Posted on November 7, 2014 by iMFdirect
By Evan Papageorgiou
When the U.S. Federal Reserve first mentioned in 2013 the prospect of a cutback in its bond buying program, markets had a “taper tantrum.” Many emerging markets saw large increases in volatility, even though outflows from their domestic markets were small and short-lived. Now the Fed has ended its bond buying and is looking ahead to rate hikes, and portfolio flows continue to arrive at the shores of emerging market economies. So everything’s fine, right? Not quite.
In our latest Global Financial Stability Report, we show that the large concentration of advanced economy capital invested in emerging markets acts as a conduit of shocks from the former to the latter.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Fiscal policy, International Monetary Fund, Investment | Tagged: bonds, Brazil, Chile, Colombia, emerging market, euro area, Germany, Global Financial Stability Report, government bond, Hong Kong, Hungary, Indonesia, interest rates, investment, Ireland, Israel, Japan, Malaysia, Mexico, Netherlands, Philippines, Poland, Russia, South Africa, Thailand, Turkey, U.S. Federal Reserve, United Kingdom, United States | Leave a comment »
Posted on June 11, 2014 by iMFdirect
By Min Zhu
(Versions in عربي, Español, 日本語, 中文, Français, and Русский)
House prices are inching up. But is this a cause for much cheer? Or are we watching the same movie again? Recall how after a decade-long boom, house prices started to fall in 2006, first in the United States and then elsewhere, contributing to the 2008-9 global financial crisis. In fact, our research indicates that boom-bust patterns in house prices preceded more than two-thirds of the recent 50 systemic banking crises.
While a recovery in the housing market (Figure 1) is surely a welcome development, we need to guard against another unsustainable boom. Housing is an essential sector of every country’s economy and has systemic implications, which is why we at the IMF are focusing on it not only in individual countries but on a cross-country basis.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, Australia, Belgium, Canada, Estonia, Global House Price Index, Hong Kong, house prices, housing market, income, Ireland, Korea, macroprudential policies, Min Zhu, Norway, Peru, Spain, Sweden, Thailand | Leave a comment »
Posted on May 17, 2012 by iMFdirect
By Anoop Singh
(Version in 中文)
Here’s the good news: thanks to relatively strong fundamentals and good policies, Asian economies have coped well with the global market turbulence of recent years. Now the bad: a major financial shock—say, of type ignited by the bankruptcy of U.S. investment bank Lehman Brothers in 2008—is likely to have a substantial impact on Asia. The reason: Asia’s increasing financial interconnectedness.
Over the past two decades—in line with the region’s growing role in the global economy—Asia’s equity markets have become increasingly sensitive to global financial developments. More specifically, we have discovered that equity returns in Asia generally now move in tandem with those in systemic economies. (By systemic economies, we are talking here about those countries—such as the United States and the United Kingdom which are home to major, global, financial centers such as Wall Street and the City of London.)
How do we measure that degree of financial interconnectedness? Or put another way, how do we measure the relationship—if any—between those Asian equity returns and the performance of systemic economies?
Filed under: Advanced Economies, Asia, Economic research, Europe, Financial Crisis, Globalization, International Monetary Fund, Investment, Politics | Tagged: Anoop Singh, bankruptcy, betas, China, East Asia, Hong Kong, iMFdirect blog, interconnectedness, Lehman Brothers, macroeconomic policy, research, Singapore, stocks, systemic | 2 Comments »
Posted on December 21, 2010 by iMFdirect
By Nigel Chalk
(Version in 中文)
In the past couple of years, Hong Kong has witnessed a sharp increase in property prices. This has led some to claim that the time has come to change Hong Kong’s “Linked Exchange Rate System”.
This represents a misdiagnosis of the current situation and the wrong prescription for Hong Kong.
It is true that the average cost of an apartment in Hong Kong has risen by almost 20 percent in the past year alone. This stands in stark contrast to what our latest World Economic Outlook described as the dismal outlook for real estate markets in the industrial countries.
And, like many countries in the region, Hong Kong has been the destination for an extraordinary amount of global capital over the past two years.
But how much of these trends have been a product of the exchange rate regime? Continue reading
Filed under: Asia, Economic outlook, 中文 | Tagged: capital inflows, credit risks, exchange rate regime, fixed exchange, Hong Kong, inflation, lending standards, property price bubble, property taxes, safe haven, speculation, transactions costs | 1 Comment »
Posted on May 18, 2010 by iMFdirect
By Anoop Singh
As I have highlighted in previous posts, Asia has been leading the global recovery and it is expected to continue doing so in the near term.
Not only has Asia’s rapid growth helped output return to pre-crisis levels relatively quickly, it has attracted large capital inflows into the region. Foreign capital has poured in, attracted by Asia’s strong fundamentals and bright growth prospects. Portfolio and cross border banking flows have rebounded sharply as financial conditions normalized.
Looking ahead, our growth projections suggest that Asia is expected to outperform advanced countries. As a result, the region is likely to continue to attract significant capital inflows, assuming that fallout from the euro zone sovereign debt crisis is contained and that the recent spike in global risk aversion abates.
Filed under: Asia, Economic Crisis, Economic research, Financial Crisis, IMF | Tagged: capital inflows, China, debt crisis, domestic demand, foreign investors, Hong Kong, infrastructure development, investment climate, labor market, price bubbles, property prices, risk aversion | 1 Comment »
Posted on March 22, 2010 by iMFdirect
(Version in 日本語)
Like geese flying in formation, the successive waves of Asian countries achieving economic takeoff and emerging or developed market status, has been likened to those migratory birds in flight. If this model is accurate, more Asian geese are set to join the flock of economically successful nations.
The “Flying Geese Paradigm” or ganko keitai was first conceived of by Japanese economist, Kaname Akamatsu in the 1930s as a way of explaining East Asian industrial development. According to Akamatsu, the lead goose in the formation, was Japan. The second tier consisted of newly industrialized economies—South Korea, Taiwan Province of China, Singapore, and Hong Kong SAR. Following hot on their tails were the ASEAN countries, such as Indonesia, Malaysia, the Philippines and Thailand. More recent additions to the flock are China and India
Filed under: Asia, concessional lending, Economic Crisis, Globalization, growth, IMF, International Monetary Fund, LICs, Low-income countries, Multilateral Cooperation | Tagged: ASEAN, Hong Kong, Indonesia, Japan, Labor, Malaysia, Singapore, South Korea, Taiwan, Thailand, the Philippines | 1 Comment »