March 16, 2018
Countries benefit in various ways from belonging to a currency union—a group of countries that share a single currency. Businesses can trade and invest across borders more easily. Member countries gain access to larger markets without facing currency risk. And in some circumstances, currency unions can help support their members when they are hit by external shocks. Continue reading “A Framework for Currency Unions and IMF Lending” »
March 15, 2018
When the Group of Twenty finance ministers and central bank governors met last October, there was a sense of optimism about the global economic upswing and the opportunities for much-needed reforms.
When they meet again in Buenos Aires next week, their focus will be on the policies needed to protect this upswing against downside risks and bolster growth going forward.
The good news is that the growth momentum has continued to strengthen, involving three- quarters of the world economy.
March 13, 2018
Whether Bitcoin’s value goes up or Bitcoin’s value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets?
The technology behind these assets—including blockchain—is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries. Continue reading “Addressing the Dark Side of the Crypto World” »
March 12, 2018
From artificial intelligence to cryptography, rapid advances in digital technology are transforming the financial services landscape, creating opportunities and challenges for consumers, service providers, and regulators alike. This new wave of technology is often called “fintech” and the industry is thriving. Consumers worldwide are using two or more fintech services, sometimes without knowing they are using fintech services. Continue reading “Fintech Quiz: How Much Do You Know?” »
March 9, 2018
The resource curse, or paradox of plenty, is when countries with an abundance of natural resources suffer stagnant economic growth or even contraction.
In this podcast, World Bank economist James Cust, says the problem of eradicating extreme poverty is going to be about how resource-rich countries manage their resource wealth. Continue reading “Beware of Strike-it-Rich Euphoria: the Curse of Potential Oil Wealth” »
March 7, 2018
For years, economists have worked to develop a way of measuring general well-being and comparing it across countries. The main metric has been differences in income or gross domestic product per person. But economists have long known that GDP is an imperfect measure of well-being, counting just the value of goods and services bought and sold in markets.
The challenge is to account for non-market factors such as the value of leisure, health, and home production, such as cleaning, cooking and childcare, as well as the negative byproducts of economic activity, such as pollution and inequality. Continue reading “Welfare Versus GDP: What Makes People Better Off” »
March 5, 2018
This International Women’s Day is bringing new calls to #pressforprogress on gender parity. Giving women and girls the opportunity to succeed is not only the right thing to do—it can also transform societies and economies.
Unlocking this transformative potential means pushing for more equal opportunities: for example, equality in legal rights for men and women, and equality in access to education, health, and finance. Just as important is the fundamental issue of ensuring a safe environment for all, including protection against harassment. Continue reading “Ending Harassment Helps #TheEconomyToo” »
March 1, 2018
Good economic times offer an opportunity to tackle budget deficits
The global economy has a spring in its step. Growth is picking up, and we at the IMF have been ratcheting up our forecasts. Government coffers are filling and, with more people at work, demand for public social support is receding. The fiscal woes of the past decade seem behind us.
But this sunny perspective ignores debt levels that remain close to historic highs and the inevitable end of the cyclical upswing. Estimates of underlying growth potential have hardly budged, and interest rates—the cost of servicing all this debt—are starting to rise, which will eventually make it harder to refinance bonds and loans. Continue reading “The Struggle to Manage Debt” »
February 28, 2018
Worldwide, 250 million people, or 3 percent of the global population, live outside their country of birth. Many of these migrants maintain strong ties with their home countries, sending part of their incomes to families back home. In 2015, migrants sent home $441 billion – almost three times the total value of official development assistance.
About 45 percent of these remittances flow from advanced economies to emerging market and developing economies. These funds have the potential to be an important mechanism for sharing income risks on a global scale. That is, if a family living in a developing country loses part of its income, higher remittances from relatives abroad could help compensate. Continue reading “Money Sent Home by Migrants Buffers Income Shocks” »
February 26, 2018
What makes China’s citizens so thrifty, and why does that matter for China and the rest of the world? The country’s saving rate, at 46 percent of GDP, is among the world’s highest. Households account for about half of savings, with corporations and the government making up the rest.
Saving is good, right? Up to a point. But too much saving by individuals can be bad for society. That’s because the flip side of high savings is low consumption and low household welfare. High savings can also fuel excessive investment, resulting in a buildup of debt in China. And because people in China save so much, they buy fewer imported goods than they sell abroad. That contributes to global imbalances, according to a recent IMF paper, China’s High Savings: Drivers, Prospects, and Policies. The country’s authorities are aware of the issue and are taking steps to address it. Continue reading “Chart of the Week: China’s Thrift, and What to Do About It” »