Tackling China’s Debt Problem: Can Debt-Equity Conversions Help?


By James Daniel, José Garrido, and Marina Moretti

Version in 中文 (Chinese)

China’s high and rising corporate debt problem and how best to address it has received much attention recently. Indeed, corporate debt in China has risen to about 160 percent of GDP, which is very high compared to other, especially developing, countries.

The IMF’s April 2016 Global Financial Stability Report looked at the issue from the viewpoint of commercial banks and resulting vulnerabilities. Its analysis suggests that the share of commercial banks’ loans to corporates that could potentially be at risk has been rising fast and, although currently at a manageable level, needs to be addressed with urgency in order to avoid serious problems down the road.  Indeed the success in addressing this issue is important for China’s economic transition and, given its size and growing global integration, the world’s economy at large.

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Warning Signs as Global Financial Risks Increase


GFSRBy José Viñals

Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)

 

Over the last six months, global financial stability risks increased as a result of the following developments:

  • First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference.
  • Second, falling commodity prices and concerns about China’s economy have put pressure on emerging markets and advanced economy credit markets.
  • Finally, confidence in policy traction has slipped, amid concerns about the ability of overburdened monetary policies to offset the impact of higher economic and political risks.

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The Changing Roles of Emerging Economies and the Insurance Sector


by iMFdirect

Today the IMF published some of its new research from the Global Financial Stability Report on two hot topics: emerging economies and the insurance sector in advanced economies.  Here’s a quick take on the latest analysis. Continue reading

What the G20 Can Do to Help the Global Recovery


By iMFdirect

(Versions in عربي and Español)

Shanghai will welcome finance ministers and central bank governors for the first ministerial meeting under China’s Group of Twenty presidency this weekend. The meeting comes at a critical time for the global economy. A note by IMF staff prepared as background for the G20 meeting, Global Prospects and Policy Challenges, points to a tepid recovery, and warns that weaker global growth might well be in the cards. This calls for a strong policy response, both national and multilateral, including from the G20.

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China’s Housing Market: Defying the Odds?


by iMFdirect

Housing is on everyone’s mind. The collapse of housing bubbles can be very costly.

  • In Japan, house prices rose by about 40 percent during the mid-1980s; the collapse was followed by a ‘lost decade’ in which incomes did not grow and house prices fell by over 40 percent.
  • In the United States, house prices increased by about 30 percent between 2001 and 2006; their collapse was followed by the global financial crisis.

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Subdued Growth, Diminished Prospects, Action Needed


By Maurice Obstfeld

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

At the start of 2016, turbulence in financial markets has returned amid renewed concern about risks to global economic growth. The fundamental forces that underlay our October World Economic Outlook projections have not dissipated, and in some respects have intensified, leading us to trim our expectations for future medium-term growth of the world economy.

In the World Economic Outlook Update released today, we still, however, expect growth to pick up this year in most countries.

Despite the modesty of the reduction we see in general growth prospects and the promise of improvement in coming years, downside risks to our central scenario have intensified. In our view, a focus on these risks is the main factor driving recent developments in financial markets.

We may be in for a bumpy ride this year, especially in the emerging and developing world.

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China and Africa: Will the Honeymoon Continue?


By Wenjie Chen and Roger Nord

(Versions in عربي中文, Français, Português, and Español)

China’s President Xi Jinping’s recent pledge of US$60 billion in financial support over the next three years illustrates the depth of the partnership between China and Africa.

However, China’s shift from an investment-heavy, export led growth strategy to an economic model that relies more on domestic consumption has led to a dramatic decline in commodity prices. Lower commodity prices and lower volumes of trade have hit sub-Saharan Africa’s commodity exporters hard. But over the medium term, this shift may offer sub-Saharan African countries the opportunity to diversify their economies away from natural resources, and create jobs for their young populations, provided they pursue the right policies to foster competitiveness and integrate into global value chains.

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