November 16, 2017
The weather seems to be getting wilder and fiercer. From devastating hurricanes in the U.S. and the Caribbean, to raging wildfires in California and ruinous floods in India, the human and economic toll of extreme weather events is enormous. Continue reading “Climate Change Will Bring More Frequent Natural Disasters & Weigh on Economic Growth” »
November 9, 2017
Roads or schools? It’s a question akin to the “guns or butter” choice that governments around the world confronted in the 20th century: How to spend a nation’s finite resources to produce the maximum benefit for its people.
In our recent IMF Working Paper, we find that low-income countries tend to spend less on schools than on roads as a share of GDP—even though investment in education may be a more pressing need in their societies.
November 8, 2017
The 18th Annual Jacques Polak Annual Research Conference last week opened with Managing Director Christine Lagarde noting the ebb and flow of capital movements into emerging market and developing economies since the turn of the millennium. She asked three questions at the heart of the discussion, and to which speakers returned consistently during the conference: Continue reading “Understanding and Managing Financial Interdependence” »
November 6, 2017
Per capita incomes in emerging market and developing economies are expected to grow by about 2 percentage points faster per year than advanced economies between 2017 and 2022. The implication is that the gap in income levels between the two groups of countries is narrowing. However, a closer look at per capita incomes by country paints a different and more nuanced picture. Continue reading “Catch-Up Prospects in Emerging Economies: A Glass One Quarter Empty” »
October 31, 2017
The global financial crisis and subsequent economic recession saddled banks in the Caribbean with high levels of problem loans. The share of nonperforming loans to total loans more than tripled in many Caribbean countries from 2007 to 2016, and they have been slow to come down. Problem loans (loans that are 90 days or more past due) are bad news for banks and the economy. Continue reading “More Action Needed to Resolve Problem Loans in the Caribbean” »
October 27, 2017
The boom and bust in cross-border capital flows around the global financial crisis, and in its aftermath, have rekindled debates on the existence and implications of a “global financial cycle.”
The traditional open-economy (“Mundell-Fleming”) model postulates that countries face a “trilemma”: a trade-off among the objectives of exchange rate stability, free capital mobility, and independent monetary policy. If a country chooses exchange rate stability and free capital mobility, it must give up monetary policy autonomy. Conversely, an independent monetary policy in the presence of free capital flows is possible through exchange rate flexibility. Continue reading “Understanding the Global Financial Cycle” »
October 26, 2017
Cyberattacks on financial institutions are becoming more common and considerably more sophisticated. High-profile cases like the Equifax breach, which compromised the confidentiality of 143 million Americans’ credit information, and the theft of US$81 million from Bangladesh Bank, are just two examples of recent cyber breaches in the financial industry.
Today, cyber risk is a permanent threat to financial institutions and the proper functioning of the highly interconnected financial system. Banks of all sizes experience cyberattacks every day. Breaches of individual firms can cause adverse knock-on effects for other financial and nonfinancial firms and give rise to systemic risk, a new dimension of cyber risk that is little understood. Continue reading “Cyber Defense Must Be Global” »
October 19, 2017
"The road ahead is not an easy one,’’ the IMF’s Executive Directors wrote after the IMF’s first ever Annual meeting in 1946.’’ We do not underestimate the difficulties facing us.’’
More than 70 years later, we’ve encountered many a storm across continents from the Latin American sovereign debt crisis to the Savings and Loans crisis to the Asian crisis. And then there was the global financial crisis of 2008. Continue reading “Time to Act Now: It’s All About the Right Policy Mix” »
October 11, 2017
Income inequality among people around the world has been declining in recent decades. This is due to countries like China and India’s incomes catching-up to advanced economies. But the news is not all good. Inequality within countries has increased, particularly in advanced economies. Since the global economic recovery has gained pace and is now widespread, policymakers have a window of opportunity to respond with reforms that tackle inequality, and our new Fiscal Monitor shows how the right mix of fiscal policies can make the difference.
October 11, 2017
It seems like a paradox. The world’s financial system is getting stronger, thanks to healthy economic growth, buoyant markets, and low interest rates. Yet despite these favorable conditions, dangers in the form of rising financial vulnerabilities are starting to loom. That is why policymakers should act now to keep those vulnerabilities in check. Continue reading “Financial Stability Improves, But Rising Vulnerabilities Could Put Growth at Risk” »