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 »
Posted on June 27, 2011 by iMFdirect
By Jody Myers
(Version in Français)
Drug traffickers, diamond smugglers, and terrorists’ financiers around the world have one thing in common: they abuse the financial system to “clean” the proceeds they have obtained from their illegal work, or to transfer funds to achieve their destructive aims. The former is known as money laundering and the latter as terrorist financing.
In the United States alone, profits from these crimes are estimated around $275 billion, excluding tax evasion.
Our research shows this dark side of the economy has destructive consequences for a country’s financial stability, economy, and governance. (more…)
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Europe, Financial Crisis, International Monetary Fund | Tagged: Article IV, banks, corruption, Financial Action Task Force, financial institutions, Financial Sector Assessment Program, government revenues, inflation, insider trading, International Monetary Fund, money laundering, purchasing power, risk, tax evasion, terrorist financing, United States | 4 Comments »
Posted on June 20, 2011 by iMFdirect
By José Viñals
(Versions in عربي, 中文, Español, Français, Русский)
It was fitting that I should present our latest assessment of global financial stability in Sao Paulo, the financial center of one of the leading emerging economies. In common with many of its peers in Latin America, Brazil is recovering strongly from the crisis. But new financial stability challenges are emerging in this, and other fast-growing regions.
Let me start with three key messages:
- First, financial risks have increased since April.
- Second, as a result, policymakers in both advanced and emerging economies need to step up their efforts to preserve financial stability and safeguard the recovery.
- And third, we have entered into a new phase of the crisis – a political phase- when tough political decisions will need to be made, because the window for substantial policy action is closing. Time is of the essence. (more…)
Filed under: Advanced Economies, Emerging Markets, Europe, Financial Crisis, Financial regulation, IMF | Tagged: Brazil, capital flows, debt, emerging economies, Europe, financial policies, financial risks, Global Financial Stability Report, inflation, intereste rates, Japan, Latin America, macropurdential, policymakers, sovereign risk, stress tests, United States | 5 Comments »
Posted on June 17, 2011 by iMFdirect
By Olivier Blanchard
عربي, 中文, Español, Français, Português, Русский)
Today we’re in Sao Paulo, Brazil, to release our update to the IMF’s World Economic Outlook.
Despite a mild slowdown, the global economic recovery continues but the road to health will be a long one. Downside risks, both old and new, are increasing.
Our world forecast is 4.3% growth for 2011, and 4.5% for 2012, so down by 0.1% for 2011, and unchanged for 2012, relative to April. This figure hides very different performances for advanced economies on the one hand, and for emerging and developing economies on the other. (more…)
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Employment, Europe, growth, IMF | Tagged: advanced economies, Asia, assets, banks, Brazil, capital flows, commodities, credit, crisis, debt, economy, emerging economies, Europe, financial system, fiscal, food prices, global recovery, government debt and deficits, growth, IMF, iMFdirect, income, inflation, International Monetary Fund, Japan, Latin America, monetary policy, oil prices, unemployment, United States, World Economic Outlook | 4 Comments »
Posted on June 6, 2011 by iMFdirect
By Masood Ahmed
Across the world, surging international food prices have become a major cause for concern and topic of debate. This is especially so in the Arab world, which is home to some of the largest food importers and where rising food prices have been one of the factors in recent political unrest.
In the context of ongoing political developments, governments across the region are responding to the rise in commodity prices with hikes in fuel and food subsidies, civil service wage and pension increases, additional cash transfers, tax reductions, and other spending increases. These measures will help poor households maintain their purchasing power and limit further increases in domestic food prices.
How should central banks—whose task is to prevent general price increases that would further cut into peoples’ incomes—react? What inflation metric should they target? (more…)
Filed under: Economic Crisis, IMF, Inequality, Middle East | Tagged: central banks, consumption, economic policy, food, fuel, inflation, Middle East, monetary policy, North Africa, oil, poor | 6 Comments »
Posted on March 22, 2011 by iMFdirect
Guest post by Joseph E. Stiglitz, Columbia University, and
co-host of the Conference on Macro and Growth Policies in the Wake of the Crisis
The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis; standard models even said bubbles couldn’t exist—markets were efficient. Even after the bubble broke, they said the effects would be contained. Even after it was clear that the effects were not “contained,” they provided limited guidance on how the economy should respond. Maintaining low and stable inflation did not ensure real economic stability. The crisis was “man-made.” While in standard models, shocks were exogenous, here, they were endogenous. (more…)
Filed under: Economic Crisis, Economic research, Financial Crisis, International Monetary Fund | Tagged: capital flows, central banks, credit risk, cross-border linkages, economic recovery, financial markets, financial sector regulation, financial stability, fiscal policy, industrial policy, inflation, Joseph Stiglitz, Macro and Growth Policies in the Wake of the Crisis, macroeconomic models, macroeconomic policy, macroeconomic stability | 15 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? (more…)
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 November 1, 2010 by iMFdirect
By Anoop Singh
(Version in 日本語)
Of all the things policymakers have had to worry about in the past couple of years, inflation wasn’t one of them. Some even heralded the end of inflation.
Today, inflation still isn’t a ‘problem’ in Asia. For the most part, it remains relatively modest, but it is on the rise in some countries in the region. And understanding what is driving that inflation matters. Policymakers need to consider the sources of inflation in making the right policy choices. What policy tools to choose. (more…)
Filed under: Asia, Economic Crisis, Economic outlook | Tagged: actual output, capital inflows, commodity prices, core inflation, domestic demand, economic growth, exchange rates flexibility, inflation, interest rates, monetary policy, output gaps, policy stimulus, potential output, Regional Economic Outlook: Asia and Pacific, structural reforms | 2 Comments »
Posted on July 20, 2010 by iMFdirect
By José Viñals
Monetary stability seems almost a given today, even taken for granted. It wasn’t always like that. Not so long ago, high and volatile inflation routinely raised its ugly head and threatened living standards. Some of us even remember those days! It wasn’t pleasant. But since then, an effective antidote has pretty much wiped out rampant price instability. Over the past three decades, better monetary frameworks have caused the level and volatility of inflation to fall sharply. These frameworks enshrined price stability as the main monetary policy objective, and provided independence and constrained discretion in the pursuit of this objective, often set out through formal inflation targets.
As I said, it worked out well. Or did it? In reality, there was a gaping hole in the system. While monetary policy frameworks fortified the castle against inflation at the front, they didn’t pay much attention to back door vulnerabilities. I’m talking about financial stability.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, Fiscal Stimulus, IMF, International Monetary Fund | Tagged: asset price bubbles, central banking, financial reform, Financial regulation, financial stability, global financial crisis, global financial linkages, inflation, inflation targets, international trade, monetary policy, price stability | 3 Comments »
Posted on May 12, 2010 by iMFdirect
By Anoop Singh
(Version in 中文 日本語 and 한국어)
I blogged last from China, and this week I am in India to present our latest Asia-Pacific Regional Economic Outlook in New Delhi. India is of course, along with China and some other countries, an important driver of the Asian recovery. And Asia in turn is leading the global recovery.
At the same time, the global recovery also influences Asia’s growth, given Asia’s high dependence on export demand and its growing integration with international financial markets. And the global outlook is subject to downside risks, which came to the forefront again last week in the form of developments in Europe and continue to be reflected in financial market volatility all across the world.
So, while recent Asian performance has been strong and the outlook remains relatively positive, we are not yet out of the woods.
Filed under: Asia, Economic Crisis, Economic research, Fiscal Stimulus, growth, IMF | Tagged: capital flows, China, Europe, fiscal policy, India, inflation, Japan | 1 Comment »