How to Manage the Commodity Roller Coaster

Vitor Gasparby Vitor Gaspar 

(Versions: عربي中文FrançaisРусский, and Español)

The world economy is experiencing important transitions and associated uncertainties.

  • Commodity prices have fallen sharply, with adverse consequences for exporting countries.
  • China’s rebalancing and the prospect of U.S. interest rate increases are having important and costly spillover effects on other economies.
  • And these and other factors are posing important fiscal challenges, especially for emerging markets.

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Metals and Oil: A Tale of Two Commodities

By Rabah Arezki and Akito Matsumoto

(Version in Español)

“It was the best of times, it was the worst of times.” With these words Charles Dickens opens his novel “A Tale of Two Cities”. Winners and losers in a “tale of two commodities” may one day look back with similar reflections, as prices of metals and oil have seen some seismic shifts in recent weeks, months and years.

This blog seeks to explain how demand — but also supply and financial market conditions — are affecting metals prices. We will show some contrast with oil, where supply is the major factor. Stay tuned for a deeper analysis of the trends in a special commodities feature, which will be included in next month’s World Economic Outlook.

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The Road to Lima: Paved with Blogs

By iMFdirect

This year’s IMF Annual Meetings are going on the road…to Lima, Peru.  All the big debates will focus on economics, finance, inequality, financial inclusion, emerging markets, commodities and many more.

Since you’ve been reading gossip magazines at the beach busy this summer, we thought you might like a handy refresher on some of our blogs in recent months about Latin America.

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The African Century

By Antoinette M. Sayeh and Abebe Aemro Selassie

If, as has been observed, demography is destiny, this will be the African century.

Most countries in sub-Saharan Africa are on the cusp of a demographic transition—the years when the share of young and old in the population declines and those in working age range (15-64 years) increases.

Elsewhere, this transition has generally been accompanied by higher savings, incomes, and economic growth. Our latest Regional Economic Outlook for sub-Saharan Africa looks at how the transition might play out and the implications for economic policies.
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From Taper Tantrum to Bund Bedlam

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.

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Commodity Blues: Corporate Investment in Latin America

Nicolas MagudBy 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.

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How Much Finance Is Too Much: Stability, Growth & Emerging Markets

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.

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