Fiscal Adjustment: Too Much of a Good Thing?

Posted on January 29, 2012 by iMFdirect

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.

Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Finance, Fiscal policy, Public debt | Tagged: , , , , , , , , , , , , | 11 Comments »

Strong Leadership, Collective Action Key to Economic Recovery

Posted on September 23, 2011 by iMFdirect

The 2011 IMF-World Bank Annual Meetings are taking place in Washington DC as the global economy enters a dangerous new phase — financial markets jitters and risks to the recovery are giving everyone plenty to talk about. Here are our ‘must reads’ for the meetings.

Filed under: Annual Meetings, Economic outlook, IMF, International Monetary Fund | Tagged: , , , , , , , , , | 4 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

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 »

A Balanced Debate About Reforming Macroeconomics

Posted on March 22, 2011 by iMFdirect

The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis and they provided limited guidance on how the economy should respond.

There was also remarkable consensus about many elements of policy in responding to the crisis, and there were even large areas of policy consensus for the longer run.

In short, the conference made an important contribution in invigorating a balanced debate about reforming macroeconomics.

Filed under: Economic Crisis, Economic research, Financial Crisis, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , | 15 Comments »

All Eyes on Paris and the G-20

Posted on February 18, 2011 by iMFdirect

As G-20 Finance Ministers and Central Bank Governors gather in Paris this weekend, their meeting—the first ministerial level meeting of France’s G-20 presidency—comes at a critical juncture, critical for the global economy, with tensions and risks emerging that require strong policy responses, and critical for ensuring actions on international policy cooperation and reform. So, with all eyes turning to Paris, here is some recommended reading for G-20 watchers.

Filed under: Economic outlook, Employment, G-20, Global Governance, Globalization, International Monetary Fund, Multilateral Cooperation | Tagged: , , , , , , , , , , , , , , | 3 Comments »

Two-speed Global Recovery Continues

Posted on January 25, 2011 by iMFdirect

The world economic recovery continues. Although global growth is set to slow over the coming year, underlying private demand is improving and we expect the slowdown to be modest. Global growth should remain at 4.4 percent in 2011, down from 5 percent in 2010. But it remains a two-speed recovery: slow in advanced countries, and much faster in emerging and developing economies. As a result, tensions and risks are emerging, which require strong policy responses. In this post, Olivier Blanchard discusses the IMF’s update of the world economic outlook, including the short-term tensions and risks, and what needs to be done, to reduce risks and strengthen the global recovery.

Filed under: Advanced Economies, Economic outlook, Emerging Markets, International Monetary Fund, Low-income countries, 中文 | Tagged: , , , , , , , , , , , | 7 Comments »

How to Bake a (Cr)edible Medium-term Fiscal Pie

Posted on November 4, 2010 by iMFdirect

How can governments have their cake and eat it too? How can fiscal policy provide sufficient support to economic activity, and reassure markets that fiscal solvency is not at risk? The poor state of fiscal accounts of most advanced countries calls for austere fiscal policies, before the confidence crisis that is now hitting a few small advanced economies spreads to the larger ones. But not right now: a frontloaded adjustment—that is a tightening that is not gradual but falls disproportionately early in the adjustment phase—could destabilize the recovery.

But can countries limit frontloading and still achieve credibility? Yes, but baking the right fiscal pie is likely to require a number of ingredients. Of course, the exact recipe depends on country circumstances. If you want to know more about this we suggest you savor our newly released Fiscal Monitor. The proof will be in the eating.

Filed under: Advanced Economies, Economic Crisis, Fiscal policy, IMF, International Monetary Fund, Public debt | Tagged: , , , , , , , , , , | 9 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 »

Financial System Fragilities – Achilles’ Heel of Economic Recovery

Posted on October 5, 2010 by iMFdirect

It would be unfair for any assessment of global economic and financial stability not to acknowledge the tremendous progress has been made in repairing and strengthening the financial system since the onset of the global crisis. Still, the key message from the IMF’s October 2010 Global Financial Stability Report is clear. Progress toward global financial stability has suffered a setback over the past six months—the financial system remains the Achilles’ heel of the economic recovery. In this blog post, José Viñals discusses two broad issues. What is at the heart of this lingering lack of confidence? And, looking ahead, what are the policy priorities?

Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: , , , , , , , , , , , , | 2 Comments »

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