Posted on October 8, 2014 by iMFdirect
by Vitor Gaspar
(version in Español, Français, 中文, Русский, and 日本語)
Unemployment remains unacceptably high in many countries. It increased dramatically during the Great Recession. Global unemployment currently exceeds 200 million people. An additional 13 million people are expected to be unemployed by 2018.
The most worrisome is youth unemployment. There are examples of advanced economies in Europe where youth unemployment surged above 50 percent. In several developing economies, job creation does not absorb the large number of young workers entering the labor force every year.
Filed under: Advanced Economies, Asia, Debt Relief, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Fiscal, growth, IMF, International Monetary Fund, Reform, unemployment | Tagged: bond markets, economic reform, Fiscal Monitor, fiscal policy, Great Recession, inflation, interest rates, labor market, public investment, structural policies, unemployment, youth unemployment | 2 Comments »
Posted on September 10, 2014 by iMFdirect
By Francesco Columba and Jarkko Turunen
(Versión en español)
photo: Patrick H. Corkery/DoD/Sipa USA/Newscom
After more than five years of exceptionally low interest rates, the U.S. Fed is getting closer to the point of managing a liftoff of policy interest rates from close to zero. As of today, liftoff is expected to take place by around mid-2015.
But this is not set in stone. The Fed has repeatedly emphasized that the timing will depend on the state of the U.S. economy. If things look better, policy rates may increase earlier. Conversely, weaker than expected data may well mean that interest rates will move up later.
In our view, based on our most recent economic projections, there is some scope for policy rates to stay at zero for a little while longer than mid-2015, given the remaining slack in the labor market and still low inflation.
Filed under: Advanced Economies, Economic outlook, Employment, Fiscal policy, International Monetary Fund | Tagged: fiscal policy, IMF, interest rates, International Monetary Fund, monetary policy, unemployment, United States, US Federal Reserve | Leave a comment »
Posted on April 7, 2014 by iMFdirect
By Giovanni Dell’Ariccia and Karl Habermeier
(Versions in Español)
The global financial crisis shook monetary policy in advanced economies out of the almost complacent routine into which it had settled since Paul Volcker’s Fed beat inflation in the United States in the early 1980s.
Simply keep inflation low and stable, target a short-term interest rate, and regulate and supervise financial institutions, the mantra went, and all will be well.
Of course many scholars and policymakers, especially in emerging markets, were skeptical of this simple creed. But they did not make much headway against a doctrine seemingly well-buttressed by sophisticated theoretical models, voluminous empirical research, and over 20 years of “Great Moderation” —low inflation and output volatility. All of that has changed since the crisis, and ideas that were once marginal have now moved to center stage.
Filed under: Advanced Economies, Economic research, Emerging Markets, Finance, Financial Crisis, Fiscal policy, IMF, International Monetary Fund | Tagged: central banks, financial stability, inflation, interest rates, macroeconomic policy, monetary policy, policymakers, Singapore, unemployment, United Kingdom, United States | 1 Comment »
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 27, 2014 by iMFdirect
By Reza Moghadam
Is the recovery everyone has been waiting for finally here? Encouraging signs from Europe—rising share prices, lower sovereign bond yields, and increased risk appetite—reflect an upturn in high-frequency indicators, the first signs of positive domestic demand in the euro area, and the prospect of less drag from fiscal consolidation.
At the same time, there are formidable headwinds to overcome. Debt owed by households and businesses remains high, making a rapid pick-up in consumption and investment unlikely. Contracting bank lending, as well as relatively tougher credit conditions in the countries most in need of support, are also holding back recovery. And reducing unacceptably high levels of unemployment depends on strong growth.
Filed under: Economic research, Employment, Europe, Financial Crisis, International Monetary Fund | Tagged: book launch, euro area, recovery, unemployment, video | Leave a comment »
Posted on February 19, 2014 by iMFdirect
By Subir Lall
(Version in Português)
Today the IMF released a report on Portugal’s progress under the country’s Economic Adjustment Program. What is the latest assessment?
A strong start
There is no doubt that Portugal has made remarkable progress over the past three years. When the sovereign lost access to international bond markets in 2011, the outlook was grim. The economy was facing large domestic and external imbalances and dismal growth prospects. Unprecedented official financing from Portugal’s European partners and the IMF provided a window of opportunity to address the weaknesses at the root of the crisis and regain market confidence. While constrained by formal and informal strictures, the authorities rose to the occasion.
Filed under: Economic Crisis, Emerging Markets, Employment, Europe, Financial Crisis, growth, International Monetary Fund | Tagged: bonds, fiscal adjustment, labor market, Portugal, reforms, unemployment | Leave a comment »
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 »