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Africa and the Great Recession: Changing Times

Posted on May 14, 2012 by iMFdirect

Sub-Saharan Africa’s solid growth record has been supported by several factors, including significantly less civil conflict, the generally favorable commodity price developments benefiting Africa’s natural resource exporters; and the extensive debt relief provided to most highly-indebted poor countries. But I would ascribe key importance to sound policy choices by African governments – both in terms of pursuing appropriate macroeconomic policies and pressing ahead with important reform measures.

Filed under: Advanced Economies, Africa, Asia, Debt Relief, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, growth, Inequality, International Monetary Fund, LICs, Low-income countries, recession | Tagged: Antoinette Sayeh, banking, buffers, China, Cote d’Ivoire, drought, employment, Great Recession, iMFdirect blog, investment, jobs, Lusaka, Mali, MDGs, oil, regional outlook, South Africa, Zambia | 2 Comments »

Showcasing a More Confident Africa

Posted on December 16, 2011 by iMFdirect

Africa is on the move. While several other regions of the world have to address slowdown and uncertainty, many countries in Africa have been facing a contrasting challenge: to respond to the growing demand for their bountiful resources and manage rising investment in much-needed infrastructure. But at the same time, growing economic uncertainty in the world is raising concerns across the continent where vulnerability to global shocks remains high.

Filed under: Africa, Economic Crisis, Employment, Financial Crisis, growth, IMF, Inequality, International Monetary Fund, Low-income countries | Tagged: Christine Lagarde, commodities, Good Luck Jonathan, infrastructure, investment, Ngozi Okonjo-Iweala, Niger, Nigeria, shocks | 6 Comments »

Making the Most of Bad Situations

Posted on December 13, 2011 by iMFdirect

Governments in low-income countries are having to deal with a lot of bad news these days. Slow growth in the advanced economies is dampening demand for their exports and affecting inflows of investment, aid, and remittances. Changes in credit conditions elsewhere influence the availability of trade finance. Volatility in commodity prices creates problems for both importers and exporters. Meanwhile, climactic and other natural disasters continue to occur at the local and regional level.

Filed under: Africa, concessional lending, Economic Crisis, IMF, International Monetary Fund, LICs, Low-income countries | Tagged: aid, buffers, CFIs, commodities, contingent financial instruments, credit, DFID, Ethiopia, food security, France, investment, LEAP, Malawi, poverty reduction, remittances, self-insurance, weather derivatives | 8 Comments »

Africa: Changing the Narrative

Posted on December 2, 2011 by iMFdirect

Enduring poverty and conflict are so stark in Africa that it is sometimes difficult to see what else is happening.

In April 2011, a study published by the Columbia Journalism Review titled “Hiding the Real Africa” documented how easily Africa makes news headlines in the West when a major famine, pandemic, or violent crisis breaks. But less attention is given to positive trends and underlying successes.

In many cases, despite accelerated economic growth over the past 10 years, the rise of a middle class of consumers, and a more dynamic private sector attracting indigenous entrepreneurs, the narrative about Africa has remained focused on the bad news.

That has, fortunately, started to change. This week’s cover story in The Economist, on “Rising Africa”, is testament to that. So too is the just-released December 2011 issue of Finance and Development (F&D) magazine on “Changing Africa: Rise of a Middle Class”, which explores Africa’s potential.

Filed under: Africa, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Low-income countries | Tagged: asset prices, capital flows, commodities, credit booms, economic growth, education, entrepreneurship, euro area, Finance & Development magazine, food and fuel crisis, IMF, iMFdirect, infrastructure, International Monetary Fund, investment, Ngozi Okonjo-Iweala, Nigeria, poverty reduction, private sector, privatization, social protection, South Africa, trade | 4 Comments »

Whack-A-Mole in China’s Bubbly Housing Market

Posted on August 9, 2011 by iMFdirect

Ultimately, the solution has to involve higher interest rates (on both deposits and loans), efforts to create a broader set of financial assets for the population to invest in, and a broad-based property tax that covers the majority of China’s housing stock.

Filed under: Asia, Emerging Markets, growth, International Monetary Fund, 日本語 | Tagged: Beijing, China, construction, housing, investment, overheating, property crash, property market, Shanghai, speculation | 18 Comments »

Keeping Asia from Overheating

Posted on May 19, 2011 by iMFdirect

Asia’s vigorous pace of growth has seen the region play a leading role in the global recovery. But there are signs that higher commodity prices are spilling over to a more generalized increase in inflation. Expectations of future inflation have picked up. And accommodative macroeconomic policy stances, coupled with limited slack in some economies, have added to inflation pressures.

Against this backdrop, the need for policy tightening in Asia has become more pressing than it was six months ago, especially in economies that face generalized inflation pressures. How should policymakers address these challenges?

Filed under: Asia, Economic outlook, IMF, International Monetary Fund | Tagged: asset price bubbles, capital inflows, commodity prices, currency appreciation, economic rebalancing, fiscal consolidation, global recovery, headline inflation, inclusive growth, inflationary pressures, investment, macroeconomic policy, macroprudential policies, monetary tightening, overheating, property prices, social protection | 5 Comments »

The Emerging Bright Spot in Europe

Posted on May 18, 2011 by iMFdirect

With all the anxiety generated by the troubles of Portugal, Greece, and Ireland, it is easy to forget that a different part of Europe was in the spotlight two years ago, facing equally dire predictions of bank runs, fiscal ruin, and devaluation.

Today, many economies in emerging Europe are quietly staging a strong comeback. Most impressive is the turnaround in the three Baltic countries, which suffered record deep recessions in the wake of the 2008/09 financial crisis. Take Lithuania, which grew an eye-catching 14.7 percent in the first quarter of 2011.

Given this good news, what more can policymakers do to sustain the recovery—and prevent a new boom-bust cycle? Raising the long-term growth trend is key.

Filed under: Economic outlook, Emerging Markets, Europe, IMF, International Monetary Fund | Tagged: asset price bubbles, boom-bust cycle, capital inflows, consumption, credit default swaps, current account deficits, domestic demand, economic growth, economic output, exports, growth potential, investment, Macroeconomic policies, markets, structural policies | 1 Comment »

To Owe or Be Owned—Depends on How You Tax It

Posted on May 13, 2011 by iMFdirect

Corporate tax codes in the United States, most of Europe, Asia and elsewhere in the world, create a significant bias toward debt finance over equity. The crux of the issue is that interest paid on borrowing can be deducted from the corporate tax bill, while returns paid on equity—dividends and capital gains—cannot.

This debt distortion is not new. What is new, however, is that we have come to realize that excessive debt (or leverage) is much more costly than we had. The global financial crisis was a stark lesson about the risks of excessive leverage ratios in financial institutions.

Designing a better system will ultimately pay off. And now is the time for change. A recent IMF Staff Discussion Note offers two alternatives that reduce or eliminate the more favorable tax treatment of debt.

Filed under: Advanced Economies, Financial Crisis, Fiscal policy, International Monetary Fund | Tagged: capital gains, corporate income tax, corporate profits, debt bias, debt finance, dividends, equity, financial crises, global financial crisis, interest deductiblity, investment, leverage, tax avoidance, tax deduction, tax incentives | Leave a Comment »

BRICs and Mortar—Building Growth in Low-Income Countries

Posted on May 9, 2011 by iMFdirect

By Dominique Desruelle and Catherine Pattillo (Versions in 中文, Português, Español, Русский) The so-called BRIC nations—Brazil, Russia, India and China—could be a game changer for how low-income countries build their economic futures. The growing economic and financial reach of the BRICs has seen them become a new source of growth for low-income countries (LICs). LIC-BRIC ties—particularly [...]

Filed under: Emerging Markets, growth, International Monetary Fund, Low-income countries | Tagged: balanced and sustainable growth, Brazil, BRICs, China, commercial financing, commodity trap, concessional lending, development financing, government debt, growth drivers, India, infrastructure development, investment, investment financing, macroeconomic stability, manufacturing, Russia, structural changes, tax incentives, trade, trade preferences, transparency | 2 Comments »

Old Dilemmas, New Challenges: Monetary Policy and Capital Flows into Emerging Economies

Posted on April 21, 2011 by iMFdirect

For a decade or more, we at the IMF have grappled with the idea that very large capital flows into successful emerging market countries were almost inevitable and would prove extremely difficult to manage. Since these topics were first broached at a theoretical level, we have witnessed developments in a number of emerging economies in Europe that reinforce the concerns and underscore the implications for policy.

Two lessons may be learned from the experience. First, the choice between fixed and flexible exchange rates is important, but perhaps not for reasons that are usually put forward. Second, monetary policy—and policy to stabilize the economy more generally—needs substantial reinforcement.

Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, International Monetary Fund | Tagged: asset price bubbles, capital flows, credit growth, current account deficits, exchange rate, exchange rate flexibility, exchange rate regimes, external vulnerability, fixed exchange rates, foreign currency exposure, foreign exchange risk, interest rates, investment, macroprudential policies, monetary policy, rates of return, risk premiums | 1 Comment »

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Africa and the Great Recession: Changing Times

Showcasing a More Confident Africa

Making the Most of Bad Situations

Whack-A-Mole in China’s Bubbly Housing Market

The Emerging Bright Spot in Europe

To Owe or Be Owned—Depends on How You Tax It

BRICs and Mortar—Building Growth in Low-Income Countries

Old Dilemmas, New Challenges: Monetary Policy and Capital Flows into Emerging Economies

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