; fresh market turbulence in the euro area; and the credit downgrade of the United States.
This has thrown us into a crisis of confidence driven by three main factors: weak growth, weak balance sheets, and weak politics. Continue reading
Filed under: Economic research, Europe, Financial Crisis, Financial regulation, Financial sector supervision, IMF, International Monetary Fund | Tagged: balance sheet repair, bank balance sheets, capital buffers, confidence, credit risk, deleveraging, financial danger zone, financial stability risk, Global Financial Stability Report, global financial system, household balance sheets, IMF, iMFdirect, International Monetary Fund, sovereign and financial balance sheets, sovereign risks, weak balance sheets | 9 Comments »