Posted on March 5, 2014 by iMFdirect
By Serkan Arslanalp and Takahiro Tsuda
(Version in Español, Français, Português, Русский, 中文)
There are a trillion reasons to care about who owns emerging market debt. That’s how much money global investors have poured into in these government bonds in recent years —$1 trillion. Who owns it, for how long and why it changes over time can shed light on the risks; a sudden reversal of money flowing out of a country can hurt. Shifts in the investor base also can have implications for a government’s borrowing costs.
What investors do next is a big question for emerging markets, and our new analysis takes some of the guesswork out of who owns your debt. The more you know your investors, the better you understand the potential risks and how to deal with them.
Filed under: Advanced Economies, Debt Relief, Economic research, Emerging Markets, Financial Crisis, growth, International Monetary Fund, Investment, Public debt | Tagged: balance sheets, Brazil, China, Colombia, debt, emerging market economies, Global Financial Stability Report, government debt, Indonesia, interest rates, Latvia, Malaysia, Mexico, Poland, Romania, South Africa, Uruguay | Leave a comment »
Posted on January 22, 2014 by iMFdirect
By Min Zhu
(Version in Français, Русский, 日本語, Português, عربي and 中文)
We had a big debate on emerging markets’ growth prospects at our Annual Meetings in October 2013. We lowered our 2013 growth forecast for emerging markets and developing economies by a whopping 0.5 percentage points compared to our earlier forecast. Some argued that we were too pessimistic. Others said that we should have stuck with the lower-growth scenario we had devised at the onset of the global financial crisis.
Fast forward to today. Indeed, most recent figures indicate that the engines of global growth—emerging markets and developing economies—have slowed significantly. Their growth rate dropped about 3 percentage points in 2013 from 2010 levels, with more than two thirds of countries seeing a decline— Brazil, China, and India lead the pack. This is important for the global economy, since these economies generate half of today’s global economic activity.
In my more recent travels around the world—five regions on three continents—I received the same questions everywhere: what is happening with the emerging markets? Is the slowdown permanent? Can emerging markets boost their growth? What are the downside risks?
Filed under: Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Financial Crisis, Fiscal policy, Fiscal Stimulus, growth, IMF, International Monetary Fund, Latin America | Tagged: Brazil, central banks, China, commodiity prices, India, Indonesia, interest rates, international trade, Turkey | 1 Comment »
Posted on January 13, 2014 by iMFdirect
By Alexander Culiuc and Kalpana Kochhar
(Versions in Español, Русский, Português, and 中文)
A number of emerging market economies have been on a rollercoaster since the U.S. Federal Reserve announced last May the eventual tapering of its asset purchase program. This is another reminder of how susceptible these economies remain to economic conditions outside their borders.
Much of the market movements to date have been short term in nature. But emerging markets know the end-game – interest rates in advanced economies will eventually go up, reducing the cheap external financing they have benefited from until now. And this is not the only external factor weighing on the growth prospects of emerging markets.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: advanced economies, capital flows, commodiity prices, emerging market economies, exchange rate, inflation, interest rates, World Economic Outlook | 3 Comments »
Posted on November 1, 2013 by iMFdirect
By Olivier Blanchard
Several years out from the global financial crisis, the world economy is still confronting its painful legacies. Many countries are suffering from lackluster recoveries coupled with high and persistent unemployment. Policymakers are tackling the costs stemming from the crisis, managing the transition from crisis-era policies, and trying to adapt to the associated cross-border spillovers.
Against this background, the IMF’s 14th Jacques Polak Annual Research Conference, entitled “Crises: Yesterday and Today,” to take place on November 7-8, will take stock of our understanding of past and present crises.
This year’s conference will be a special one as we shall honor Stanley Fischer’s many contributions to economic research and policy. Stan has extensively studied economic and financial crises, first as a faculty member at the Massachusetts Institute of Technology, and then as a policymaker with many hats over the years―the Chief Economist of the World Bank, the First Deputy Managing Director of the IMF, and the Governor of the Bank of Israel.
Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Europe, Finance, Fiscal policy, Global Governance, IMF, International Monetary Fund, Latin America, Multilateral Cooperation | Tagged: central banks, East Asia, financial stability, fiscal policy, IMF Annual Research Conference, IMF Jacques Polak Research Conference, interest rates, Japan, Latin America, macroeconomics, Olivier Blanchard, Paul Krugman, stanley Fischer, United States | 2 Comments »
Posted on October 21, 2013 by iMFdirect
By Anoop Singh
Almost one year ago, the term Abenomics first surfaced in Japan. The idea of a coordinated policy effort to revive Japan’s economy and end deflation seemed a bold idea, but also a long-shot. Back in February, several young investment bankers told me that ending deflation within the next few years stood at most, a 20 percent chance. They noted that they had never experienced rising prices in their lifetimes. By June they had upped the chances of success to 40 percent. With Abenomics approaching the one-year mark, is the new strategy working?
Lot of policy action
The year started with a flurry of new policy initiatives: in January, the Bank of Japan (BoJ) adopted a 2 percent inflation target, followed by new fiscal stimulus, and a decision to join negotiations over the Trans-Pacific Partnership (TPP), a proposal for a free trade agreement spanning countries from Australia, Brunei, to Chile, Canada, and the U.S. Shortly after, Haruhiko Kuroda took the helm at the Bank of Japan and introduced Quantitative and Qualitative Monetary Easing—an aggressive plan to reach 2 percent inflation in about 2 years mainly through large-scale bond purchases. Just, a few days ago, the government agreed to go ahead with the consumption tax increase in 2014 and announced further fiscal stimulus to soften the growth impact. Discussions on growth reforms are next on the agenda, with a special Diet session starting this month. Plenty of action, but has this whirlwind of activity paid off?
Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, growth, IMF, International Monetary Fund | Tagged: Abenomics, Bank of Japan, interest rates, Japan, Regional Economic Outlook: Asia | 1 Comment »
Posted on October 7, 2013 by iMFdirect
By Kalpana Kochhar and Roberto Perrelli
(Version in Español and عربي)
After a decade of high growth and a swift rebound after the collapse of U.S. investment bank Lehman Brothers, emerging markets are seeing slowing growth. Their average growth is now 1½ percentage points lower than in 2010 and 2011. This is a widespread phenomenon: growth has been slowing in roughly three out of four emerging markets. This share is remarkably high; in the past, such synchronized and persistent slowdowns typically have only occurred during acute crises.
Our analysis attributes the slowdown in part to cyclical forces, including softer external demand and in part to structural bottlenecks, for example in infrastructure, labor markets, power sector. And this has happened in spite of supportive domestic macroeconomic policies, (still) favorable terms of trade, and easy financing conditions, which only began to tighten recently. However, a non-trivial portion of the slowdown remains unexplained, suggesting that other factors common to emerging markets are at play.
Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, growth, International Monetary Fund, Public debt | Tagged: emerging market, interest rates, macroeconomics, policy, Program of Seminars, trade | 5 Comments »
Posted on July 24, 2013 by iMFdirect
By Carlo Cottarelli
Recent political and social unrest in some emerging and developing countries may have idiosyncratic features. But they also have a common denominator: a yearning for more equality in incomes, economic self-determination, and political power. Are these developments in seemingly unrelated emerging economies the beginning of a trend?
Simple—some would say simplistic!—empirical evidence suggests that this may indeed be the case: look at the convergence of real per capita GDP in emerging markets to the level observed in Western Europe and the United States in the early sixties (see chart 1). One can conjecture that, once per capita income achieves this level, the rise of the middle class prompts demands for more equity in the distribution of economic and political power. We know the sixties. It was a time when the rise of the middle class led to a wave of social unrest and change that rocked the economy and society—a change that gradually spread throughout the western world (what we now call “advanced economies”), with a call for more social justice, more democracy, and a better life for everyone. What followed were deep social and economic transformations.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: fiscal policy, GDP, interest rates, public spending, taxes | 1 Comment »
Posted on May 3, 2013 by iMFdirect
Guest post by: Joseph E. Stiglitz
Columbia University, New York, and co-host of the Conference on Rethinking Macro Policy II: First Steps and Early Lessons
(Versions in 中文, Français, 日本語, and Русский)
In analyzing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last 30 years—as liberalization policies became dominant—have given us a wealth of experience and mountains of data. If we look over a 150 year period, we have an even richer data set.
With a century and half of clear, detailed information on crisis after crisis, the burning question is not How did this happen? but How did we ignore that long history, and think that we had solved the problems with the business cycle? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris.
Filed under: Advanced Economies, Debt Relief, Economic Crisis, Emerging Markets, Europe, Finance, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: central banks, credit, Economics, Financial regulation, GDP, global economic crisis, IMF, iMFdirect, interest rates, International Monetary Fund, Joseph Stiglitz, monetary policy, reform, stability | 8 Comments »
Posted on April 11, 2013 by iMFdirect
By Erik Oppers
This spring monetary policy is the talk of the town. It is everywhere you look, it’s unique, and you’ve never seen anything quite like it before: short-term interest rates at zero for several years running, and central bank balance sheets swelling with government bonds and other assets in the euro area Japan, the United Kingdom, and the United States.
But the meteoric rise of this once dusty topic can’t last. The end of these unconventional monetary policies will come and may pose threats to financial stability because of the length and breadth of their unprecedented reign. Policymakers should be alert to the risks and take gradual and predictable measures to address them.
Filed under: Advanced Economies, Economic outlook, Economic research, Fiscal policy, International Monetary Fund, Investment | Tagged: banks, bonds, central banks, credit, financial markets, financial stability, Global Financial Stability Report, IMF, iMFdirect, interest rates, International Monetary Fund, Japan, monetary policy, policy, United Kingdom, United States | 1 Comment »
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.
Filed under: Advanced Economies, Economic research, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: central banks, exchange rate, GDP, IMF, iMFdirect, inflation, interest rates, International Monetary Fund, liquidity, macroprudential, monetary policy, Turkey | 1 Comment »