Adapting to Climate Change—Three Success Stories

By Evgenia Pugacheva and Mico Mrkaic

March 20, 2018

When governments subsidize private investment in adaptation, the economic costs of extreme weather events can be reduced (photo: Leolintang/iStock by Getty Images).

Climate change is one of the greatest threats facing our planet. Its negative effects on health, the biosphere, and labor productivity are already being felt throughout the world. Aware of the danger, communities, households, and governments have started taking measures to reduce their exposures and vulnerability to weather shocks and climate change. Our study in the World Economic Outlook shows that public investment in adaptation can partially reduce the economic costs of severe weather events.   Continue reading “Adapting to Climate Change—Three Success Stories” »

A Framework for Currency Unions and IMF Lending

By Sean Hagan and Hugh Bredenkamp

March 16, 2018

Versions in عربي (Arabic), 中文 (Chinese), Español (Spanish), 日本語 (Japanese), Português (Portuguese)

New guidance approved by the IMF represents an important step in how the Fund supports members of currency unions undertaking adjustment (photo: IMF).

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” »

Policy Actions to Sustain Growth and Guard Against Risks

By Christine Lagarde

March 15, 2018

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Even though the sun still shines on the global economy, there are more clouds on the horizon (iStock by GettyImages).

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.

Continue reading “Policy Actions to Sustain Growth and Guard Against Risks” »

Fintech Quiz: How Much Do You Know?

By IMFBlog

March 12, 2018

Rapid advances in digital technology are transforming the financial services landscape (iStock by Getty Images).

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?” »

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” »

The Euro Area Needs a Fiscal Union

By Helge Berger, Giovanni Dell’Ariccia, and Maurice Obstfeld

February 21, 2018

Version in Français (French) 

Without more tangible elements of a fiscal union, the euro area will remain fundamentally vulnerable to shocks. (photo: iStock by GettyImages) .

The euro area is experiencing a robust recovery, but the architecture supporting Europe’s currency union remains incomplete and leaves the region vulnerable to future financial crises.

While substantial progress has been made to address some architectural issues—conditional lending facilities and key elements of a banking union—we argue in our recent paper that the euro area needs to build elements of a common fiscal policy, including more fiscal risk sharing, to preserve financial and economic integration and stability. Without some degree of fiscal union, the region will continue to face existential risks that policymakers should not ignore. While this is not a new topic, the current favorable economic climate might be the moment to advance the discussion—and the chance to strengthen the euro area. Continue reading “The Euro Area Needs a Fiscal Union” »

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” »

Countries in the IMF Financial Spotlight in 2018

By IMF Blog

January 31, 2018

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Financial sector assessments are showing that countries and financial systems are adapting better methods to monitor financial vulnerabilities (photo: Ingram Publishing/Newscom).

The IMF in 2018 will complete ten assessments of countries’ financial systems, to identify risks and propose policies to strengthen their financial stability. Three of this year’s reviews will be for countries with Systemically Important Financial Systems : Belgium, Brazil and Poland. In addition, IMF experts will assess the euro area’s financial stability. Other financial stability assessments will cover Armenia, Jamaica, Namibia, Peru, Romania, and Tanzania.

Continue reading “Countries in the IMF Financial Spotlight in 2018” »

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” »

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”” »

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