Scenes From A Central Bank: A Turkish Tale in Two Acts

Posted on April 2, 2013 by iMFdirect

By Robert Tchaidze and Heiko Hesse 

In mid 2010 the Turkish central bank decided to introduce a policy that increased uncertainty in interest rates hoping that would stop foreign investors who were pouring money into the country in search of a quick buck. That’s right. ‘Keep calm and carry on’ was replaced by ‘Keep them guessing.’

The Turkish economy was overheating.  Money poured into the country from foreign investors attracted by a strong economy and high yields. A lending boom resulted in excessive growth along with an appreciating exchange rate and widening current account deficit. While evidence of success, these kinds of capital inflows are a headache policymakers would rather avoid, as they expose a country to risks that affect the economy and financial system as a whole, while undermining the objective of controlling inflation.

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Filed under: Advanced Economies, Economic research, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: , , , , , , , , , , , | 1 Comment »

An Open and Diverse Economy To Benefit All Algerians

Posted on March 18, 2013 by iMFdirect

Christine LagardeBy Christine Lagarde

(Version in عربي)

I was in Algiers last week, my first time as the Managing Director of the IMF. It was a good visit: we reaffirmed the special partnership between Algeria and the IMF, and I was able to gain a deeper insight into Algeria’s aspirations—and also its challenges in reaching a hopeful future.

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Filed under: Africa, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

What We Can Do To Improve Women’s Economic Opportunities

Posted on March 8, 2013 by iMFdirect

Christine LagardeBy Christine Lagarde

Versions in  عربي, 中文, Français, 日本語, Русский, and Español

Today, I invite all of you to celebrate International Women’s Day. Let’s celebrate the incredible progress women have made over the past decades in different parts of society, playing a key role in economic life that our grandmothers worked for and dreamed about. Today, although men still dominate the executive suites in most professions, women all over the world hold high positions in the private sector and in public office. Women are no longer the Second Sex Simone de Beauvoir wrote about.

But far too many women face the most fundamental challenges: the right to safety and to choose the life they want.

Across the globe, fewer women than men are in paid employment, with only about 50 percent of working-age women participating in the labor force. In many countries, laws, regulations and social norms still constrain women’s possibilities to seek paid employment. And all over the world women conduct most of the work that remains unseen and unpaid, in the fields and in households.

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Filed under: Africa, Asia, Europe, growth, International Monetary Fund, Latin America, Middle East, Politics | Tagged: , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

A Missing Piece In Europe’s Growth Puzzle

Posted on March 5, 2013 by iMFdirect

moghadamsmallBy Reza Moghadam

Even before the latest euro area GDP numbers and Italian elections cast a shadow over the continent, economists were struggling to reconcile the steady improvement in market sentiment with the more downbeat data on the economy, production, orders, and jobs.

This video looks at this puzzle from a somewhat different perspective than the usual—and still correct—narrative of weak banks and over-indebted public sectors caught in a vicious cycle. More specifically, we examine the role of household and corporate balance sheets in the countries under financial market stress and the implications for policy priorities.

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Filed under: International Monetary Fund | Tagged: , , , , , , , , , , , , , | Leave a Comment »

India’s Economy: Stamina Is The Name Of The Game

Posted on February 21, 2013 by iMFdirect

by Laura Papi and Rahul Anand*

So far 2013 has been a breath of fresh air in terms of economic news: financial markets have rallied and economic indicators have started to surprise on the upside. In India, the rupee has strengthened and the Bombay Stock Exchange index (Sensex) crossed the 20,000 mark for the first time in two years.  Industrial production has started picking up.

So is India’s growth about to go back to 8-9 percent? The short answer is no. But we need to look back to understand why India’s growth has decelerated to a decade low and why the slump, which has hit investment particularly hard, has persisted for over a year. As structural problems are at the root of the slowdown, so structural reforms must be at the core of the solution.

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Filed under: Economic Crisis, Emerging Markets, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , | 1 Comment »

Europe: Toward A More Perfect Union

Posted on February 15, 2013 by iMFdirect

Nemat Shafik 4

By Nemat Shafik

During the years that followed the euro’s introduction, financial integration proceeded rapidly and markets and governments hailed it as a sign of success. The widespread belief was that it would benefit both south and north—capital was finally able to flow to where it would best be used and foster real convergence.

But in fact, a lasting convergence in productivity did not materialize across the European Union. Instead, a competitiveness divide emerged. As the financial crisis gripped the euro area in 2010, these and other problems came to the fore.

Three years later, the financial symptoms of the crisis are thankfully receding with a new sense of optimism in markets. But the underlying problems—lack of convergence of productivity and the structural flaws in the architecture of the monetary union—have only been partially addressed.

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Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , | Leave a Comment »

Resolutions for the Fiscal New Year—Staying on Track Is No Easy Task

Posted on February 4, 2013 by iMFdirect

by Carlo Cottarelli and Philip Gerson

Version in Español and عربي

We’re one month into 2013, and if past experience is any guide, by now many people will have all but forgotten the promises they made about the things they planned to do over the coming year.

It’s a time-honored tradition in many countries for people to make resolutions at the New Year, usually involving things that are good for them, like achieving a healthier weight. Unfortunately, it’s also traditional that these commitments quickly fall by the wayside, only to be taken up again next year, usually with the same results.

But unlike many of these resolutions, the ones made by most advanced economies to reduce their 2012 fiscal deficits were by and large kept. The average headline deficit in these countries fell by about ¾ percent of GDP last year, bringing the cumulative deficit decline to 3 percent of GDP since budget shortfalls peaked in 2009. This is good news.

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Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: , , , , , , , , , , , | 2 Comments »

Latvia’s Economic Potential: Recovery and Reforms

Posted on January 28, 2013 by iMFdirect

david moore

by David Moore

Latvia’s economy has attracted international attention out of all proportion to its size. Many observers know that Latvia returned to strong economic growth after a severe downturn in 2008 and 2009 and a tough austerity program.  In late 2012, Latvia even repaid the IMF in full, several years early.

But the international consensus ends there. Critics of Latvia’s economic strategy point to continuing high rates of unemployment and poverty; advocates point to the benefits of frontloading spending cuts and tax increases to lay the foundations for recovery.

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Filed under: Economic Crisis, Employment, Europe, Fiscal policy, Fiscal Stimulus, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , | 2 Comments »

We May Have Avoided the Cliffs, But We Still Face High Mountains

Posted on January 23, 2013 by iMFdirect

WEO

by Olivier Blanchard

Version in Español  and عربي

Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.

Compared to where we were at the same time last year, acute risks have decreased. The United States has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.

But we should be under no illusion. There remain considerable challenges ahead. And the recovery continues to be slow, indeed much too slow.

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Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 5 Comments »

The Ties That Bond Us: What Demand For Government Debt Can Tell Us About the Risks Ahead

Posted on January 17, 2013 by iMFdirect

by Serkan Arslanalp and Takahiro Tsuda

It’s not news that emerging markets can be vulnerable to bouts of market volatility. Investors often pull sudden stops—they stop buying or start selling off their holdings of government bonds.

But what has become apparent in recent years is that advanced economy government bond markets can also experience investor outflows, and associated runs. At the same time, some traditional and new safe haven countries have seen their borrowing costs drop to historic lows as they experience rising inflows from foreign investors.

Our new research shows that advanced economies’ exposure to refinancing risk and changes in government borrowing costs depend mainly on who is holding the bonds— the demand side for government debt.

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Filed under: Advanced Economies, Asia, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, G-20, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 4 Comments »

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