Posted on July 11, 2010 by iMFdirect
By Naoyuki Shinohara
(Version in 中文, 日本語 and 한국어)
Asia’s voice is getting louder and the IMF—and, indeed, the world—is listening.
I am writing from Daejeon, Korea where the Fund and the government of Korea are hosting together a high-level international conference over the next two days.
The conference, entitled Asia 21: Leading the Way Forward, is an opportune time to reflect on exactly that: Asian leadership. Both the topics to be discussed and participants expected for the event speak volumes of the range and depth of expertise and experience in the region.
With broader recognition of the region’s economic, analytic and policy successes, Asia is now a leading voice in the global dialogue on economic and financial policies.
Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, G-20, Global Governance, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: Asia and the IMF, Asia21, Asian integration, G-20, G-20 mutual assessment process, global financial crisis, global financial safety net, IMF governance, international monetary cooperation, New Arrangements to Borrow, policy coordination, regional economic analysis, regional financial safety nets, regional financing mechanisms, regional integration, sustainable recovery | Leave a comment »
Posted on July 9, 2010 by iMFdirect
By Anoop Singh
In just a few days’ time, the Korean government and the IMF will jointly host a high-level international conference in Daejeon, Korea. At the Fund, we are trying continually to enhance our strategic dialogue with Asia, and the conference is an important part of this effort.
Asia’s leadership of the global recovery is undeniable, as I have said in earlier blogs. And the extensive reforms and improved macroeconomic policy frameworks that underpinned the region’s remarkable resilience to the global crisis will see Asia’s successes continue. In just two short decades, we expect it to become the largest economic region in the world.
The Korea conference will be an opportunity to showcase Asia’s economic successes, and also highlight the importance of regional integration and cooperation, which has been growing rapidly in Asia.
Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, G-20, Global Governance, Globalization, growth, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: Asia, Asia and the IMF, Asia-Pacific, Asian integration, cross-border linkages, early warning exercise, financial sector reform, G-20, global economic crisis, global financial safety net, governance, governance reform, IMF governance, low-income countries, multilateral surveillance, policy coordination, rebalance global economy, regional financial safety nets, regional integration, spillovers, strong policy frameworks, surveillance, vulnerability analysis | Leave a comment »
Posted on July 8, 2010 by iMFdirect
By Olivier J. Blanchard
The macroeconomic forecasts in the IMF’s latest World Economic Outlook update reflect two opposing forces. Looking back, say over the first half of the year, numbers about economic activity have come in strong, indeed somewhat stronger than we had forecast. These would give reasons to be more optimistic than we were earlier.
Looking forward, however, strong clouds have appeared on the horizon. They present real dangers and serious policy challenges, and give reasons to be less optimistic than we were earlier.
Assessing the balance of these two forces is a difficult exercise. Our forecast for world growth in 2010 is about 4½ %, a bit higher than our April forecast of around 4¼ %. This revision largely reflects the stronger activity during the first half of the year. Our forecast for 2011 is broadly unchanged, at about 4¼ %.
Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic research, Emerging Markets, Europe, Financial Crisis, Fiscal Stimulus, Low-income countries, recession | Tagged: capital flows, China, euro, Europe, fiscal consolidation, G-20, Greece, IMF World Economic Outlook, Olivier Blanchard, unemployment, world growth, yuan | 4 Comments »
Posted on July 5, 2010 by iMFdirect
By José Viñals
Financial system reform has reached a critical point around the world. Pressure is building from the financial industry to slow reform and concerns about fiscal conditions risk drawing public and political energies away from the need to act on financial sector problems. Fortunately, the Group of Twenty (G-20) reaffirmed its commitment at a summit in Toronto on June 26-27 to a comprehensive reform agenda—and we must seize the moment.
Filed under: Advanced Economies, Economic Crisis, Financial Crisis, Financial regulation, Globalization, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: financial reform, financial sector regulation, Financial Stability Board, FSB, G-20, nonbanks, Toronto summit, World Bank | 5 Comments »
Posted on June 24, 2010 by iMFdirect
By Olivier Blanchard and Carlo Cottarelli
(Version in عربي 中文 Français Русский Español)
Advanced economies are facing the difficult challenge of implementing fiscal adjustment strategies without undermining a still fragile economic recovery. Fiscal adjustment is key to high private investment and long-term growth. It may also be key, at least in some countries, to avoiding disorderly financial market conditions, which would have a more immediate impact on growth, through effects on confidence and lending. But too much adjustment could also hamper growth, and this is not a trivial risk. How should fiscal strategies be designed to make them consistent with both short-term and long-term growth requirements?
We offer ten commandments to make this possible. Put simply, what advanced countries need is clarity of intent, an appropriate calibration of fiscal targets, and adequate structural reforms. With a little help from monetary policy, and from their (emerging market) friends.
Filed under: Advanced Economies, Asia, Economic research, Emerging Markets, Financial Crisis, Fiscal Stimulus, growth, International Monetary Fund | Tagged: advanced economies, budgets, China, Europe, fiscal policy, G-20, G-7, Japan, taxation, U.S. Congress, United States, Value-Added Tax | 18 Comments »
Posted on February 19, 2010 by iMFdirect
By Marek Belka
Conventional wisdom has been that capital flows are a blessing to emerging economies, bringing needed funds to countries where investments are most productive. But if history is any guide, capital flows have proven to be highly volatile—surging in good times and collapsing in gloomy ones.
The global financial crisis has renewed the debate over the desirability of capital flows to emerging economies. Adding fuel to this debate is the fact that two of the world’s largest emerging economies—China and India—have experienced strong growth and relatively limited fallout from the crisis, all the while maintaining hefty restrictions on the flow of foreign capital.
What can be done to ensure that emerging economies still benefit from productive foreign capital, while reducing the risks associated with highly volatile flows? Can we throw out the bathwater, but keep the baby?
Filed under: Advanced Economies, Economic research, Emerging Markets, Europe, Financial regulation | Tagged: capital controls, China, European Union, exchange rates, fiscal policy, foreign currency lending, G-20, India, Marek Belka, Poland, reserves | 5 Comments »
Posted on January 17, 2010 by iMFdirect
By Marek Belka
Much is riding on getting the timing of the exit right from the stimulative policies used to combat the global economic and financial crisis. This is something that IMF Managing Director Dominique Strauss-Kahn has repeatedly emphasized. Exiting too early may jeopardize the recovery. But exiting too late may sow the seeds for the next crisis, as Wolfgang Munchau and others have argued recently. I also agree with Jean Pisani-Ferry and his colleagues that exiting in an uncoordinated fashion will lead to a renewed build up of financial instability.
To successfully unwind the extraordinary policy measures taken in response to the crisis, we need more than just a good sense of the state of the economic recovery and the degree of financial stability. We also need to know to what extent the global economy currently is influenced by those supportive policy measures. Is it safe yet to change course?
Filed under: Advanced Economies, Economic Crisis, Europe, Financial Crisis, Financial regulation, Fiscal Stimulus, growth | Tagged: bank lending, Banking crisis, eastern Europe, ECB, Europe, European Central Bank, fiscal policy, Fiscal Stimulus, G-20, Jean Pisani-Ferry, Lucas Papademos, recovery, the euro, unemployment, Wolfgang Munchau, World Economic Outlook | Leave a comment »
Posted on December 8, 2009 by iMFdirect
By José Viñals
Over the past two years, disruptive failures, shotgun marriages, and government bailouts of some household names in the financial industry have placed the age-old issue of “too big to fail” at the center of financial sector policy discussions. As well, the Lehman bankruptcy and government support for AIG extended the “too-big-to-fail” notion from banks to include nonbank financial institutions. And in some cases, the financial institutions in distress were not even particularly big; rather, they were too interconnected, and too important for the functioning of the global financial system, to be allowed to fail.
We need to think about how to deal with such “too-important-to-fail” institutions for at least three reasons.
- When institutions are provided with implicit (and explicit) public support, they are apt to take on riskier activities than they otherwise would, with the knowledge that the government will step in if those risks turn out badly. This is called moral hazard.
- Well-run institutions are forced to compete with institutions that are implicitly guaranteed—or even directly financially supported—by the government. This makes for an unlevel playing field in the financial sector.
- Government support absorbs valuable public resources, arguably at the expense of more equitable and productive public spending; it could also endanger the fiscal stability of a country.
Filed under: Economic Crisis, Financial Crisis, Financial regulation, recession | Tagged: AIG, capital requirements, financial sector supervision, Financial Stability Board, G-20, José Viñals, risk | 1 Comment »
Posted on November 2, 2009 by iMFdirect
By Anoop Singh
Now here’s the puzzle: how is it that Asia has rebounded sooner and more strongly than the rest of the globe from the economic slump when the region is so heavily dependent on exports for its growth? This, and the future prospects for the region, are two of the key issues we analyzed in the latest Regional Economic Outlook (REO) for Asia and the Pacific, recently launched in Seoul and Tokyo.
There are three pieces to the puzzle of Asia’s rebound:
- Exports (in value added terms) account on average for about one-third of GDP in emerging Asian countries, while many of the region’s large firms depend on global capital markets to finance their investment projects.
- Recovery in the rest of the world has been unsteady.
- Yet Asia’s own GDP figures for the third quarter have been impressive: Korea grew nearly 3 percent in that quarter alone, Singapore grew even faster, and China’s growth accelerated to 9 percent year-on-year, propelled by booming investment.
Filed under: Asia, Economic Crisis, Fiscal Stimulus, growth | Tagged: China, G-20, Group of Twenty, Korea, recovery, Singapore, trade | 4 Comments »
Posted on October 11, 2009 by iMFdirect
By Masood Ahmed
Middle East oil exporters are squarely facing the worst financial crisis since the Great Depression head on. Despite the sharp drop in oil prices last year, the oil exporters rightly decided to maintain spending by drawing upon reserves amassed during the boom years.
High public spending and exceptional anticrisis financial measures have not only cushioned oil exporters’ own economies but are also contributing to sustaining global demand. They have also helped the interlinked economies of neighboring oil importers.
Facing this boom-bust cycle
Between 2004 and 2008, Middle East oil-exporting countries grew by about 6 percent a year and accumulated $1.3 trillion in foreign assets. With the striking drop in oil prices—from a peak of $147 per barrel in mid-2008 to around $30 per barrel at the beginning of 2009—the countries of the Gulf Cooperation Council (GCC) have been hardest hit. Iraq and Saudi Arabia are expected to see the most pronounced drops in oil GDP growth—8 and 15 percentage points, respectively—this year.
Despite sharp drop in oil prices last year, oil exporters rightly decided to maintain spending by drawing on reserves amassed during boom years (photo: Wathiq Khuzaie/Getty Images)
During the precrisis boom years, banks had lent substantial amounts for real estate and equity purchases and made large profits. With the onset of the crisis, asset values fell sharply and the global deleveraging led to a severe tightening of credit conditions, especially in the GCC. Banks’ balance sheets have come under pressure credit growth has slowed sharply—up to 40 percentage points in Qatar.
Filed under: Economic Crisis | Tagged: Algeria, bank financing, G-20, Iran, Iraq, Libya, oil exporters, Saudi Arabia, Sudan, Yemen | 1 Comment »