Financial Stability Improves, But Rising Vulnerabilities Could Put Growth at Risk

By Tobias Adrian

October 11, 2017

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The headquarters of the European Central Bank in Frankfurt, Germany: To avoid causing market turbulence, central banks will have to clearly communicate their plans to gradually unwind crisis-era policies (photo: Caro/Sven Hoffman/Newscom).

It seems like a paradox. The world’s financial system is getting stronger, thanks to healthy economic growth, buoyant markets, and low interest rates. Yet despite these favorable conditions, dangers in the form of rising financial vulnerabilities are starting to loom. That is why policymakers should act now to keep those vulnerabilities in check. Continue reading “Financial Stability Improves, But Rising Vulnerabilities Could Put Growth at Risk” »

Global Economic Upswing Creates a Window of Opportunity

By Maurice Obstfeld

October 10, 2017

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The global recovery is continuing, and at a faster pace. The picture is very different from early last year, when the world economy faced faltering growth and financial market turbulence. We see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia.

The latest World Economic Outlook has therefore upgraded its global growth projections to 3.6 percent for this year and 3.7 percent for next—in both cases 0.1 percentage point above our previous forecasts, and well above 2016’s global growth rate of 3.2 percent, which was the lowest since the global financial crisis. Continue reading “Global Economic Upswing Creates a Window of Opportunity” »

Chart of the Week: High Hurdles for Trade in Services

By IMFBlog

September 25, 2017

A shop window in Stockholm, Sweden: 62 % of jobs in the country are in the services sector (photo: Bob Strong/Reuters/Newscom).

The service sector accounts for some two-thirds of economic activity, and roughly the same share of jobs around the world. And yet the barriers to trade in services—from banking to online consultations with doctors or engineers—remain high.

Continue reading “Chart of the Week: High Hurdles for Trade in Services” »

Gaining Currency: The Rise of the Renminbi

By IMFBlog

August 4, 2017

Eswar Prasad at an IMF conference (photo: Staff/IMF)

 
As China’s economy catches up in size with that of the United States, some economists predict that the renminbi will soon challenge the dollar’s dominance in international finance.

Continue reading “Gaining Currency: The Rise of the Renminbi” »

Chart of the Week: Electric Takeover in Transportation

By IMFBlog

July 31, 2017 

An electric car recharges at a meter in London: The UK is the latest country to announce plans to end fossil fuel vehicle sales by 2040 (photo: Sasha Fox Walters/iStock by Getty Images)

The switch from horses to automobiles in the 20th century paved the way for the rise of oil-based transportation and energy use. Today, electric vehicle ownership is picking up speed. Greater affordability of electric vehicles will likely steer us away from our current sources of energy for transportation, and toward more environmentally friendly technology. And that can happen sooner than you think.

Our Chart of the Week from a recent IMF working paper shows that the transition away from motor vehicles could happen in the next 10 to 25 years, based on parallel shifts in the 20th century. Patterns observed in the early days of the horse-car transition closely resemble present-day electric vehicle adoption rates. Between 2011 and 2015, the average annual growth rate of electric vehicle ownership was 120 percent. This is, in fact, slightly faster growth than that of motor vehicles during a comparable timeframe in the past. Using the horse-car parallel, the paper forecasts that by 2040 motor vehicles could mostly disappear in advanced economies, and could comprise about a third of the fleet of all cars in emerging market and developing economies. Continue reading “Chart of the Week: Electric Takeover in Transportation” »

A Firming Recovery

By Maurice Obstfeld

July 24, 2017

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(photo: IMF)

The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy’s gain in momentum.

As in our April forecast, the World Economic Outlook Update projects  3.5 percent growth in global output for this year and 3.6 percent for next.

The distribution of this growth around the world has changed, however: compared with last April’s projection, some economies are up but others are down, offsetting those improvements. Continue reading “A Firming Recovery” »

No Time to Stand Still: Strengthening Global Growth and Building Inclusive Economies

By Christine Lagarde

July 5, 2017

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The port of Hamburg, Germany: G20 leaders meet to discuss policies to strengthen the global economic recovery (photo: Markus Lange/robertharding/Newscom)

Nearly sixty years ago, a little-known band called the Beatles arrived in Hamburg, got a haircut, recorded their first song, and found their sound.

Taking a cue from the Fab Four, world leaders gathering for the Group of Twenty Summit this week can make the most of their time in Hamburg—and leave Germany with a sound plan to strengthen global growth.

Continue reading “No Time to Stand Still: Strengthening Global Growth and Building Inclusive Economies” »

Chart of the Week: Why Energy Prices Matter

By IMFBlog

June 5, 2017

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(photo: Imagine China/Newscom)

Wind turbines and solar panels generate electricity at power station, Jiangsu, China. Getting energy prices right will help reduce environmental costs and save lives (photo: Imagine China/Newscom)

World Environment Day is an occasion to consider why it’s so important to get energy prices right. The IMF has long argued that energy prices that reflect environmental costs can help governments achieve their goals not only for improving public health but also for inclusive growth and sound public finances.  

A number of countries such as Egypt, Indonesia, Mexico, and Saudi Arabia have recently taken important steps to increase energy prices towards market levels. Some others, such as India and China have made important strides in cost-effective renewable energy sources—and reduced their reliance on fossil fuels. Still, undercharging for fossil fuel energy remains pervasive and substantial and can cause severe health effects from pollution, particularly in densely populated countries. Continue reading “Chart of the Week: Why Energy Prices Matter” »

How Trade with China Boosts Productivity

By JaeBin Ahn and Romain Duval

May 24, 2017

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Container port, Qingdao city, China. Trade with China has helped improve living standards in advanced economies through higher productivity (photo: Imagine China/Newscom)

Advocates of protectionist policies in advanced economies blame job losses on growing trade with China, and influential researchers have provided some empirical backing for their claims. Yet the benefits of trade with China are often overlooked. Among them is faster growth in productivity—the key driver of improved living standards. This suggests that rather than erecting new barriers to trade, advanced economies should continue to open up—while doing much more to help those who have lost their jobs to overseas competition. Continue reading “How Trade with China Boosts Productivity” »

Emerging Economy Consumers Drive Infrastructure Needs

By Paolo Mauro

May 4, 2017

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

The infrastructure needs of emerging market economies, like China or India, differ from those of advanced economies like the United States or Germany. Many emerging economies must substantially expand their energy and transportation networks, or build them from scratch, to accommodate rapid economic growth. Our research shows the more people make, the more they spend on transportation. With emerging economies’ middle classes booming and incomes rising, this has big implications for how policymakers choose to invest in infrastructure. Continue reading “Emerging Economy Consumers Drive Infrastructure Needs” »

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