The Struggle to Manage Debt

By Christoph Rosenberg

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” »

Chart of the Week: China’s Thrift, and What to Do About It

February 26, 2018

By IMFBlog

A pedestrian walks in front of a branch of the Postal Savings Bank of China in Nanjing. China’s saving rate is one of the world’s highest (photo: Imagine China/Newscom).

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” »

Game-Changers and Whistle-Blowers: Taxing Wealth

By James Brumby and Michael Keen

February 13, 2018

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

New Delhi, India: there are now very few effective explicit wealth taxes in either developing or advanced economies (photo: Jens Kalaene/Corbis).

High and rising income inequality is a serious concern in many countries, as highlighted in the IMF’s recent Fiscal Monitor. Wealth, however, is distributed even more unequally than income, as in the picture below. Continue reading “Game-Changers and Whistle-Blowers: Taxing Wealth” »

Chart of the Week: Crime, Joblessness, and Youth in the Caribbean

By IMFBlog

February 12, 2018

Weak growth in the Caribbean reduces economic opportunities for young people, increasing their vulnerability to illegal activities and crime (photo: IMF)

Youth unemployment in the Caribbean—among the highest in the world—and crime are key bottlenecks to growth in the region.

In our Chart of the Week, we show that the 2008 global financial crisis had an especially strong effect on the unemployment rate for those between the ages of 15 and 24, which jumped on average by 5 percentage points between 2007 and 2013—from 21 percent to 26 percent. In some countries (for example, the Bahamas, Barbados, and Jamaica), youth unemployment rates are nearly three times that of those aged 30 and over. Continue reading “Chart of the Week: Crime, Joblessness, and Youth in the Caribbean” »

The Buzz of Populism and Its Pull on the Economy

By IMFBlog

February 9, 2018

(photo: Berkeley Review)

If you believe the economy can explain the rise of populism, political scientist Cristóbal Rovira Kaltwasser says it’s a bit more complicated than that.

“If you think about populist radical right parties in Western Europe, the party that gets the most votes is in Switzerland. And the economy in Switzerland is running perfectly!”

Populism has become a bit of a buzz word of late, and it was the subject of a seminar at the 2018 American Economic Association’s Annual Meeting. The IMF’s Antonio Spilimbergo organized the panel, which included Kaltwasser and economic stalwarts Dani Rodrik and Raghuram Rajan. Continue reading “The Buzz of Populism and Its Pull on the Economy” »

Chart of the Week: Inequality, Your Health, and Fiscal Policy

By Mercedes García-EscribanoBaoping Shang, and Emmanouil (Manos) Kitsios

February 5, 2018 

 Catania Sicily, Italy.  Men with a lower level of education live shorter lives, on average, than their better educated fellow citizens (photo: Jann Huizenga/Getty Images/IStock).

The gap in life expectancy between rich and poor people is a worldwide phenomenon, and has grown dramatically in recent years in some countries. 

In our Chart of the Week, we show how this longevity gap, which reflects inequality in access to health care and its impact on peoples’ overall health, varies across countries. Men with a lower level of education live shorter lives, on average, than their better educated fellow citizens: this gap ranges from four years in Italy, to 14 years in Hungary, according to the October 2017 Fiscal Monitor. Continue reading “Chart of the Week: Inequality, Your Health, and Fiscal Policy” »

A Dream Deferred: Inequality and Poverty Across Generations in Europe

By Christine Lagarde

January 24, 2018

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

A young apprentice learns a trade in Palmela, Portugal: the right policies can help reduce inequality and poverty across generations in Europe (photo: Tim Brakemeier/DPA/Newscom).

The poet Langston Hughes once asked, “What happens to a dream deferred?” It is a relevant question to millions around the world today, especially young people, because of inequality and poverty.

This week IMF staff are launching new, European Union-focused research highlighting the impact of unemployment and the long-term consequences of inadequate social protection on the young. The study also explores ideas that can help fix the problem and reduce inequality and poverty for the next generation. Continue reading “A Dream Deferred: Inequality and Poverty Across Generations in Europe” »

5 Things You Need to Know About Inequality

By IMFBlog

January 23, 2018

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

A man with donations from a food bank in Los Angeles, California: inequality within countries is on the rise, including in advanced economies like the United States (photo: Lucy Nicholson/Newscom).

Tackling inequality is not only a moral imperative. It is critical for sustaining growth.

Global income inequality has declined in recent years, with the Gini index—a statistical measure of income distribution with a value of zero indicating perfect equality—dropping from 68 in 1988 to 62 in 2013, reflecting relatively strong growth in many emerging and developing economies, particularly in China and India. However, inequality has increased within many countries, including in many advanced economies. Continue reading “5 Things You Need to Know About Inequality” »

The Current Economic Sweet Spot Is Not the “New Normal”

By Maurice Obstfeld

January 22, 2018

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

Global growth continues to pick up and is broad based. But no matter how tempting it is to sit back and enjoy the sunshine, policy can and should move to strengthen the recovery (photo: Mumbai, India, Ingram Publishing/Newscom).

As the year 2018 begins, the world economy is gathering speed. The new World Economic Outlook Update revises our forecast for the world economy’s growth in both 2018 and 2019 to 3.9 percent. For both years, that is 0.2 percentage points higher than last October’s forecast, and 0.2 percentage points higher than our current estimate of last year’s global growth. Continue reading “The Current Economic Sweet Spot Is Not the “New Normal”” »

Economic Growth and Fairness in the Middle East and North Africa

By Jihad Azour

January 18, 2018

Versions in  عربي (Arabic),  中文 (Chinese), Español (Spanish),  Français (French),  Deutsche (German), 日本語 (Japanese)

The people of the region are rightly demanding economic growth and fairness.  The IMF aims to help them in this effort (photo: Tunis, Tunisia, ZOUBEIR SOUISSI/REUTERS/Newscom).

Rising social tensions and protests in several countries across the Middle East and North Africa are a clear indication that the aspirations of the people of the region—for opportunity, prosperity and equity—remain unfulfilled. Their frustration is understandable, and precisely because of that, it would be a mistake if the economic reform process currently underway were to be thrown into reverse. Continue reading “Economic Growth and Fairness in the Middle East and North Africa” »

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