Posted on July 13, 2015 by iMFdirect
By Yingyuan Chen, David Jones and Sanjay Hazarika
(Versions in 中文 and deutsch)
Global financial markets traditionally take their cue from the United States. Unexpected Fed rate hikes have unsettled global markets in the past. The entire global financial system threw a tantrum when then Fed Chairman Ben Bernanke merely suggested in May 2013 that the end to bond-buying and other policies could soon begin. However for the past year, the gears of global markets seem to have been thrown into reverse — it is German government bonds, known as Bunds, rather than U.S. bonds, known as Treasuries, that appear to be driving prices in global bond markets. This role reversal could add a new layer of complexity to investor calculations as they prepare for the beginning of Fed interest rate hikes, which are expected later in 2015. Also, as developments in Greece lead to rises and falls in Bund and Treasury yields, this is a trend worth keeping an eye on.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Reform | Tagged: bund, emerging market, European Central Bank, Germany, GFSR, Global Financial Stability Report, interest rates, Japan, U.S. Treasury, United States, US Federal Reserve | Leave a comment »
Posted on May 12, 2015 by iMFdirect
By Nicolás Magud
(Versions in Español and Português)
Private investment has been decelerating throughout emerging markets since mid-2011, and Latin America has been no exception (see Chart 1). This trend has raised concerns not only because weaker investment has played an important role in the broader regional slowdown, but also because Latin America’s investment rates were lower than in most other regions even before the slowdown began.
This blog looks at the drivers of corporate investment and highlights the extent to which falling commodity export prices have contributed to lower capital spending. Given the poor outlook for commodity prices and what our analysis suggests, this does not bode well for countries in the region going forward unless they can tackle some of the long-standing obstacles to increase investment.
Filed under: Economic outlook, Emerging Markets, Español, IMF, International Monetary Fund, Investment | Tagged: capital inflows, Caribbean, commodities, commodity exports, domestic saving, emerging market, Latin America, private investment, regional economic outlook | Leave a comment »
Posted on May 4, 2015 by iMFdirect
By Ratna Sahay, Martin Čihák, and Papa N’Diaye
The world still lives in the shadow of the global financial crisis that began in the United States in 2008. The U.S. experience shone a spotlight on the dangers of financial systems that have grown exponentially and beyond traditional banks. It triggered a rethinking of the extent and speed of the expansion of a country’s financial sector, and raised questions about which policies promote a safe financial system.
In our new study, we emphasize that the most commonly used indicator—bank credit—is not sufficient to measure the size and scope of a country’s financial development. We create a comprehensive index for over 170 countries to answer several policy questions from the perspective of emerging markets.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Europe, Finance, growth | Tagged: capital markets, Ecuador, emerging market, financial deepening, financial development, financial markets, financial stability, Gambia, growth, Ireland, Japan, liquidity, Morocco, Poland, U.S., United Kingdom, United States | Leave a comment »
Posted on April 29, 2015 by iMFdirect
By Jonathan D. Ostry, Atish R. Ghosh, and Mahvash S. Qureshi
There has been a remarkable increase in financial flows to frontier economies from private sources which, in relation to their economic size, are now on par with those to emerging economies (see chart).
Filed under: Africa, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, growth, IMF, International Monetary Fund, Low-income countries | Tagged: Bangladesh, Brazil, BRICs, capital flows, central bank, China, emerging market, frontier economies, Ghana, India, inflation, interest rates, monetary policy, Russia, U.S. interest rates, Uganda, Zambia | Leave a comment »
Posted on April 15, 2015 by iMFdirect
By José Viñals
(Versions in عربي and Español)
The three main messages from this Global Financial Stability Report are:
- Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address.
- Advanced economies need to enhance the traction of monetary policies to achieve their goals, while managing undesirable financial side effects of low interest rates.
- To withstand the global crosscurrents of lower oil prices, rising U.S. policy rates, and a stronger dollar, emerging markets must increase the resilience of their financial systems by addressing domestic vulnerabilities.
Let me now discuss these findings in detail.
Filed under: Advanced Economies, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Financial Crisis, Government, growth, IMF, International Monetary Fund, Reform | Tagged: Africa, Bank of Japan, emerging market, euro area, European Central Bank, financial stability, Global Financial Stability Report, Greece, interest rates, liquidity, Middle East, monetary policy, oil prices, Russia, Ukraine, United States | Leave a comment »
Posted on April 8, 2015 by iMFdirect
By Xavier Debrun
(Versions in عربي, 中文, Français, Русский, 日本語and Español)
Anyone can easily picture an economy where instability, stagnation and runaway government deficits converge into a perfect storm. Yet the simple mirror image of stability, growth, and balanced budgets currently seems odd to many. And with monetary policy looking breathless, some even wonder whether sacrificing fiscal sanity for short-term growth might not be worth a try.
In any economic debate, looking at the data is always a good starting point. And the latest issue of the Fiscal Monitor does exactly that. Our study looks at the experience with fiscal stabilization during the past three decades in a broad sample of 85 advanced, emerging market, and developing economies. The message is loud and clear: governments can use fiscal policy to smooth fluctuations in economic activity, and this can lead to higher medium-term growth. This essentially means governments need to save in good times so that they can use the budget to stabilize output in bad times. In advanced economies, making fiscal policies more stabilizing could cut output volatility by about 15 percent, with a growth dividend of about 0.3 percentage point annually.
Filed under: Annual Meetings, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Investment, Public debt, Reform | Tagged: debt, emerging market, Fiscal Monitor, fiscal policy, fiscal stabilization, government deficits, investment, recession | Leave a comment »
Posted on February 12, 2015 by iMFdirect
By Nigel Chalk and Jarkko Turunen
The remarkable collapse in the price of oil—a key global price that has virtually halved in the space of just a few months—has received a lot of attention lately.
Meanwhile, another significant shift has taken place in recent months that is just as surprising and has wide-reaching global implications—the dramatic drop in long-term U.S. Treasury bond yields. The last time we saw 10-year Treasury bond yields this low was in early May 2013. As many will remember, this didn’t last long and when it corrected, it set off a burst of volatility across emerging markets.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Investment | Tagged: bond yields, emerging market, inflation, interest rates, market volatility, oil prices, U.S., U.S. Federal Reserve, United States | Leave a comment »