Chart of the Week: Iceland’s Tourism Eruption
By IMFBlog
August 14, 2017
Tourists at Jokulsarlon iceberg lagoon in eastern Iceland. Tourism has become a pillar of the Nordic island’s economy (photo: Picture Alliance/Paul Mayall/Newscom).
Iceland’s tourist industry is burgeoning as adventure-seeking visitors flock to the rugged Nordic nation to partake in activities such as whale watching, ice climbing and spelunking.
The number of foreign visitors to Iceland surged 40 percent to 1.8 million last year – dwarfing the island’s population of 335,000. This year, Keflavík airport expects another 27 percent increase, to 2.2 million, according to estimates cited in a recent study by IMF economist Uwe Böwer. Continue reading “Chart of the Week: Iceland’s Tourism Eruption” »
Aging Japan Puts a Strain on the Financial System
By Gaston Gelos and Sònia Muñoz
Versions in 中文 (Chinese), 日本語 (Japanese)
Elderly shoppers in Tokyo’s Sugamo district: As Japan's population ages, demand for financial services shifts (photo: Issei Kato/Reuters/Newscom).
Japan’s population is shrinking and getting older, posing challenges to the nation’s financial system. How Japan copes could guide other advanced economies in Asia and Europe that are grappling with the same trends but are at an earlier phase of similar demographic developments.
Continue reading “Aging Japan Puts a Strain on the Financial System” »
Building Fiscal Institutions in Fragile States
By Katherine Baer, Sanjeev Gupta, Mario Pessoa
August 9, 2017
Version in Français (French)
A porter in the market in Kathmandu, Nepal: the country increased their tax revenues in recent years with the help of technical assistance (photo: Navesh Chitrakar/Newscom)
Fragile states face more obstacles to growth than most countries. Their per-capita GDP is less than half of most other low-income countries, and their economies are more volatile. Many are in conflict or going through a natural disaster, or just emerging from these. Our study is based on 39 countries, and since completed, the number of fragile states has increased to 43.
To grow, a country needs tax policies and tax administration, laws and institutions to formulate and execute a budget, and trained staff to implement fiscal policies, among other factors. Our preliminary results show that fragile states that have received technical assistance, also have improved their fiscal performance.
Continue reading “Building Fiscal Institutions in Fragile States” »
Chart of the Week: The Potential for Growth and Africa’s Informal Economy
By IMFBlog
August 8, 2017
A street vendor sells roasted corn in Tanzania: Unregistered household enterprises comprise a significant portion of sub-Saharan Africa’s economy (photo: Ton Koene/VWPics/Newscom)
By 2035, sub-Saharan Africa will have added more working-age people to their workforce than the rest of the world’s regions combined. And this growing workforce will have to be met with jobs. In the region, up to 90 percent of jobs outside agriculture are in the informal sector. This includes household enterprises that are not formally registered, like street vendors or domestic workers. It also includes off-the-books activities by registered firms—for example, the taxi driver who offers a discount if the meter is not turned on.
Continue reading “Chart of the Week: The Potential for Growth and Africa’s Informal Economy” »
Gaining Currency: The Rise of the Renminbi
By IMFBlog
August 4, 2017
Eswar Prasad at an IMF conference (photo: Staff/IMF)
Continue reading “Gaining Currency: The Rise of the Renminbi” »
A Dip into Subzero Policy Rates
by Giovanni Dell’Ariccia, Vikram Haksar, and Tommaso Mancini-Griffoli
August 3, 2017
Versions in ربي (Arabic), 中文 (Chinese), Español (Spanish), 日本語 (Japanese); Русский (Russian)
A recent IMF paper looks at the effectiveness of negative interest rates, drawing on the initial experience of the euro area, Denmark, Japan, Sweden, and Switzerland (photo: Tuckraider/iStock by Getty Images)
Zero was gradually adopted in the ancient world—both east and west—as the ultimate point of reference, a point above and below which things change. For the ancient Egyptians, zero represented the base of pyramids. In science it became the freezing point of water, in geography the altitude of the sea, in history the starting point of calendars.
In the realm of monetary policy, zero was typically seen as the lower bound for interest rates. That has changed in recent years in the context of a slow recovery from the 2008 crisis. Several central banks hit zero and began experimenting with negative interest rate policies. Most did so to counter very low inflation, but some also were concerned about currencies that were too strong. Continue reading “A Dip into Subzero Policy Rates” »
All Hands on Deck: Confronting the Challenges of Capital Flows
By Atish R. Ghosh, Jonathan D. Ostry, and Mahvash S. Qureshi
August 2, 2017
Exchange rates board, Australian Securities Exchange: Emerging economies have several tools to manage capital flows. The most common are foreign exchange intervention and monetary policy (photo: wx-bradwang/iStock by Getty Images)
The global financial crisis and its aftermath saw boom-bust cycles in capital flows of unprecedented magnitude. Traditionally, emerging market economies were counselled not to impede capital flows. In recent years, however, there has been growing recognition that emerging market economies may benefit from more proactive management to avoid crisis when flows eventually recede. But do they adopt such a proactive approach in practice?
Continue reading “All Hands on Deck: Confronting the Challenges of Capital Flows” »
A Common Cause for Sustainable Growth and Stability in Central Africa
August 1, 2017
Version in Français (French), Português (Portuguese), and Español (Spanish);
Woman with a machete in Bafut, Cameroon: Six countries in Central Africa have a strategy to turn their economies around, with help from the IMF (photo: Heiner Heine/imageBroker/Newscom)
Six countries in central Africa have been hit hard by the collapse in commodity prices. Oil prices dropped, economic growth stalled, public debt rose, and foreign exchange reserves declined. A delayed response from policymakers, and a regional conflict have worsened the situation further for people in the region.
The countries of the Central African Economic and Monetary Community are Gabon, Cameroon, Chad, the Central African Republic, the Republic of Congo, and Equatorial Guinea. They share a common currency—the CFA franc—that is pegged to the euro, and have a common central bank that holds the region’s pool of foreign exchange reserves. Continue reading “A Common Cause for Sustainable Growth and Stability in Central Africa” »
Chart of the Week: Electric Takeover in Transportation
By IMFBlog
July 31, 2017
An electric car recharges at a meter in London: The UK is the latest country to announce plans to end fossil fuel vehicle sales by 2040 (photo: Sasha Fox Walters/iStock by Getty Images)
The switch from horses to automobiles in the 20th century paved the way for the rise of oil-based transportation and energy use. Today, electric vehicle ownership is picking up speed. Greater affordability of electric vehicles will likely steer us away from our current sources of energy for transportation, and toward more environmentally friendly technology. And that can happen sooner than you think.
Our Chart of the Week from a recent IMF working paper shows that the transition away from motor vehicles could happen in the next 10 to 25 years, based on parallel shifts in the 20th century. Patterns observed in the early days of the horse-car transition closely resemble present-day electric vehicle adoption rates. Between 2011 and 2015, the average annual growth rate of electric vehicle ownership was 120 percent. This is, in fact, slightly faster growth than that of motor vehicles during a comparable timeframe in the past. Using the horse-car parallel, the paper forecasts that by 2040 motor vehicles could mostly disappear in advanced economies, and could comprise about a third of the fleet of all cars in emerging market and developing economies. Continue reading “Chart of the Week: Electric Takeover in Transportation” »
Global Imbalances: Avoiding a Tragedy of the Commons
By Gustavo Adler and Luis Cubeddu
July 28, 2017
Since 2013, global imbalances have become increasingly concentrated in advanced economies. Surplus and deficit countries alike bear responsibility for correcting excess external imbalances (photo: Caro Oberhaeuser/Newscom)
We have just released our latest assessments of external positions for the 29 largest economies. As discussed in this year’s External Sector Report, excess current account imbalances—that is, those beyond the levels warranted by country fundamentals—were broadly unchanged in 2016. They represented about one-third of total actual surpluses and deficits, with only small shifts in 2016. Continue reading “Global Imbalances: Avoiding a Tragedy of the Commons” »
