Restarting the Growth Engine in Sub-Saharan Africa

By IMFBlog

May 19, 2017

Version in Français (French)

The IMF’s latest economic health check of sub-Saharan Africa shows that growth fell to its lowest level in 20 years.

In this podcast, the IMF African Department’s Celine Allard, who oversaw the report, says that this drop brought a halt to the 5 to 6 percent growth rate that was enjoyed in the last two decades. Some factors contributing to this slowdown are lower commodity prices, the devastation of a severe drought—exacerbating crop infestation and leading to a famine affecting some 20 million people—and political conflicts that affect trade.

Continue reading “Restarting the Growth Engine in Sub-Saharan Africa” »

A New Twist in the Link Between Inequality and Economic Development

By Francesco Grigoli

May 11, 2017

Version in  عربي (Arabic),  Español (Spanish)

Much has been written about the relationship between inequality and economic development, but theory remains inconclusive. When income is more concentrated in the hands of a few individuals, this can lead to less demand by the general population and lower investment in education and health, impairing long-term growth. At the same time, a certain level of inequality endows the rich with the means to start businesses, and creates incentives to increase productivity and investment, promoting economic activity. But the initial inequality levels also matter to explain why an increase in inequality varies in its impact on economic development across countries.

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Chart of the Week: The Cost of Asia’s Aging

By IMFBlog

May 1, 2017

Versions in 中文 (Chinese), Bahasa (Indonesia), and 本語 (Japanese) 

When it comes to tackling demographic change in Asia, there’s no one-size-fits-all strategy for policymakers. In some countries, like Japan, the population is aging rapidly, and the labor force is shrinking. In others, like the Philippines, young people are flooding the job market in search of work.

As our chart shows, the impact of aging could potentially drag down Japan’s average annual GDP growth by 1 percentage point over the next three decades. While in India and the Philippines, which have some of the youngest populations in the region, a growing workforce could potentially increase GDP by that same amount. Continue reading “Chart of the Week: The Cost of Asia’s Aging” »

Five Keys to a Smart Fiscal Policy

By Vitor Gaspar and Luc Eyraud

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

We live in a world of dramatic economic change. Rapid technological innovation has fundamentally reshaped the way we live and work. International trade and finance, migration, and worldwide communications have made countries more interconnected than ever, exposing workers to greater competition from abroad. While these changes have brought tremendous benefits, they have also led to a growing perception of uncertainty and insecurity, particularly in advanced economies.

Today’s conditions require new, more innovative solutions, which the IMF calls smart fiscal policies. By smart policies we mean policies that facilitate change, harness its growth potential, and protect people who are hurt by it. At the same time, excessive borrowing and record levels of public debt have limited the financial resources available to government. So, fiscal policy must do more with less. Fortunately, researchers and policy makers are realizing that the fiscal tool kit is broader and the tools more powerful than they thought. Five guiding principles sketch the contours of these smart fiscal policies, which are described in chapter one of the IMF’s April 2017 Fiscal Monitor. Continue reading “Five Keys to a Smart Fiscal Policy” »

Global Financial Stability Improves; Getting the Policy Mix Right to Sustain Gains

By Tobias Adrian

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

The world’s financial system has become safer and more stable since our last assessment six months ago. Economic activity has gained momentum. The outlook has improved and hopes for reflation have risen. Monetary and financial conditions remain highly accommodative. And investor optimism over the new policies under discussion in the United States has boosted asset prices. These are some of the conclusions of the IMF’s latest Global Financial Stability Report

But it’s important for governments in the United States, Europe, China and elsewhere to follow through on investor expectations by adopting the right mix of policies. This means preventing fiscal imbalances, resisting calls for higher trade barriers, and maintaining global cooperation on regulations needed to make the financial system safer. Continue reading “Global Financial Stability Improves; Getting the Policy Mix Right to Sustain Gains” »

Global Economy Gaining Momentum—For Now

By Maurice Obstfeld

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

Momentum in the global economy has been building since the middle of last year, allowing us to reaffirm our earlier forecasts of higher global growth this year and next. We project the world economy to grow at a pace of 3.5 percent in 2017, up from 3.1 percent last year, and 3.6 percent in 2018. Acceleration will be broad based across advanced, emerging, and low-income economies, building on gains we have seen in both manufacturing and trade.

Our new projection for 2017 in the April World Economic Outlook is marginally higher than what we expected in our last update. This improvement comes primarily from good economic news for Europe and Asia, as well as our continuing expectation for higher growth this year in the United States.

Continue reading “Global Economy Gaining Momentum—For Now” »

Chart of the Week: Seeking Solutions to Growing Inequality

By IMFblog

As finance ministers and central banks gather in Washington this week for the spring meetings of the IMF and World Bank, income inequality will be among the topics of discussion.

While global economic integration has brought enormous benefits in the form of rising living standards, it has also contributed to widening inequality within some countries. In advanced economies, the incomes of the top 1 percent have grown three times faster than those of the rest of the population over the past three decades. Continue reading “Chart of the Week: Seeking Solutions to Growing Inequality” »

The Hollowing Out of Middle-Skilled Labor Share of Income

By Mai Dao, Mitali Das, Zsoka Koczan, and Weicheng Lian

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

Imagine how a typical factory today operates in many advanced economies. There are no longer many workers lined up along assembly belts. Instead, there are only a few of them—mostly likely engineers—looking at screens of highly sophisticated equipment that does the assembly once done by humans. With technological advancement constantly driving down the cost of capital, firms are increasingly replacing workers with machines.

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Drivers of Declining Labor Share of Income

By Mai Chi Dao, Mitali Das, Zsoka Koczan, and Weicheng Lian

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

After being largely stable in many countries for decades, the share of national income paid to workers has been falling since the 1980s. Chapter 3 of the April 2017 World Economic Outlook finds that this trend is driven by rapid progress in technology and global integration.

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Channeling a Voice for Women

IMFBlog

Muna AbuSulayman is a Saudi Arabian media personality, whose television show, Kalam Nawaem, which means “soft talk” in Arabic, is the longest running and most popular social issues show in the Middle East. In this podcast, AbuSulayman discusses pushing social boundaries, including on topics such as gender equality. Continue reading “Channeling a Voice for Women” »

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