It’s the Years, Not The Mileage: IMF Analysis of Pension Reforms in Advanced Economies

Posted on February 1, 2012 by iMFdirect

Indiana Jones, the fictional character of the namesake movies, once said “It’s not the years, it’s the mileage.” The quote comes to mind as many advanced economies wrestle with the best way for pension reform to ensure both retirees and governments don’t go broke.

Our view, explained in a new study, is that in fact the years do matter.

Our analysis shows that gradually raising retirement ages could help countries contain pension spending increases and boost economic growth.

Filed under: Advanced Economies, Economic Crisis, Employment, Fiscal policy, IMF, International Monetary Fund, Public debt | Tagged: , , , , , , , , , , , , , , , , | 3 Comments »

Africa: Changing the Narrative

Posted on December 2, 2011 by iMFdirect

Enduring poverty and conflict are so stark in Africa that it is sometimes difficult to see what else is happening.

In April 2011, a study published by the Columbia Journalism Review titled “Hiding the Real Africa” documented how easily Africa makes news headlines in the West when a major famine, pandemic, or violent crisis breaks. But less attention is given to positive trends and underlying successes.

In many cases, despite accelerated economic growth over the past 10 years, the rise of a middle class of consumers, and a more dynamic private sector attracting indigenous entrepreneurs, the narrative about Africa has remained focused on the bad news.

That has, fortunately, started to change. This week’s cover story in The Economist, on “Rising Africa”, is testament to that. So too is the just-released December 2011 issue of Finance and Development (F&D) magazine on “Changing Africa: Rise of a Middle Class”, which explores Africa’s potential.

Filed under: Africa, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Low-income countries | Tagged: , , , , , , , , , , , , , , , , , , , , , , | 4 Comments »

U.S. Housing and Labor Pains—Central America and the Caribbean Feeling the Pinch Too

Posted on November 11, 2011 by iMFdirect

If housing and labor market woes aren’t bad enough in the United States, they’re hurting Central America and the Caribbean too.

It has been five years since the U.S. housing bubble burst and three years since the onset of the global financial crisis. And still, in the world’s largest economy—which in the past quickly and vigorously recovered from downturns—jobs and output are barely growing. In fact, output is just 1.6 percent higher than a year ago, and almost 14 million people remain unemployed.

True, some of this lackluster economic performance reflects global factors, particularly the uncertainty surrounding the lingering European crisis, but also temporary factors related to the Japanese earthquake. However, on the domestic front, fragile household balance sheets and stubbornly high unemployment have been major factors impeding growth. This latter development is having negative spillovers on many Central American and Caribbean countries, where remittances and tourism flows from workers in the United States are important for their economies (see our most recent Regional Economic Outlook for Western Hemisphere).

Filed under: Employment, growth, International Monetary Fund, Latin America | Tagged: , , , , , , , , , , , , | 2 Comments »

Lurking in the Shadows—The Risks from Nonbank Intermediation in China

Posted on November 3, 2011 by iMFdirect

One of my all-time favorite movies is “The Third Man” starring Orson Welles and Joseph Cotten. Perhaps the most striking part of the movie is the shadowy cinematography, set in post-World War II Vienna. Strangely, it springs to mind lately when I have been thinking of China.

Many China-watchers looked on in 2009 as the government’s response to the global financial crisis unfolded, causing bank lending to expand by close to 20 percentage points in less than a year. At the same time, a less visible phenomenon was also getting underway. One that, like Orson Welles’ character in the movie, resided firmly in the shadows. Various types of nonbank financial intermediaries were gearing up to provide more credit.

Talking to people in China, and looking at what numbers are available, one cannot help but have an uneasy feeling that more credit is now finding its way into the economy outside of the banking system than is actually flowing through the banks. This worries me for four broad reasons.

Filed under: Asia, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , | 24 Comments »

India: Linked or De-linked from the Global Economy?

Posted on October 25, 2011 by iMFdirect

With economic growth expected to continue at a reasonably good clip this year and next, it’s all too easy to think there’s not much to worry about. Even as Diwali celebrations begin across India, the outlook for the world economy is fairly uneven and uncertain. More worrisome than the subdued global growth outlook, risks are building up especially in Europe—and these include an extreme scenario with financial disruption.

Although India’s economy has generally been less prone to external forces than many others, we still need to contend with the larger than typical risks in the global economy. These risks harken the need for a new wave of reforms. What does the more somber darker global outlook mean for India? And exactly what policies are needed?

Filed under: Asia, Economic Crisis, Economic outlook, Emerging Markets, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , | 4 Comments »

Shared Frustrations: How to Make Economic Growth in Sub-Saharan Africa More Inclusive

Posted on October 19, 2011 by iMFdirect

Suddenly it’s the thing everyone is talking about. Income inequality. In North Africa and the Middle East, jobless youth sparked the Arab Spring. In the United States, the growing gap between rich and poor is the “meta concern” of the Occupy Wall Street movement. Worldwide, frustrations appear to be on the rise.

And, in sub-Saharan Africa, sustained economic growth may have produced tremendous advances, but a large proportion of the population is still living in poverty. Here, the underlying situation is a little more complex.

In July, I wrote about the importance of inclusive growth and whether economic growth was a necessary or a sufficient condition for poverty reduction. Our latest Regional Economic Outlook for Sub-Saharan Africa takes that thinking a step further, with new analysis that looks at how living standards for the poorest households have actually been changing in some countries in the region.

Filed under: Africa, Economic outlook, Français, growth, Inequality, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments »

Fiscal Glass is Half Full: Some Reasons for Optimism

Posted on September 21, 2011 by iMFdirect

In the midst of jittery financial markets, and global economic doom and gloom, it’s easy to become pessimistic. Public debt and fiscal deficits in many advanced economies remain very high.

Nevertheless, important progress has been made in fiscal adjustment—the fiscal outlook in most countries is stronger than we expected two years ago. So to the pessimists I say, don’t lose sight of what’s been achieved.

But, to the optimists (if there are any) I say, don’t underestimate what still needs to be done. The task that policymakers face is complicated. They need to ensure the public sector is not a source of instability by committing to a plan that will stabilize and then bring down public debt. At the same time, they need to make sure that fiscal tightening itself does not undermine the recovery.

Filed under: Advanced Economies, Economic outlook, Economic research, Fiscal policy, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , | 1 Comment »

Haves and Have Less—Why Inequality Throws Us Off Balance

Posted on September 14, 2011 by iMFdirect

We used to think that overall economic growth would pull everyone up. While the rich might be getting richer, everyone would benefit and would see higher living standards. That was the unspoken bargain of the market system. But now research is showing that, in many countries, inequality is on the rise and the gap between the rich and the poor is widening, particularly over the past quarter-century.

Filed under: IMF, Inequality, International Monetary Fund | Tagged: , , , , , , , , , , , , | 3 Comments »

Interest Rates and Investor Decisions: The Long and Short of It

Posted on September 13, 2011 by iMFdirect

What drives the investment decisions of investors with a longer time horizon? Our research found these investors generally do not look at differences in interest rate among countries when deciding where to invest.

Filed under: Advanced Economies, Emerging Markets, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , | 2 Comments »

More Diversity will Help the IMF at Work

Posted on June 1, 2011 by iMFdirect

Nemat Shafik, who took over as IMF Deputy Managing Director in April, says she has been surprised by the vigor of internal policy debate at the IMF. “From the outside looking in, you have the impression that the IMF is a monolith with a very single-minded view of the world. When you are inside the Fund, what is really striking is how active the internal debate is,” she says.

At a time when the global economy is being buffeted by continued uncertainty in Europe, uprisings in the Middle East, and signs of overheating in some emerging market economies, there’s a lot to discuss. And, it addition to global economic problems, the IMF’s work environment has come under increased scrutiny, in particular how women are treated and its professional code of conduct.

In an interview, Ms. Shafik discusses some of these issues.

Filed under: Africa, Europe, G-20, IMF, International Monetary Fund, LICs, Low-income countries, Middle East | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

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