Posted on May 12, 2015 by iMFdirect
By Nicolás Magud
(Versions in Español and Português)
Private investment has been decelerating throughout emerging markets since mid-2011, and Latin America has been no exception (see Chart 1). This trend has raised concerns not only because weaker investment has played an important role in the broader regional slowdown, but also because Latin America’s investment rates were lower than in most other regions even before the slowdown began.
This blog looks at the drivers of corporate investment and highlights the extent to which falling commodity export prices have contributed to lower capital spending. Given the poor outlook for commodity prices and what our analysis suggests, this does not bode well for countries in the region going forward unless they can tackle some of the long-standing obstacles to increase investment.
Filed under: Economic outlook, Emerging Markets, Español, IMF, International Monetary Fund, Investment | Tagged: capital inflows, Caribbean, commodities, commodity exports, domestic saving, emerging market, Latin America, private investment, regional economic outlook | Leave a comment »
Posted on May 7, 2015 by iMFdirect
By Shekhar Aiyar, Bergljot Barkbu, and Andreas (Andy) Jobst
If financing is the lifeblood of European small businesses, then the effect of the financial crisis was similar to a cardiac arrest. The flow of affordable credit from banks was choked off and small and medium-sized enterprises (SMEs) were hit hardest. Today, with bank lending still recovering from that shock, smart policy actions could open up securitization as a source of financing to help small businesses start up, flourish and grow.
SMEs are vital to the European economy. They account for 99 out of every 100 businesses, two in every three employees, and 58 cents of each euro of value added of the business sector in Europe. Improving access to finance would therefore not only revive small businesses, but also support a strong and lasting recovery for Europe as a whole.
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Finance, Globalization, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: bank lending, bond markets, capital markets, credit, EU, Europe, France, Germany, infrastructure, Italy, private investment, Securitization, small and medium-sized enterprises, Spain | Leave a comment »
Posted on February 28, 2012 by iMFdirect
The issue of reviving or maintaining economic growth is a the forefront of policymakers’ minds all around the world. Of course, the policies needed to achieve that differ from region-to-region, country-to-country.
For many countries in Africa, weak infrastructure is an obstacle to raising growth.
In a recent interview with IMF Survey online magazine, Andrew Berg of the IMF’s Research Department (and one of our contributing bloggers) discusses the challenge of overcoming what he calls a “tremendous infrastructure deficit”, an issue that “affects all levels of society and all aspects. It affects health, education and growth.”
The issue is complicated further by the many competing demands these countries face. “We are talking about the need for infrastructure development, but we could be talking about how incredibly important it is to spend on AIDS, health, education, or any number of things,” says Berg.
Filed under: Africa, Economic research, growth, IMF, LICs, Low-income countries, recession | Tagged: foreign borrowing, IMF, iMFdirect, infrastructure, infrastructure gaps, infrastructure investment, International Monetary Fund, private investment, public-private partnerships | Leave a comment »
Posted on April 4, 2011 by iMFdirect
By Abebe Aemro Selassie
Among the havoc wrought by the global financial crisis, unemployment ranks at the top. This discussion often focuses on the situation in advanced countries. Unemployment in the United States, for example, continues to hover around 9 percent.
Take that and double it. Then you can begin—yes, just begin—to get a sense of the magnitude of the problem in South Africa. Unemployment in South Africa now stands at some 24 percent. Youth unemployment is phenomenally higher still at some 50 percent. Continue reading
Filed under: Africa, Economic Crisis, Economic research, Emerging Markets, Employment, Inequality, International Monetary Fund, Politics, Public debt | Tagged: global economic crisis, global financial crisis, labor markets, labor protection laws, macroeconomic policy, private investment, South Africa, unemployment, wage bargaining, wage subsidy, youth unemployment | 7 Comments »
Posted on December 3, 2010 by iMFdirect
By Hugh Bredenkamp and Roger Nord
(Version in Français )
For low-income countries, the absence of reliable infrastructure—roads, railways, ports, but also power supply—has become an increasingly binding constraint on growth. And we know that investment in infrastructure can raise productivity, boost growth, and help reduce poverty. But as straightforward as it sounds, getting investment decisions right is no easy feat.
For starters, low-income countries have massive investment needs. The World Bank has estimated that, in sub-Saharan Africa alone, the total financing need is around $93 billion per year. And one third of this still unfunded.
Even when financing is available, there’s a raft of other issues to tackle. What investments offer the biggest boost to growth? How much investment is needed and by whom? How to finance this investment without taking on too much debt? Continue reading
Filed under: Economic Crisis, LICs, Low-income countries, Public debt | Tagged: capacity building, debt sustainability, enabling environment, global economic crisis, growth potential, infrastructure, investment strategies, low-income countries, private investment, sustainable investment | 7 Comments »
Posted on October 6, 2010 by iMFdirect
By Olivier Blanchard
Achieving a “strong, balanced, and sustained world recovery”—to quote from the goal set in Pittsburgh by the G-20—was never going to be easy. It requires much more than just going back to business as usual. It requires two fundamental and complex economic rebalancing acts.
First, internal rebalancing. When private demand collapsed, fiscal stimulus helped reduce the fall in output. This helped avoid the worst. But private demand must now become strong enough to take the lead and sustain growth, while fiscal stimulus gives way to fiscal consolidation.
The second is external rebalancing. Many advanced countries, most notably the United States, relied excessively on domestic demand before the crisis, and they must now rely more on net exports. Many emerging market countries, most notably China, had relied excessively on net exports, but must now look to domestic demand. Continue reading
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, G-20, growth, Low-income countries, Multilateral Cooperation | Tagged: balanced and sustainable growth, capital inflows, downside risks, economic imbalances, financial reform, fiscal consolidation, Fiscal Stimulus, global financial crisis, IMF World Economic Outlook, monetary accommodation, policy coordination, private domestic demand, private investment, rebalance global economy, sustainable recovery, unemployment | 10 Comments »