Posted on April 11, 2014 by iMFdirect
By Reza Moghadam
Economic growth across Europe is slowly picking up, which is good news. But the recovery is still modest and measures to boost economic growth and create jobs are important.
Western Europe: picking up the pace
The recovery projected last October for the euro area has solidified. This is reflected in our revised forecasts—e.g., the 2014 forecast for the euro area is up from 1 percent last October to 1.2 percent now, with important upgrades in countries like Spain. These revisions reflect the stronger data flow on the back of past policy actions, the revival of investor confidence, and the waning drag from fiscal consolidation. The positive impact on program countries is palpable—improving economies, lower spreads, and evidence of market access. We’ve also seen a welcome pick-up in growth in the UK (almost 3 percent is expected for 2014).
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: banking union, ECB, euro area, inflation, loans, lowflation, macroeconomic policy, recovery, Regional Economic Outlook: Europe, Russia, Spain, Turkey, Ukraine, United Kingdom | 2 Comments »
Posted on March 4, 2014 by iMFdirect
By Reza Moghadam, Ranjit Teja, and Pelin Berkmen
Recent talk about deflation in the euro area has evoked two kinds of reactions. On one side are those who worry about the associated prospect of prolonged recession. On the other are those who see the risk as overblown. This blog and the video below sift through both sides of the debate to argue the following:
- Although inflation—headline and core—has fallen and stayed well below the ECB’s 2% price stability mandate, so far there is no sign of classic deflation, i.e., of widespread, self-feeding, price declines.
- But even ultra low inflation—let us call it “lowflation”—can be problematic for the euro area as a whole and for financially stressed countries, where it implies higher real debt stocks and real interest rates, less relative price adjustment, and greater unemployment.
- Along with Japan’s experience, which saw deflation worm itself into the system, this argues for a more pre-emptive approach by the ECB.
Filed under: Economic research, Europe, Financial Crisis, growth, IMF, International Monetary Fund | Tagged: competitiveness, deflation, euro area, Europe, inflation, Japan, Spain, unemployment | 5 Comments »
Posted on February 7, 2014 by iMFdirect
By Prakash Loungani
(Version in Español)
Over 200 million people are unemployed around the globe today, over a fifth of them in advanced economies. Unemployment rates in these economies shot up at the onset of the Great Recession and, five years later, remain very high. Some argue that this is to be expected given that the economy remains well below trend and press for greater easing of macroeconomic policies (e.g. Krugman, 2011, Kocherlakota (2014)). Others suggest that the job losses, particularly in countries like Spain and Ireland, have been too large to be explained by developments in output, and may largely reflect structural problems in their labor markets. Even in the United States, where unemployment rates have fallen over the past year, there is concern that increasing numbers of people are dropping out of the labor force, thus decoupling jobs and growth.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Finance, growth, International Monetary Fund, recession | Tagged: Austria, employment, Great Recession, Ireland, Italy, jobs, labor force, labor market, Prakash Loungani, Spain, structural reform, unemployed, unemployment, United States | Leave a comment »
Posted on January 28, 2014 by iMFdirect
By Christine Lagarde
(Version in Français and Español)
As we begin the new year, Europe confronts both good and bad news. First the good news. Growth is finally picking up in the euro area as it is slowly emerging from the deep recession. The bad news? Still nearly 20 million people are unemployed. Until the effects on employment have been reversed, we cannot say that the crisis is over.
Two trends are particularly troubling, now and for the future. First, the high level of long-term unemployment gives me great cause for concern: almost half of those without a job have been unemployed for more than a year. Second, I still worry about the large number of young people without jobs: nearly one quarter of Europeans under the age of 25 who are looking for a job cannot find one. In Italy and Portugal, more than one third of under-25s are unemployed, and in Spain and Greece more than one half are.
Filed under: Advanced Economies, Economic research, Employment, Europe, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: book launch, Christine Lagarde, Czech Republic, euro area, Europe, Germany, labor market, Slovakia, Spain, unemployment | Leave a comment »
Posted on January 24, 2014 by iMFdirect
The IMF’s Christine Lagarde is in Brussels on January 28 to talk about jobs and growth in Europe.
The good news is growth is finally picking up in the euro area as it is slowly emerging from the deep recession. But nearly 20 million people are unemployed.
The most effective way of boosting jobs is to get growth going again.
The IMF has a new book that analyzes today’s challenges head-on and proposes a roadmap for the continent’s recovery.
Christine Lagarde will discuss the book along with Wolfgang Schäuble, Finance Minister of Germany, and Luis de Guindos, Minister of Economy and Competitiveness of Spain. The event will be chaired by Fabian Zuleeg, Chief Executive of the European Policy Centre.
Watch the live webstream on this page from 8.00-9.30 a.m. (Central European Time).
Filed under: Advanced Economies, Economic research, Employment, Europe, Financial Crisis, growth, International Monetary Fund | Tagged: book launch, Christine Lagarde, economic recovery, Europe, Germany, Spain, unemployment | Leave a comment »
Posted on April 29, 2013 by iMFdirect
By Olivier Blanchard
(Versions in عربي, 中文, Français, Русский, and Español)
The IMF has just hosted a second conference devoted to rethinking macroeconomic policy in the wake of the crisis. After two days of fascinating presentations and discussions, I am certain of one thing: this is unlikely to be our last conference on the subject.
Rethinking and reforms are both taking place. But we still do not know the final destination, be it for the redefinition of monetary policy, or the contours of financial regulation, or the role of macroprudential tools. We have a general sense of direction, but we are largely navigating by sight.
Filed under: Advanced Economies, Asia, Debt Relief, Economic research, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: conference, debt, Financial regulation, financial sector, iMFdirect, International Monetary Fund, Italy, Japan, macroeconomic policy, macroeconomics, macroprudential policies, monetary policy, Olivier Blanchard, Spain, United Kingdom | 7 Comments »
Posted on April 16, 2013 by iMFdirect
By Olivier Blanchard
(Versions in عربي , 中文, 日本語, Русский, and Español)
The main theme of our latest outlook is one that you have now heard for a few days: we have moved from a two-speed recovery to a three-speed recovery.
Emerging market and developing economies are still going strong, but in advanced economies, there appears to be a growing bifurcation between the United States on the one hand, and the Euro area on the other.
This is reflected in our forecasts. Growth in emerging market and developing economies is forecast to reach 5.3% in 2013, and 5.7% in 2014. Growth in the United States is forecast to be 1.9% in 2013, and 3.0% in 2014. In contrast, growth in the Euro area is forecast to be -0.3% in 2013, and only 1.1% in 2014.
Filed under: Advanced Economies, Asia, Debt Relief, Economic Crisis, Economic outlook, Emerging Markets, Europe, Fiscal policy, growth, Low-income countries | Tagged: Brazil, China, economic forecasts, euro area, Europe, Germany, IMF, iMFdirect, India, International Monetary Fund, Italy, Japan, Olivier Blanchard, Spain, United States, WEO | 1 Comment »
Posted on February 15, 2013 by iMFdirect
By Nemat Shafik
During the years that followed the euro’s introduction, financial integration proceeded rapidly and markets and governments hailed it as a sign of success. The widespread belief was that it would benefit both south and north—capital was finally able to flow to where it would best be used and foster real convergence.
But in fact, a lasting convergence in productivity did not materialize across the European Union. Instead, a competitiveness divide emerged. As the financial crisis gripped the euro area in 2010, these and other problems came to the fore.
Three years later, the financial symptoms of the crisis are thankfully receding with a new sense of optimism in markets. But the underlying problems—lack of convergence of productivity and the structural flaws in the architecture of the monetary union—have only been partially addressed.
Filed under: Advanced Economies, Economic Crisis, Employment, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: central banks, emerging economies, euro zone, Europe, European Union, financial integration, fiscal integration, fiscal union, Germany, IMF, iMFdirect, International Monetary Fund, Italy, monetary union, productivity, Spain | Leave a comment »
Posted on January 23, 2013 by iMFdirect
by Olivier Blanchard
Version in Español and عربي
Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.
Compared to where we were at the same time last year, acute risks have decreased. The United States has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.
But we should be under no illusion. There remain considerable challenges ahead. And the recovery continues to be slow, indeed much too slow.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: banking union, Brazil, capital flows, China, debt, developing economies, emerging economies, euro area, Europe, European Central Bank, financial markets, fiscal cliff, fiscal consolidation, fiscal crisis, fiscal policy, France, Germany, government bonds, government debt and deficits, growth, IMF, iMFdirect, India, inflation, International Monetary Fund, Italy, Japan, Outright Monetary Transactions, Spain, United States, WEO, World Economic Outlook | 5 Comments »
Posted on January 17, 2013 by iMFdirect
by Serkan Arslanalp and Takahiro Tsuda
It’s not news that emerging markets can be vulnerable to bouts of market volatility. Investors often pull sudden stops—they stop buying or start selling off their holdings of government bonds.
But what has become apparent in recent years is that advanced economy government bond markets can also experience investor outflows, and associated runs. At the same time, some traditional and new safe haven countries have seen their borrowing costs drop to historic lows as they experience rising inflows from foreign investors.
Our new research shows that advanced economies’ exposure to refinancing risk and changes in government borrowing costs depend mainly on who is holding the bonds— the demand side for government debt.
Filed under: Advanced Economies, Asia, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Financial sector supervision, G-20, growth, IMF, International Monetary Fund | Tagged: advanced economies emerging economies, Australia, Austria, banks, Belgium, borrowing costs, Canada, debt, debt-to-GDP ratio, demand, Denmark, financial institutions, financial markets, Finland, France, Germany, government bonds, Greece, IMF, iMFdirect, International Monetary Fund, investors, Ireland, Italy, Japan, Korea, Netherlands, New Zealand, Norway, Portugal, refinancing risk, risk, Slovenia, sovereign risk, Spain, supply, Sweden, Switzerland, United States, World Economic Outlook | 4 Comments »