Posted on May 10, 2012 by iMFdirect
By Luis Cubeddu, Camilo E. Tovar, and Evridiki Tsounta
(Version in Español)
Housing construction projects are sprouting up across much of Latin America and mortgage credit is also growing very fast. Does this sound familiar? It should!
Easy external financing conditions and high commodity prices have led to important improvements in living standards and credit deepening in many countries of the region over the past decade. The credit expansion has been particularly impressive in the mortgage sector, where legal reforms and government subsidies have also played a role.
Although mortgage credit in Latin American countries is relatively low by international standards —at just 7 percent of GDP versus over 20 percent in emerging Asia and over 65 percent in the United States—it has grown at an impressive annual average real rate of 14 percent since 2003, with Brazil leading the pack. Home prices have also risen sharply over this period, particularly in countries where mortgage credit has expanded the fastest (for more details see Chapter 5 in our latest Western Hemisphere Regional Economic Outlook).
So, are housing vulnerabilities emerging?
Filed under: Economic Crisis, Economic outlook, Economic research, Employment, Finance, Financial Crisis, Financial regulation, growth, Inequality, International Monetary Fund, Latin America, Public debt | Tagged: Brazil, Camilo E. Tovar, Chile, Colombia, credit, Evridiki Tsounta, housing, housing market, Luis Cubeddu, Mexico, Minha Casa, Minha Vida, Peru, Uruguay | 5 Comments »
Posted on November 11, 2011 by iMFdirect
By Evridiki Tsounta
(Version in Español)
If housing and labor market woes aren’t bad enough in the United States, they’re hurting Central America and the Caribbean too.
It has been five years since the U.S. housing bubble burst and three years since the onset of the global financial crisis. And still, in the world’s largest economy—which in the past quickly and vigorously recovered from downturns—jobs and output are barely growing. In fact, output is just 1.6 percent higher than a year ago, and almost 14 million people remain unemployed.
True, some of this lackluster economic performance reflects global factors, particularly the uncertainty surrounding the lingering European crisis, but also temporary factors related to the Japanese earthquake. However, on the domestic front, fragile household balance sheets and stubbornly high unemployment have been major factors impeding growth. This latter development is having negative spillovers on many Central American and Caribbean countries, where remittances and tourism flows from workers in the United States are important for their economies (see our most recent Regional Economic Outlook for Western Hemisphere).
Filed under: Employment, growth, International Monetary Fund, Latin America | Tagged: economic growth, export diversification, homeowners, housing market, IMF, iMFdirect, International Monetary Fund, labor market, mortgage refinance, Regional Economic Outlook: Western Hemisphere, remittances, unemployment, unemployment rate | 2 Comments »
Posted on August 1, 2011 by iMFdirect
By Ajai Chopra
The U.K. government should be nimble in its policy response if it looks as though the economy is headed for a prolonged period of weak growth, high unemployment, and subdued inflation. Currently, we don’t expect this scenario to happen. But if such a scenario appears to be in prospect, we recommend responding quickly with some combination of further quantitative easing by the Bank of England and temporary tax cuts.
The most likely scenario for the U.K. economy is that it will gradually recover, although it will face continued headwinds from a soft housing market, household and financial sector deleveraging, and ongoing consolidation of the budget. Against this, the economy should get a push from private investment and an increase in exports driven by the global recovery. Labor productivity may also rebound and improve competitiveness.
Led by these forces, the IMF is expecting a bumpy and uneven recovery in the U.K. and our updated growth forecast for the near term, taking into account the recent GDP release for the second quarter, will be published with the September World Economic Outlook. Over the medium term, we expect growth to accelerate gradually to about 2½ percent. (more…)
Filed under: Advanced Economies, Europe, Fiscal policy, Fiscal Stimulus | Tagged: commodiity prices, competitiveness, exports, fiscal adjustment, housing market, inflation, quantitative easing, tax cuts, unemployment | 8 Comments »