Fed Tightening May Squeeze Portfolio Flows to Emerging Markets

December 14th, 2017|

By Robin Koepke

December 14, 2017

Version in  中文 (Chinese),  Français (French),  Русский (Russian)

Derivatives traders in Singapore: Tighter Federal Reserve monetary policy is likely to reduce overseas purchases of emerging market stocks and bonds (photo: Caro/Rupert Oberhaeuser/Newscom)

A key question facing global investors today is what impact the US Federal Reserve’s monetary policy normalization process will have on capital flows to emerging markets. The IMF’s new model estimates show that normalization—raising the policy interest rate and shrinking the balance sheet—will likely reduce portfolio inflows by about $70 billion over the next two years, which compares with average annual inflows of $240 billion since 2010. Continue reading “Fed Tightening May Squeeze Portfolio Flows to Emerging Markets” »

Propping Up the Chinese Economy: Credit versus Fiscal Stimulus

December 12th, 2017|

By Sophia Chen and Lev Ratnovski

December 13, 2017

Version in 中文 (Chinese), Español (Spanish), 日本語  (Japanese)

Construction work Qingyuan , Guangdong, China : Fiscal stimulus is a powerful tool for growth (photo: Imagine China/Newscom).

Credit booms are addictive. Credit supports growth and the perception of wealth. Yet credit booms are risky, and are often followed by financial busts and economic slowdowns. The challenge is taming credit without hurting growth. Continue reading “Propping Up the Chinese Economy: Credit versus Fiscal Stimulus” »

Chart of the Week: The Walking Debt: Resolving China’s Zombies

December 11th, 2017|

By IMFBlog

December 11, 2017

Version in 中文 (Chinese)

IMF research shows that resolving China’s zombie firms can boost productivity and long-term growth prospects (photo: DNY59/iStock by Getty Images).

China’s “zombies” are non-viable firms that are adding to the country’s rising corporate debt problem, and are bad business. Zombie firms are highly indebted and incur persistent losses, but continue to operate with the support of local governments or soft loans by banks—adding very little value to economic prospects. China has already made a lot of progress in resolving these firms, and should continue its efforts to send the zombies packing. Continue reading “Chart of the Week: The Walking Debt: Resolving China’s Zombies” »

Corruption Disruption

December 8th, 2017|

By Christine Lagarde

December 8, 2017

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

Corruption can have devastating effects on economic growth and stability (photo: Patric Sandri IKON Images/Newscom)

Why does the IMF care so deeply about corruption? The reason is simple. The job of the IMF is to protect global economic stability and promote strong, sustainable, balanced, and inclusive economic growth. And this becomes difficult, if not impossible, to achieve in the presence of entrenched and institutionalized corruption. Continue reading “Corruption Disruption” »

Chart of the Week: Sharing the Wealth: Inequality and Who Owns What

December 7th, 2017|

By IMFBlog

December 7, 2017

Luxury yachts in Monaco: The surge in top incomes, combined with high savings, has resulted in growing wealth inequality (photo: Eric Gaillard/Newscom).

Income inequality among people around the world has been declining in recent decades. But the news is not all good. Inequality within many countries has increased, particularly in advanced economies.

In addition to income inequality, wealth inequality—what you have accumulated, as opposed to what you earn—is closely related, and reflects differences in savings, inheritances, and bequests. Continue reading “Chart of the Week: Sharing the Wealth: Inequality and Who Owns What” »

Improving Financial Stability in China

December 6th, 2017|

By Ratna Sahay and James P. Walsh

December 6, 2017

Version in  عربي (Arabic), 中文(Chinese), Español (Spanish), Français (French),  Русский (Russian)

A man walks past a bank branch in Beijing: China’s leaders have made financial stability one of their top priorities (photo: Stephen Shaver/UPI/Newscom).

China’s leaders have made financial stability one of their top priorities. Given the size and importance of the Chinese market, with the world’s largest banks and second-largest stock market, that is welcome news for China and the world. The financial system permeates virtually all aspects of economic activity, having played a key role in facilitating rapid economic growth and in sharply reducing poverty rates.

China is moving from the world’s factory floor toward  a more modern, consumer-driven economy. During this transition, however, some tensions have emerged in the financial sector. Continue reading “Improving Financial Stability in China” »

Taxes, Debt and Development: A One-Percent Rule to Raise Revenues in Africa

December 5th, 2017|

By Vitor Gaspar and Abebe Aemro Selassie

December 5, 2017

Versions in عربي (Arabic), 中文(Chinese),  Español (Spanish), Français (French), Русский (Russian)

School children in Ghana: building a country’s tax capacity helps pay for education and health care (photo: Vacca Sintesi/SIPA/Newscom).

Tax revenues play a critical role for countries to create room in their budgets to increase spending on social services like health and education, and public investment. At a time when public debt levels in sub-Saharan Africa have increased sharply, raising tax revenues is the most growth-friendly way to stabilize debt. More broadly, building a country’s tax capacity is at the center of any viable development strategy to meet the ongoing needs for expanding education and health care, and filling significant infrastructure gaps. Continue reading “Taxes, Debt and Development: A One-Percent Rule to Raise Revenues in Africa” »

More People, More Technology, More Jobs: How to Build Inclusive Growth

December 4th, 2017|

By Stefania Fabrizio and Andrea F. Presbitero

December 4, 2017

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

Pretoria, South Africa: technicians work inside a new locomotive (photo: Zhai Jianlan Xinhua News Agency/Newscom).

Population growth and technological innovation don’t necessarily have to widen inequality in developing countries. They can also offer new opportunities to increase growth and create jobs: the long-term outcomes depend on today’s policy choices. But those choices are not easy because policies for sustained and inclusive growth may conflict with short-term needs. We look at the trade-offs and how to balance short- and long-term goals for sustainable and inclusive growth. Continue reading “More People, More Technology, More Jobs: How to Build Inclusive Growth” »

Shifting Sands

November 30th, 2017|

By IMFBlog

November 30,2017

This issue of F&D focuses on the Middle East and North Africa. We take stock of the region’s rapid transformation since the uprisings of 2011—a period that raised the hopes of millions for a better future, and caused despair for millions of others.

The iron lid that had kept Arab societies artificially stable was lifted by the uprisings, writes Marwan Muasher of the Carnegie Endowment for Peace. Now, the only path to stability and prosperity is through building better institutions, sharing power, and implementing policies that will foster inclusive growth—a process that will require a new social contract between governments and society. Continue reading “Shifting Sands” »

Chart of the Week: Oil Prices & Energy Subsidies

November 27th, 2017|

By IMFBlog

November 27, 2017

Versions in  中文(Chinese); Español (Spanish), Français (French), 日本語 (Japanese)

Universal fuel and energy subsidies have been prevalent in sub-Saharan Africa, but they have substantial drawbacks (photo: Reuters/Newscom).

Reforms in some mostly oil-exporting countries, along with lower international fuel prices since 2014, have reduced the size of fuel subsidies in sub-Saharan Africa, and they need to do more  given the recent rise in international fuel prices.

Universal fuel and energy subsidies have been prevalent in sub-Saharan Africa, but they have substantial drawbacks. They tend to benefit the rich rather than the poor, foster fuel overconsumption, and crowd out more productive government spending. Continue reading “Chart of the Week: Oil Prices & Energy Subsidies” »

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IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day.

The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

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