Seven Pillars of Prosperity—Diversifying Economic Growth in the Caucasus and Central Asia

Medium-term economic growth prospects in the Caucasus and Central Asia region are strong. But, to secure ongoing prosperity, the eight countries of the region—Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—will need to look beyond traditional sources of growth. The challenge for policymakers will be to foster new and more diverse growth drivers, outside mining, oil, and gas. There are seven policy pillars that can help them do that, including strengthening economic and financial ties within the region.

By | May 5th, 2011|Economic outlook, Emerging Markets, International Monetary Fund|

Does Foreign Exchange Intervention Slow the Pace of Currency Appreciation?

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 (particularly in terms of slowing the pace of currency appreciation). In the latest Regional Economic Outlook: Western Hemisphere we took a fresh look at intervention practices and effectiveness for a group of economies in Latin America and other regions during 2004-10. Our analysis suggests that foreign exchange market interventions may help to mitigate appreciation temporarily. However, the impact depends on the circumstances and characteristics of each country.

By | May 4th, 2011|Economic outlook, International Monetary Fund, Latin America|

Confessions of a Dismal Scientist—Africa’s Resilience

Like many economists, I tend to fear the worst. I have witnessed phenomenal changes for the better in sub-Saharan Africa over the past 20 odd years. Part of me still worries that this trajectory will not endure. But, the more I see of the region’s economic performance and outlook, the more I’m changing my tune. Good macroeconomic policies in many more countries the years before the crisis put them in good stead to weather the crisis relatively well. As we report in our latest Regional Economic Outlook, output in sub-Saharan Africa looks set to expand by around 5½ this year and 6 percent in 2012. My latest worry is the recent sharp increase in food and fuel prices on world markets. To help minimize the dislocation that this shock may entail, countries should consider a two-pronged policy response.

Rethinking Economic Principles: Join the Debate

The global financial crisis caused hardship and suffering all over the world. To prevent a repeat, we need to rethink… "… what we know about economic theory …. We need to rethink, following this, the policies … coming from the analytical work. And then we will need also to rethink multilateralism." IMF Managing Director Dominique Straus-Kahn (April, 2011) A wholesale reexamination of macroeconomic principles in the wake of the crisis was the goal of a conference at the IMF in early March. But, for Olivier Blanchard and others, the conference was merely “the beginning of a conversation, the beginning of an exploration.” Here is our list of recommended reads to help you be part of the conversation.

By | May 2nd, 2011|Economic Crisis, Economic research, International Monetary Fund|
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