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Euro Area — “Deflation” Versus “Lowflation”

By | March 4th, 2014|Economic research, Financial Crisis, growth, IMF, International Monetary Fund, Uncategorized|

By Reza Moghadam, Ranjit Teja, and Pelin Berkmen

Recent talk about deflation in the euro area has evoked two kinds of reactions. On one side are those who worry about the associated prospect of prolonged recession. On the other are those who see the risk as overblown. This blog and the video below sift through both sides of the debate to argue the following:

  • Although inflation—headline and core—has fallen and stayed well below the ECB’s 2% price stability mandate, so far there is no sign of classic deflation, i.e., of widespread, self-feeding, price declines.
  • But even ultra low inflation—let us call it “lowflation”—can be problematic for the euro area as a whole and for financially stressed countries, where it implies higher real debt stocks and real interest rates, less relative price adjustment, and greater unemployment.
  • Along with Japan’s experience, which saw deflation worm itself into the system, this argues for a more pre-emptive approach by the ECB.

Continue reading “Euro Area — “Deflation” Versus “Lowflation”” »

Are Jobs and Growth Still Linked?

By | February 7th, 2014|Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Finance, growth, International Monetary Fund, recession, Uncategorized|

Prakash LounganiBy Prakash Loungani 

(Version in Español)

Over 200 million people are unemployed around the globe today, over a fifth of them in advanced economies. Unemployment rates in these economies shot up at the onset of the Great Recession and, five years later, remain very high. Some argue that this is to be expected given that the economy remains well below trend and press for greater easing of macroeconomic policies (e.g. Krugman, 2011, Kocherlakota (2014)). Others suggest that the job losses, particularly in countries like Spain and Ireland, have been too large to be explained by developments in output, and may largely reflect structural problems in their labor markets. Even in the United States, where unemployment rates have fallen over the past year, there is concern that increasing numbers of people are dropping out of the labor force, thus decoupling jobs and growth.

Continue reading “Are Jobs and Growth Still Linked?” »

Jobs and Growth: Supporting the European Recovery

By | January 28th, 2014|Advanced Economies, Economic research, Employment, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Uncategorized|

MD's Updated HeadshotBy Christine Lagarde

(Version in Français and Español)

As we begin the new year, Europe confronts both good and bad news. First the good news. Growth is finally picking up in the euro area as it is slowly emerging from the deep recession.  The bad news? Still nearly 20 million people are unemployed. Until the effects on employment have been reversed, we cannot say that the crisis is over.

Two trends are particularly troubling, now and for the future. First, the high level of long-term unemployment gives me great cause for concern: almost half of those without a job have been unemployed for more than a year. Second, I still worry about the large number of young people without jobs: nearly one quarter of Europeans under the age of 25 who are looking for a job cannot find one. In Italy and Portugal, more than one third of under-25s are unemployed, and in Spain and Greece more than one half are.

Continue reading “Jobs and Growth: Supporting the European Recovery” »

Jobs and Growth in Europe

By | January 24th, 2014|Advanced Economies, Economic research, Employment, Financial Crisis, growth, International Monetary Fund, Uncategorized|

The IMF’s Christine Lagarde is in Brussels on January 28 to talk about jobs and growth in Europe.

The good news is growth is finally picking up in the euro area as it is slowly emerging from the deep recession.  But nearly 20 million people are unemployed.

The most effective way of boosting jobs is to get growth going again.

The IMF has a new book that analyzes today's challenges head-on and proposes a roadmap for the continent's recovery.

Christine Lagarde will discuss the book along with Wolfgang Schäuble, Finance Minister of Germany, and Luis de Guindos, Minister of Economy and Competitiveness of Spain. The event will be chaired by Fabian Zuleeg, Chief Executive of the European Policy Centre.

Watch the live webstream on this page from 8.00-9.30 a.m. (Central European Time).

Mercedes García-Escribano

By | November 26th, 2013|

Mercedes García-Escribano

Mercedes García-Escribano is a deputy division chief in the IMF’s Fiscal Affairs Department. Her country experience includes a broad range of advanced and emerging countries such as Austria, Colombia, Brazil, Malta, Mexico, Peru, and Spain. Her research interests include ​​fiscal (government expenditures, public compensation, and decentralization), financial sector, and labor market issues.


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Lagarde: Great Transitions in the Global Economy

By | October 10th, 2013|International Monetary Fund, Uncategorized|

By iMFdirect

Christine Lagarde held a press conference this morning and covered a lot of ground.

The IMF Managing Director wants policymakers to energize the global economic recovery that is too slow and too unbalanced.

Two main transitions are taking place in the global economy. First, Advanced economies are strengthening, while emerging market economies are growing slower. Second, the world is moving to a different kind of financial sector.

Countries need to manage this process, which will take some time, with stronger policies to make growth more inclusive and sustainable, and the financial system more stable.

Lagarde fielded questions on the IMF’s governance reforms, the global impact of a failure to raise the U.S. debt ceiling, China, Greece, Portugal, Nigeria, Spain, Slovenia, and Egypt.

Find out the who, why and how and watch the press conference.

Transitions to Financial Stability: A Bumpy Ride

By | October 9th, 2013|Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, International Monetary Fund, Low-income countries, Public debt, Uncategorized|

GFSRBy José Viñals

(Versions in 中文Français, 日本語, Русский, and Español)

The global financial system faces several major transitions along the road to greater financial stability.  These transitions will be challenging because they are accompanied by substantial risks.

So what are these transitions?

  • The first one is the transition in the United States from a prolonged period of monetary accommodation towards a normalization of monetary conditions. Will this transition be smooth or bumpy?
  • Second, emerging markets face a transition to more volatile external conditions and higher risk premiums. What needs to be done to keep emerging markets resilient?
  • Third, the euro area is moving to a stronger union and stronger financial systems. This report focuses on the close links between the corporate and banking sectors. What are the implications of the corporate debt overhang for bank health?
  • Fourth, Japan is moving towards the new policy regime of Abenomics. The stakes are high. Will Japan’s policies be comprehensive enough to ensure stability?
  • And finally, there is the global transition to a safer financial system, where much remains to be done.

Continue reading “Transitions to Financial Stability: A Bumpy Ride” »

Global Outlook—Still Three Speeds, But Slower

By | July 9th, 2013|Advanced Economies, Africa, Asia, Economic Crisis, Economic outlook, Emerging Markets, Europe, Finance, Financial Crisis, growth, IMF, International Monetary Fund, Latin America, Politics, recession|

2010 WEO BLANCHARD By Olivier Blanchard

Today we released our update of the World Economic Outlook.

The world economy remains in 3-speed mode.  Emerging markets are still growing rapidly.  The US recovery is steady.  And much of Europe continues to struggle. 

There is however a twist to the story.   Growth almost everywhere is a bit weaker than we forecast in April, and the downward revision is particularly noticeable in emerging markets.  After years of strong growth, the BRICS in particular are beginning to run into speed bumps.  This means that the focus of policies will increasingly need to turn to boosting potential output growth or, in the case of China, to achieving more sustainable and balanced growth.

What the Numbers Show

Continue reading “Global Outlook—Still Three Speeds, But Slower” »

Africa: Second Fastest-Growing Region in the World

By | June 10th, 2013|Africa, Economic Crisis, Economic outlook, Emerging Markets, Employment, Financial Crisis, growth, International Monetary Fund, Low-income countries|

Antoinette SayehBy Antoinette M. Sayeh 

Sub-Saharan Africa is the second fastest-growing region of the world today, trailing only developing Asia.  This is remarkable compared to the current complicated state of the global economy, with Europe still struggling and the United States slowly on the mend.

In 2012, Sub-Saharan Africa maintained solid growth, with output growth at 5 percent on average. The factors that have supported the region through the Great Recession—strong investment, favorable commodity prices, and generally prudent macroeconomic management—continued to be at play.

Continue reading “Africa: Second Fastest-Growing Region in the World” »

Rethinking Macroeconomic Policy

By | April 29th, 2013|Advanced Economies, Asia, Debt Relief, Economic research, Europe, Finance, Financial Crisis, Financial regulation, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt|

blanchBy Olivier Blanchard

(Versions in عربي中文FrançaisРусский, and Español)

The IMF has just hosted a second conference devoted to rethinking macroeconomic policy in the wake of the crisis. After two days of fascinating presentations and discussions, I am certain of one thing:  this is unlikely to be our last conference on the subject.

Rethinking and reforms are both taking place.  But we still do not know the final destination, be it for the redefinition of monetary policy, or the contours of financial regulation, or the role of macroprudential tools. We have a general sense of direction, but we are largely navigating by sight.

Continue reading “Rethinking Macroeconomic Policy” »

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