Inclusive and Sustained Growth in Asia: The Role of Fiscal Policy

Posted on May 8, 2013 by iMFdirect

ASinghBy 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.

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Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, Finance, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: , , , | Leave a Comment »

The Lessons of the North Atlantic Crisis for Economic Theory and Policy

Posted on May 3, 2013 by iMFdirect

Joseph_E._StiglitzGuest 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.

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Filed under: Advanced Economies, Debt Relief, Economic Crisis, Emerging Markets, Europe, Finance, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , , | 8 Comments »

Emerging Asia: At Risk of the “Middle-Income Trap”?

Posted on April 29, 2013 by iMFdirect

ASinghBy Anoop Singh

(Versions in 中文 and 日本語)

Emerging economies in Asia have weathered the global financial crisis relatively unscathed and appear to be on track for continued strong growth this year and the next. Perhaps because the region has been doing rather well, policymakers’ concerns have increasingly shifted towards medium-term risks: could growth and fast convergence to living standards in advanced economies—come to an end?

In fact, while the economic performance of emerging economies in Asia remains undoubtedly strong in international comparison, it has already shown signs of gradual weakening.

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Filed under: Advanced Economies, Asia, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , , | Leave a Comment »

How to Sustain Recent Financial Gains: Fix Old Risks and Meet New Challenges

Posted on April 17, 2013 by iMFdirect

GFSRBy José Viñals

(Versions in  عربي ,日本語, Español)

Policymakers’ decisive actions  since our last report in October have increased global financial stability by reducing acute risks.

  • In the euro area, policymakers averted a financial cliff.
  • In the United States, the worst fears of the fiscal cliff had been averted, while balance sheet repair and continued monetary easing have supported financial markets and the recovery.
  • In Japan, new policy initiatives have caught the imagination of global markets that Japan may finally leave its deflation valley.

But our latest Global Financial Stability Report concludes that improved financial markets and gains in financial stability will not be sustained—and new risks are likely to emerge—unless policymakers address key underlying vulnerabilities.

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Filed under: Economic Crisis, Europe, Finance, Financial Crisis, growth, International Monetary Fund | Tagged: , , , , , , , , , | Leave a Comment »

Subsidizing Energy Consumption: Why it’s Wrong and What Can Be Done About it

Posted on March 27, 2013 by iMFdirect

Carlo CottarelliBy Carlo Cottarelli

(Versions in Español, 中文, Français, 日本語, and Русский)

Let’s face it. Everybody loves cheap energy. Almost all human activities require energy consumption and, if something is so basic, it seems pretty obvious that it should not be denied to anyone and government should make it as cheap as possible to both households and companies, including through subsidies. This can help households avoid paying exorbitant energy bills at the end of the month, something that the poor may not be able to afford even for basic needs like heating and cooking.

Companies may also need energy subsidies to help them stay competitive. Energy subsidies appear even more appropriate, and even the obvious thing to do, in countries that have a large supply of energy, like oil producers. After all, this natural wealth in the form of energy belongs to the people; why shouldn’t it be cheap?

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Filed under: Africa, Economic research, Español, Finance, Financial Crisis, Fiscal policy, Français, growth, Inequality, International Monetary Fund, Low-income countries, Middle East, Politics, عربي | Tagged: , , , , , , , | Leave a Comment »

Support the People, Not Energy in the Middle East and North Africa

Posted on March 27, 2013 by iMFdirect

Masood AhmedBy Masood Ahmed

(Versions in عربي, 中文, Français, 日本語, Русский, and Español)

Of all the regions in the world, the Middle East and North Africa region stands out as the one that relies the most on generalized energy subsidies. In energy-rich countries, governments provide subsidies to their populations as a way of sharing the natural resource wealth. In the region’s energy-importing countries, governments use subsidies to offer people some relief from high commodity prices, especially since social safety nets are often weak.

The question is: does this well-intended social protection policy represent the most efficient way to channel aid to the most vulnerable? The answer is no!

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Filed under: Emerging Markets, Finance, Fiscal policy, growth, IMF, Investment, Middle East, Politics, عربي | Tagged: , , , , , , , , | Leave a Comment »

India’s Slowdown May Have a Silver Lining

Posted on May 24, 2012 by iMFdirect

By Roberto Guimarães and Laura Papi

The extent of the recent slowdown in India’s growth rate has surprised most India watchers even in the face of ongoing international financial market volatility, high and volatile oil prices, and the uneven global recovery.

GDP growth fell throughout 2011, from a high of 7.8 percent at the beginning of the year to 6.1 percent in the quarter ending in December. The slowdown in the economy has affected the industrial sector particularly hard and has extended to 2012 as shown by the 3.5 percent contraction (y/y) in March industrial production. For 2012/13, we at the IMF project that GDP growth is likely to be about 7 percent.

While India has been affected by the worldwide slowdown, many observers have started to question the inner strength of the Indian growth story.

By international standards 7 percent growth is still very robust, but it sometimes feels like underachievement for a country that was growing at more than 9 percent just a few years ago.

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Filed under: Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, Globalization, growth, Inequality, Investment, Politics, Public debt | Tagged: , , , , , , , , , , , , , , , , , , | 6 Comments »

Arab Countries in Transition Under the Spotlight

Posted on April 29, 2012 by iMFdirect

By Masood Ahmed

(Version in عربي)

Historic transitions in several Arab countries are coming under increasing strain. Domestic uncertainty over the countries’ future course, compounded by the global slowdown and rising oil prices, took a toll on growth in 2011, and the current year will be equally challenging.

A joint and sustained effort is needed to help these countries navigate through this challenging period and set out an economic vision that is fair and inclusive.

Clear risks require strong resolve

The difficulties and challenges facing these countries were very much a focus of discussion during the recent 2012 IMF-World Bank Spring Meetings in Washington. The meetings brought together ministers and top officials from all over the world, with Middle East issues high on the agenda.

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Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Finance, Financial regulation, Globalization, growth, IMF, Inequality, International Monetary Fund, Middle East, Public debt | Tagged: , , , , , , , , , , , , , , | 4 Comments »

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