Posted on April 8, 2014 by iMFdirect
By Olivier Blanchard
(Version in Français, Español, Русский, عربي, 中文 and 日本語)
The dynamics that were emerging at the time of the October 2013 World Economic Outlook are becoming more visible. Put simply, the recovery is strengthening.
In our recent World Economic Outlook, we forecast world growth to be 3.6 percent this year and 3.9 percent next year, up from 3.0 percent last year.
In advanced economies, we forecast growth to reach 2.2 percent in 2014, up from 1.3 percent in 2013.
The recovery which was starting to take hold in October is becoming not only stronger, but also broader. The various brakes that hampered growth are being slowly loosened. Fiscal consolidation is slowing, and investors are less worried about debt sustainability. Banks are gradually becoming stronger. Although we are far short of a full recovery, the normalization of monetary policy—both conventional and unconventional—is now on the agenda.
Brakes are loosened at different paces however, and the recovery remains uneven.
Filed under: Advanced Economies, Africa, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Financial Crisis, growth, IMF, Inequality, International Monetary Fund | Tagged: China, euro area, Germany, IMF forecast, India, inflation, Japan, macroeconomic policy, Olivier Blanchard, United Kingdom, United States, WEO, World Economic Outlook | 1 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 April 3, 2014 by iMFdirect
By Aseel Almansour, Aqib Aslam, John Bluedorn and Rupa Duttagupta
(Version in Español, Français, Русский, 中文 and 日本語)
The recent slowdown in emerging market growth is fueling a growing mania across markets and policy circles. Some worry that a large part of their stellar pace of growth over the 2000s (Figure 1) was due to a favorable external environment—cheap credit and high commodity prices. And, therefore, as advanced economies gather momentum now and begin to normalize their interest rates, and commodity price gains begin to reverse, emerging market growth could slip further.
Others instead contend that internal or domestic factors have played a role, with improved standards of governance and genuine structural reforms and robust policies, driving a fundamental transformation in the sources of emerging market growth towards a lower yet more sustainable trajectory.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Financial Crisis, growth, International Monetary Fund, Latin America | Tagged: Chile, China, emerging market, forecast, India, interest rates, Malaysia, Mexico, Thailand, United States, WEO | Leave a comment »
Posted on March 26, 2014 by iMFdirect
By Steven Barnett
(Version in 中文 and Español)
Mongolia’s economy grew nearly 12 percent last year, the United States around 2 percent. So Mongolia grew around 6 times faster than the United States, yet of course the United States contributed more to GDP growth—over 150 times more. Why, because size matters.
Let’s apply this logic to China. A bigger but somewhat slower growing China of the future will contribute about as much to global demand as the smaller but faster growing China of before. This is arithmetic: An economy that is twice as big can grow by ½ as much and contribute the same to global demand. By the way, China today is more than twice as big as it was a decade ago.
So, the good news is, even with slower growth, China will continue to be an engine of global output. Indeed, an even bigger engine than before.
Filed under: Asia, Economic research, Emerging Markets, Globalization, growth, IMF, International Monetary Fund | Tagged: China, economic growth, exchange rate, Mongolia, PPP exchange rate, United States | 2 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 30, 2014 by iMFdirect
By Alejandro Werner
(Version in Español, Português)
Looking to the year ahead, how do we see the global economic landscape, and what will this mean for our region? This question is especially on people’s minds today, given the risks of deflation in advanced economies and of sustained turbulence in emerging markets.
Despite these risks, we expect that the region will grow a little faster than last year—increasing from 2.6 percent in 2013 to 3 percent in 2014. Stronger global demand is one part of the story, but not the whole story; volatility is likely to be a significant feature of the landscape ahead. And regional growth rates will still be in low gear compared to historical trends, and downside risks to growth remain. So, let’s start with the global scene.
Filed under: Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, growth, IMF, International Monetary Fund, Latin America | Tagged: Alejandro Werner, Argentina, Brazil, Caribbean, Central America, Chile, Colombia, financial market, inflation, Latin America, Mexico, Peru, South America, tourism, United States, Uruguay, Venezuela, Western Hemisphere | Leave a comment »
Posted on January 23, 2014 by iMFdirect
By José Viñals
Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl.
At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global financial regulatory reform agenda, launched five years ago. The explicit goal of the Australian G-20 presidency is to finally complete these essential reforms. As Prime Minister Tony Abbott said today in Davos, “Financial regulation is always a work-in-progress, but these reforms now need to be finalized in ways that promote confidence without eliminating risk.”
I strongly support this extra push to create a safer financial system that can better support the needs of the real economy, and better protect taxpayers. For far too long, critics have been able to portray the G-20 reform agenda as a regulatory supertanker stuck in the shallow waters of technical complexity, financial industry pushback, and diverging national views. This image is increasingly off the mark.
Filed under: Economic Crisis, Economic outlook, Employment, Europe, Financial Crisis, Fiscal policy, G-20, growth, IMF, International Monetary Fund, Politics | Tagged: Basel III, Ben Bernanke, Davos, economic reform, European Union, Financial Stability Board, G-20, global financial system, Japan, José Viñals, U.S. Fed, United Kingdom, United States, United States Federal Reserve | 3 Comments »