Posted on March 20, 2014 by iMFdirect
By Dennis Botman and Zoltan Jakab
(Version in 日本語)
Japan’s economic progress over the past year has been impressive, with strong growth, and inflation, investment, and credit growth all heading in the right direction. But that progress is largely the result of last year’s sizable fiscal and monetary stimulus—the first two arrows of “Abenomics”. Now, the economy needs to transition to more sustainable, private-sector led growth. A hike in wages could be just the push needed to propel that shift.
As the ongoing annual wage-bargaining round draws to a close, total earnings are set to increase this year for employees at some well-known car manufacturers. But, in the past, these increases have not trickled down to higher basic wages at small and medium-sized enterprises and to non-regular workers. This is problematic as higher inflation without higher incomes can hardly be characterized as a successful reform.
Filed under: Advanced Economies, Asia, Economic research, Employment, Finance, growth, International Monetary Fund | Tagged: Abenomics, consumpt, deflation, investment, Japan, wages | Leave a comment »
Posted on March 20, 2014 by iMFdirect
By Paulo Drummond and Estelle Xue Liu
(Version in 中文)
Growing links with China have supported economic growth in sub-Saharan Africa. But the burgeoning commercial and financial ties between the developing subcontinent and the world’s second-biggest economy carry risks as well. These links also expose sub-Saharan African countries to potentially negative spillovers from China if the Asian giant’s growth slows or the composition of its demand changes.
The old aphorism “If America sneezes, the world catches a cold” referred to the U.S. economy’s role as a locomotive for the global economy, but it can now apply to any symbiotic relationship between a dominant economy and its clients. China has become a major development partner of sub-Saharan Africa. It is now the subcontinent’s largest single trading partner and a key investor and provider of aid.
Filed under: Africa, Asia, Economic research, Emerging Markets, Fiscal policy, Globalization, growth, IMF, International Monetary Fund, Low-income countries | Tagged: Angola, China, commodity prices, Congo, Democratic Republic of Congo, Equatorial Guinea, exports, investment, oil exporters, South Africa, Sub-Saharan Africa | Leave a comment »
Posted on February 26, 2014 by iMFdirect
By Jonathan D. Ostry and Andrew Berg
(Version in Français, Português, Русский, 中文)
Rising income inequality looms high on the global policy agenda, reflecting not only fears of its pernicious social and political effects, (including questions about the consistency of extreme inequality with democratic governance), but also the economic implications. While positive incentives are surely needed to reward work and innovation, excessive inequality is likely to undercut growth, for example by undermining access to health and education, causing investment-reducing political and economic instability, and thwarting the social consensus required to adjust in the face of major shocks.
Understandably, economists have been trying to understand better the links between rising inequality and the fragility of economic growth. Recent narratives include how inequality intensified the leverage and financial cycle, sowing the seeds of crisis; or how political-economy factors, especially the influence of the rich, allowed financial excess to balloon ahead of the crisis.
Filed under: Economic research, Employment, Financial Crisis, Financial regulation, Fiscal policy, growth, IMF, Inequality, International Monetary Fund | Tagged: education, income inequality, inequality, investment, research | 5 Comments »
Posted on October 29, 2013 by iMFdirect
By Steven Barnett
(Version in 中文)
Less growth in China today will mean higher income in the future. So rather than worry, we should welcome the slowdown in China’s economy. Why? Because by favoring structural reforms over short-term stimulus, China’s leadership is illustrating their commitment to move to a more balanced and sustainable growth model.
Filed under: Asia, Economic outlook, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Public debt | Tagged: China, consumption, government finances, IMF, iMFdirect, investment, reform, sustainable growth, United States | 3 Comments »
Posted on August 8, 2013 by iMFdirect
By Murtaza Syed
(Version in 中文)
Anticipation of the U.S. Federal Reserve’s exit from quantitative easing has dominated headlines in recent weeks. Half a world away, less conspicuously, but no less importantly, China, the globe’s second largest economy, is designing its own policy adjustments: firstly, unwinding the fiscal and monetary stimulus that helped shield it from the Great Recession and lifted global growth (but which also created some vulnerabilities), and secondly transitioning out of a growth model that has generated spectacular growth over the last three decades, but which is now running out of fuel.
Managed well, these twin adjustments would allow China to prolong its economic miracle in a sustainable way, with a significant positive impact for the rest of the world.
Filed under: Asia, Economic Crisis, Emerging Markets, Employment, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: China, credit, interest rate-growth differential, investment, Labor, Murtaza Syed, reform | 5 Comments »
Posted on August 5, 2013 by iMFdirect
By Jerry Schiff
(Versions in 日本語l and 中文)
Discussions in Japan of the “three arrows” of Abenomics—the three major components of Prime Minister Shinzo Abe’s economic plan to reflate the economy—are rampant among its citizens as well as economists, journalists and policy-makers worldwide. Even J-Pop groups are recording paeans to the economic policy named after the newly-elected premier. It is clear that “Abenomics” has been a remarkable branding success. But will it equally be an economic triumph?
We think it can be, and initial signs are positive. But such success is not assured. It will require difficult decisions as the country moves into largely uncharted territory. And much will depend on changing expectations within the country.
Filed under: Advanced Economies, Asia, Economic Crisis, Finance, growth, IMF, International Monetary Fund, Public debt | Tagged: Abenomics, Article IV, Bank of Japan, deflation, fiscal policy, growth, IMF, iMFdirect, International Monetary Fund, investment, Japan, monetary policy, public debt, quantitative easing, stimulus | 1 Comment »
Posted on June 10, 2013 by iMFdirect
By Antoinette M. Sayeh
Sub-Saharan Africa is the second fastest-growing region of the world today, trailing only developing Asia. This is remarkable compared to the current complicated state of the global economy, with Europe still struggling and the United States slowly on the mend.
In 2012, Sub-Saharan Africa maintained solid growth, with output growth at 5 percent on average. The factors that have supported the region through the Great Recession—strong investment, favorable commodity prices, and generally prudent macroeconomic management—continued to be at play.
Filed under: Africa, Economic Crisis, Economic outlook, Emerging Markets, Employment, Financial Crisis, Français, growth, International Monetary Fund, Low-income countries | Tagged: Democratic Republic of Congo, Ethiopia, Ghana, growth, investment, jobs, Malawi, regional economic outlook, Sub-Saharan Africa, Tanzania, unemployment | 1 Comment »
Posted on May 20, 2013 by iMFdirect
by Gustavo Adler and Nicolás Magud
(Versions in Español and Português)
Commodity exporting countries in Latin America have benefited strongly from the commodity price boom that began around 2002. And the accompanying improvements in public and external balance sheets have fed a sense that this time the macroeconomic response to the terms-of-trade boom has been different (and more prudent) than in past episodes. But, has it?
In our recent work, we analyze the history of Latin America’s terms-of-trade booms during 1970–2012 and quantify the associated income windfall (i.e., the extra income arising from improved terms-of-trade). We also document saving patterns during these episodes and assess the extent of the “effort” to save the income windfall.
Our findings suggest that, although the additional income shock associated to the recent terms-of-trade boom is unprecedented in magnitude, the effort to save it has been lower than in past episodes.
Filed under: Economic Crisis, Emerging Markets, Fiscal policy, growth, IMF, International Monetary Fund, Latin America | Tagged: Bolivia, Brazil, Chile, commodity exporters, commodity exports, IMF, iMFdirect, International Monetary Fund, investment, Latin America, Mexico, savings, trade, Venezuela | 1 Comment »
Posted on May 8, 2013 by iMFdirect
By Anoop Singh
(Versions in 中文 and 日本語)
Fiscal management has improved in Asia over the past decade. It has become more responsive to economic conditions and thereby helped stabilize growth, especially during the global financial crisis. While these are important achievements, major challenges still lie ahead—as our latest Asia and Pacific Regional Economic Outlook points out.
What are these key challenges? In a nutshell, fiscal policy can, and should do more to make Asia’s growth sustainable and more inclusive.
In the near term, budget consolidation has to proceed as the recovery takes hold to rebuild the fiscal space needed to respond to future output fluctuations.
At the same time several emerging and low income economies need to create room for higher infrastructure and social spending to support long-term growth, reduce income inequality, and fight poverty.
Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, Finance, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: infrastructure, investment, public spending, reform | Leave a comment »
Posted on May 6, 2013 by iMFdirect
By Alejandro Werner
(Versions in Español and Português)
Latin America continues to be one of the fastest growing regions in the world, even though growth slowed down a bit in 2012. Many economies in the region are operating at or near potential, inflation remains generally low, and unemployment is at historically low levels.
In the near term, the region will continue to benefit from easy external financing and relatively high commodity prices. In our May 2013 Regional Economic Outlook, we project that the region will expand by about 3½ percent in 2013. In Brazil—the region’s largest economy—economic activity is strengthening, driven by improving external demand, measures to boost investment, and the impact of earlier policy easing. In the rest of Latin America, output growth is expected to remain near potential.
Filed under: Economic Crisis, Economic outlook, Economic research, Finance, growth, International Monetary Fund, Latin America | Tagged: Brazil, capital flows, fiscal consolidation, GDP, inflation, investment, Labor, unemployment | 2 Comments »