Posted on February 10, 2012 by iMFdirect
By Nicolás Eyzaguirre
(Version in Español)
The IMF has sharply marked down its forecast for world growth and it now expects a mild recession in the euro area. Naturally, weaker world growth will affect economic activity in Latin America and the Caribbean.
Concretely, the Fund expects the world economy to grow by just 3¼ percent in 2012, ¾ percentage points lower than our September forecasts.
In contrast, our forecast for the U.S. economy for 2012 is unchanged, as incoming data signal a stronger—but still sluggish—domestic recovery that will offset a weaker global environment. Commodity prices will be affected by ebbing global demand, with oil projected to fall about 5 percent and non-oil commodities about 14 percent.
Filed under: Economic outlook, Economic research, Español, Financial Crisis, International Monetary Fund, Latin America | Tagged: bank lending, bond spreads, commodity prices, euro area, exchange rate flexibility, external financing, financial system stress, fiscal credibility, global demand, IMF, iMFdirect, International Monetary Fund, monetary policy, public debt, recession, sovereign spreads, world growth | 2 Comments »
Posted on January 29, 2012 by iMFdirect
By Carlo Cottarelli
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
The IMF has argued for some time that the very high public debt ratios in many advanced economies should be brought down to safer levels through a gradual and steady process. Doing either too little or too much both involve risks: not enough fiscal adjustment could lead to a loss of market confidence and a fiscal crisis, potentially killing growth; but too much adjustment will hurt growth directly.
At times over the last couple of years we called on countries to step up the pace of adjustment when we thought they were moving too slowly.
Instead, in the current environment, I worry that some might be going too fast.
Risk to recovery
The latest update of the Fiscal Monitor shows that fiscal adjustment is proceeding pretty quickly in the advanced economies—on average the deficit is projected to fall by a total of 2 percentage points of GDP in 2011-12. The decline is even larger in the euro area—about 3 percentage points of GDP. In a reasonably good growth environment this pace of adjustment would be fine. But in the current weaker macroeconomic environment bringing deficits down this quickly could pose a risk for the economic recovery. Continue reading
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Finance, Fiscal policy, Public debt | Tagged: bond spreads, confidence, economic recovery, fiscal adjustment, Fiscal Monitor, government bonds, IMF, iMFdirect, International Monetary Fund, market behavior, medium-term fiscal consolidation, public debt, public deficits | 11 Comments »
Posted on September 21, 2011 by iMFdirect
By Carlo Cottarelli
(Versions in عربي, Français, 中文 and Русский)
In the midst of jittery financial markets, and global economic doom and gloom, it’s easy to become pessimistic. Perhaps too much so; amid what seems like a steady drum beat of bad news, one can lose sight of what has been achieved over the last couple of years.
Public debt and fiscal deficits in many advanced economies remain very high. Nevertheless, important progress has been made in fiscal adjustment in many advanced economies. For most countries, government deficits have fallen substantially—by 2¼ percentage points of GDP on average compared to two years ago.
The fiscal outlook in most countries is stronger than we expected two years ago. Continue reading
Filed under: Advanced Economies, Economic outlook, Economic research, Fiscal policy, IMF, International Monetary Fund | Tagged: economic growth, fiscal consolidation, Fiscal Monitor, fiscal policy, government debt, government deficits, IMF, iMFdirect, International Monetary Fund, job-creating growth, medium-term fiscal consolidation, public debt | 1 Comment »
Posted on September 20, 2011 by iMFdirect
By Olivier Blanchard
(Versions in عربي, Français, Español and Русский)
The global economy has entered a dangerous new phase. The recovery has weakened considerably, and downside risks have increased sharply. Strong policies are urgently needed to improve the outlook and reduce risks.
Growth, which had been strong in 2010, decreased in 2011. We had forecast some slowdown, due mainly to fiscal consolidation. One-time events, such as the tragic earthquake in Japan, offered plausible explanations for a further slowdown. The initial U.S. data also understated the size of the slowdown. Now that the numbers are in, it is clear that more was going on. Continue reading
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, IMF, International Monetary Fund, Low-income countries | Tagged: bank balance sheets, bank capital, bank lending, current account deficits, current accout surpluses, downside risks, economic forecasts, economic rebalancing, external rebalancing, financial volatility, fiscal consolidation, IMF, iMFdirect, International Monetary Fund, low growth, medium-term fiscal consolidation, Olivier Blanchard, private demand, public debt, public deficits, sovereign bonds, weak balance sheets, World Economic Outlook, world growth | 14 Comments »
Posted on June 21, 2011 by iMFdirect
By Carlo Cottarelli
عربي, 中文, Español, Français, Português, Русский)
In São Paulo, Brazil last Friday we launched our latest assessment of the state of government finances, debts, and deficits. While many countries are slogging through a tough fiscal time, there is some good news, including in the United States where the deficit will be lower this year than previously expected. I will also give you an assessment of how the new information affects our sense of what needs to be done in the future.
Let me start by talking about the advanced economies where, as is well known, the fiscal accounts are generally weaker, reflecting large increases in deficits and debt ratios since the start of the crisis in 2008. Continue reading
Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, Employment, Europe, Fiscal policy, growth, IMF, Latin America, Low-income countries, Public debt | Tagged: Brazil, debt, deficits, Europe, Japan, public debt, São Paulo, United States | 1 Comment »
Posted on April 26, 2011 by iMFdirect
By Benedict Clements
We all hope to retire one day. Our pensions hold the promise of that.
But when that promise is a public pension, it’s also a lot like debt the government has to pay at some point in the future.
Good fiscal policy means thinking about how policy decisions—especially ones that involve long-term promises, such as pensions—affect government finances both today and in the future.
The first problem is that good fiscal policy hasn’t always ruled the day, to put it mildly. Today, pension reform is a priority for the advanced economies as current trends are unsustainable—see Commandment V—and for many emerging and low-income economies that need “to improve coverage of health and pension systems in a fiscally sound manner.” Continue reading
Filed under: Advanced Economies, Emerging Markets, Fiscal policy, International Monetary Fund, Public debt | Tagged: fiscal indicators, fiscal policy, fiscal sustainability, government deficits, pension liabilities, pension reform, pension-adjusted budget balance, pensions, public debt | 7 Comments »