Posted on February 17, 2016 by iMFdirect
By Andrea F. Presbitero and Min Zhu
(Versions in 中文 (Chinese), Français, and Português)
Many low-income developing countries have joined the group of Eurobond issuers across the globe— in sub-Saharan Africa (for example, Senegal, Zambia, and Ghana), Asia (for example, Mongolia) and elsewhere, raising over US$21 billion cumulatively over the past decade. Tapping these markets provides a new source of funds, but also exposes borrowers to shifts in investor sentiment and rising global interest rates.
Filed under: Africa, Asia, Emerging Markets, IMF, International Monetary Fund, Low-income countries, Public debt | Tagged: Asia, bond spreads, capital inflows, emerging markets, eurobond, exchange rates, financial markets, foreign reserves, GDP, IMF, iMFdirect, International Monetary Fund, low-income countries, public debt, public investment, Sub-Saharan Africa | Leave a comment »
Posted on January 28, 2016 by iMFdirect
By Antoinette Sayeh
(Versions in Español, Français, and Português)
The sub-Saharan Africa region is facing severe shocks associated with the steep decline in commodity prices and tightening global financial conditions. Against this background, it’s a good time to look back at the region’s recent growth experience and examine the relationship between growth rates and competitiveness. The extent to which sub-Saharan African companies are able to compete against their foreign competitors (that is, the extent to which they are competitive) could indeed play a role in sustaining growth going ahead.
Filed under: Africa, Economic outlook, growth, International Monetary Fund, trade | Tagged: Africa, commodity exports, competitiveness, development, exchange rates, growth, IMF, infrastructure, labor force, Regional Economic Outlook: Sub-Saharan Africa, Sub-Saharan Africa | Leave a comment »
Posted on August 3, 2012 by iMFdirect
By Nicolás Eyzaguirre
After three and a half demanding and fulfilling years at the International Monetary Fund, I’ve had a chance to see, up close, countries trying to cope with the global economy in the same way a cook might operate a blender without the lid on—carefully, while creating as little mess as possible.
As I step down from my position as Director of the IMF’s Western Hemisphere Department, I would like to share some reflections on one of the central issues facing many countries—adjustment under fixed exchange rates. It goes without saying that these reflect a personal and not an institutional view.
A lot of ink has been spent over the question of why you would lend money to a country trying to bring down its government debt and deficit. The answer is simple: to give the reforms needed to make economies competitive again time to kick in.
In the old days, fixed exchange rates were the norm rather than the exception. A body of literature and a wealth of country experience have accumulated on how to adjust under such exchange rate regimes, mostly in emerging economies. The expression “adjustment and financing” came to summarize what economies should do when faced with severe funding constraints brought on by high borrowing costs for government debt in financial markets.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Europe, Finance, IMF, International Monetary Fund, Latin America, Politics, Public debt | Tagged: borrowing, competitiveness, devaluation, exchange rates, exports, housing, Labor, Nicolás Eyzaguirre, private sector, Western Hemisphere Department | 4 Comments »
Posted on January 5, 2012 by iMFdirect
By Tamim Bayoumi
The global crisis has pushed trade reforms off—or at least to the edge of—the political radar screen. But shying away from improving the trade system in these tough economic times seems a little like cutting off your nose to spite your face.
The IMF’s First Deputy Managing Director David Lipton summed the issue up in a recent speech: “trade wars can put millions of jobs in jeopardy, while trade integration can be an engine of growth.”
Filed under: Advanced Economies, Emerging Markets, Globalization, growth, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: Doha Development Agenda, exchange rates, global financial crisis, global supply chains, IMF, iMFdirect, International Monetary Fund, international trade, multilateral trading system, trade integration, trade liberalization, trade openness, trade reforms | 6 Comments »
Posted on September 13, 2011 by iMFdirect
By Erik Oppers
What drives the investment decisions of investors with a longer time horizon? Our research found these investors generally do not look at differences in interest rates among countries when deciding where to invest.
It turns out the factors they do consider in making these decisions are good and stable growth prospects, low country risks—including political and economic stability—and a stable exchange rate. This all makes good sense for long-term investors such as pension funds and insurance companies.
So why all this talk about how low interest rates in advanced economies are “pushing” investment flows to emerging countries, where interest rates are generally higher—is this story wrong? Continue reading
Filed under: Advanced Economies, Emerging Markets, IMF, International Monetary Fund | Tagged: advanced economies, capital flows, carry traders, economic growth, emerging economies, exchange rates, Global Financial Stability Report, hedge funds, institutional investors, insurance companies, interest rates, investors, leveraged investors, market volatility, pension funds, portfolio returns, risks | 2 Comments »
Posted on May 11, 2011 by iMFdirect
By Anoop Singh
Much of the debate over global rebalancing has focused on the U.S.-China trade imbalance. But that’s missing the bigger picture.
With the growth of cross-border supply chains—a signature feature of Asia’s trade in recent decades—it would be misleading to focus on bilateral imbalances and exchange rates.
Instead of specializing in producing certain types of final goods, Asian exporters increasingly have specialized in certain stages of production and become vertically integrated with each other. So, as Asia’s economies strive to rebalance their growth models, we need to understand better how the regional supply chain affects the way exchange rates and shifts in global demand work. Continue reading
Filed under: Asia, Economic outlook, International Monetary Fund | Tagged: Asian integration, capital goods, competitiveness, cross-border supply chains, economic imbalances, effective exchange rate, exchange rates, global rebalancing, intermediate good imports, intermediate inputs, production disruptions, Regional Economic Outlook: Asia and Pacific, regional integration, trade integration, trade partners, vertical integration | 1 Comment »
Posted on May 4, 2011 by iMFdirect
By Gustavo Adler and Camilo E. Tovar
(Version in Español)
Abundant global liquidity and high exposure to capital movements have put foreign exchange intervention at center stage of the policy debate in Latin America. Although intervention is widely used, there is limited evidence about its effects on the exchange rate, and particularly in terms of slowing the pace of currency appreciation.
In the latest Regional Economic Outlook: Western Hemisphere we took a fresh look at this issue, examining intervention practices and effectiveness for a group of economies in Latin America and other regions during 2004-10. In particular, we sought to answer the following questions:
- How do Latin American countries intervene and in what respects do they differ from other economies?
- What are the rationales for these policies?
- How effective have they been in affecting the exchange rate? Continue reading
Filed under: Economic outlook, International Monetary Fund, Latin America | Tagged: capital flows, currency appreciation, derivative markets, exchange rate misalignment, exchange rate regimes, exchange rates, foreign exchange intervention, intervention rules, liquidity conditions, overvalued currency, Regional Economic Outlook: Western Hemisphere, spot markets | 3 Comments »