Posted on October 16, 2013 by iMFdirect
By Alejandro Werner
(Version in Español & Português)
For many Latin American and Caribbean economies, clouds have appeared on the economic horizon. As the global growth momentum shifts from the emerging to the advanced economies, the strength of domestic economic policies will be crucial for how countries can cope with the combination of lower commodity prices and tighter external financing conditions.
Lower commodity prices have already started to affect the region’s commodity exporters. Even though prices remain high by historical standards, countries can no longer count on the tailwind from ever-improving terms of trade, which had propelled economic activity over the past decade.
Meanwhile, longer-term U.S. interest rates have started to rise, with knock-on effects for emerging markets. Across all of the financially integrated economies of Latin America, bond yields have increased, equity prices have fallen, and currencies have depreciated since May, when the U.S. Fed first mentioned the possibility of tapering its bond purchases later this year. Financial conditions remain fairly benign for now, but the strong tailwind from ultra-low external financing costs may also be gone for good.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, IMF, International Monetary Fund, Languages, Latin America, Public debt | Tagged: fiscal balances, infrastructure, lending, Regional Economic Outlook: Western Hemisphere | Leave a comment »
Posted on October 2, 2013 by iMFdirect
By Erik Oppers
What’s up with weak credit? Five years into the economic crisis credit is still barely growing, and even declining in many advanced economies. Weak credit growth is a major factor holding back the economic recovery and governments have tried every policy they can come up with to jumpstart credit. Still, banks don’t seem to want to lend. Or is it the corporate sector and households that can’t afford to borrow? Many feel these policies are not working. What are policymakers to do?
Our analysis in the most recent Global Financial Stability Report tries to shed light on all this darkness to help countries figure out how to make these policies work. It turns out there is no cookie-cutter solution: the problem differs from country to country and changes over time. For example, in a number of euro area countries, a lackluster demand for loans limited credit growth early in the crisis, but then banks became reluctant to supply more loans as the crisis in Europe intensified in 2012.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Finance, Fiscal policy, growth, International Monetary Fund, Politics | Tagged: balance sheets, banks, credit, euro area, financial stability, GFSR, Global Financial Stability Report, lending | Leave a comment »
Posted on July 17, 2012 by iMFdirect
By José Viñals
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
Our latest update of the Global Financial Stability Report has three key messages.
First, financial stability risks have increased, because of escalating funding and market pressures and a weak growth outlook.
Second, the measures agreed at the recent European leaders’ summit provide significant steps to address the immediate crisis, but more is needed. Timely implementation and further progress on banking and fiscal unions must be a priority.
And third, time is running out. Now is the moment for strong political leadership, because tough decisions will need to be made to restore confidence and ensure lasting financial stability in both advanced and emerging economies. It is time for action.
Now, why have financial stability risks increased?
Filed under: Advanced Economies, Europe, Financial Crisis, IMF, International Monetary Fund | Tagged: advanced economies, balance sheets, banks, capital flows, debt, emerging economies, euro zone, European Central Bank, European Stability Mechanism, financial markets, financial stability, fiscal consolidation, fiscal policy, GFSR, Global Financial Stability Report, growth, IMF, International Monetary Fund, Italy, lending, monetary policy, safe assets, Spain, United States | 3 Comments »
Posted on May 25, 2010 by iMFdirect
By Masood Ahmed
In the midst of an early and uncertain economic recovery from the global crisis, countries in the Middle East and North Africa (MENA) region have been experiencing a sharp slowdown in the growth of credit to the private sector, by about 30 percentage points on average relative to precrisis peak rates.
For many sectors, firms, and households that depend on bank financing, this slowdown may be forcing them to scale back their spending plans, or to resort to scarce or costly alternative avenues for financing. Slow credit growth may therefore be constraining the strength of the recovery in the short run, in addition to limiting prospects for longer-term growth. Policymakers are understandably concerned.
Filed under: Economic Crisis, Economic research, Financial Crisis, IMF | Tagged: balance sheets, bank funding, bank profitability, capital losses, countercyclical policy, credit culture, credit demand, credit growth, Iran, Jordan, Kuwait, lending, liquidity, Morocco, nonperforming loans, private sector, Qatar, risk aversion, Saudi Arabia, supply side, UAE | 4 Comments »