Lasting Effects: The Global Economic Recovery 10 Years After the Crisis

2019-03-13T13:38:40-04:00October 3, 2018|

By Wenjie Chen, Mico Mrkaic, and Malhar Nabar

October 3, 2018

عربي,中文, Español, Français, Baˈhasa indoneˈsia, 日本語, Português, Русский

Woman cleaning in Berlin, Germany: the 2008 global financial crisis has had long-lasting effects on economic growth (photo: Caro/Olaf Jandke/Newscom)

In the year following the 2008 financial crisis, economic activity declined in half of all countries in the world. Our analysis in Chapter 2 of the October World Economic Outlook shows that in many countries output is still well below levels that would have prevailed had output followed its precrisis trend. […]

Shifting Tides: Policy Challenges and Opportunities for the G-20

2019-03-13T16:33:37-04:00July 18, 2018|

By Christine Lagarde

July 18, 2018

Versions in عربي中文Español, Français 日本語, Português, Русский 

Cars to be shipped abroad, Jiangsu, China: trade tariffs have gone into effect and export orders have decreased (photo: Imagine China/Newscom)

The artist Claude Monet once said, “I worked without stopping, for the tide at this moment is just as I need it.” As the Group of Twenty finance ministers gather this week at the banks of the Rio de la Plata in Buenos Aires they should be inspired by the words of Monet, […]

Propping Up the Chinese Economy: Credit versus Fiscal Stimulus

2019-03-14T16:17:51-04:00December 12, 2017|

By Sophia Chen and Lev Ratnovski

December 13, 2017

Version in 中文 (Chinese), Español (Spanish), 日本語  (Japanese)

Construction work Qingyuan , Guangdong, China : Fiscal stimulus is a powerful tool for growth (photo: Imagine China/Newscom).

Credit booms are addictive. Credit supports growth and the perception of wealth. Yet credit booms are risky, and are often followed by financial busts and economic slowdowns. The challenge is taming credit without hurting growth. […]

Improving Financial Stability in China

2019-03-15T13:16:49-04:00December 6, 2017|

By Ratna Sahay and James P. Walsh

December 6, 2017

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

A man walks past a bank branch in Beijing: China’s leaders have made financial stability one of their top priorities (photo: Stephen Shaver/UPI/Newscom).

China’s leaders have made financial stability one of their top priorities. Given the size and importance of the Chinese market, with the world’s largest banks and second-largest stock market, that is welcome news for China and the world. The financial system permeates virtually all aspects of economic activity, having played a key role in facilitating rapid economic growth and in sharply reducing poverty rates.

China is moving from the world’s factory floor toward  a more modern, consumer-driven economy. During this transition, however, some tensions have emerged in the financial sector. […]

How Policy Makers Can Better Predict a Downturn – and Prepare

2019-03-15T14:49:03-04:00October 3, 2017|

By Claudio Raddatz and Jay Surti

October 3, 2017

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

A trading floor in Singapore. Financial conditions provide valuable clues to the economic outlook and can improve the accuracy of forecasts (photo: Caro/Oberhaeuser/Newscom).

The global financial crisis showed that periods of robust growth and seeming calm in financial markets can be followed by a sudden surge in market volatility and an unexpected economic downdraft. That’s why it is so important for policy makers to keep a close watch on so-called financial conditions. These can include everything from bond yields and oil prices to foreign exchange rates and levels of domestic debt. […]

Taking Away the Punch Bowl: Lessons from the Booms and Busts in Emerging Europe

2017-04-15T14:03:55-04:00September 10, 2012|

By Bas B. Bakker and Christoph Klingen

With all eyes on the euro area, it is easy to forget that only a few years ago the emerging economies of Europe, from the Baltic to the Black Sea, went through a deep economic and financial crisis. This crisis is the topic of a new book that we will introduce to the public this week in Bucharest, London, and Vienna.

One lesson is that your best chance to prevent deep crises is forcefully addressing booms before they get out of hand. Another is that even crises that look abysmal can be contained and overcome— policies to adjust the economy and international financial support do work.

In the half decade leading up to the crisis, easy global financial conditions, confidence in a rapid catch-up with western living standards, and initially underdeveloped financial sectors spawned a tremendous domestic demand boom in the region. Western banking groups bankrolled the bonanza, providing their eastern subsidiaries with the funds to extend the loans that fueled the domestic boom. […]

Dealing with Uncertain Economic Times: The Outlook for Asia

2017-04-15T14:18:33-04:00October 13, 2011|

Recent large equity sell-offs across Asia and safe haven flows into Japan illustrate perfectly the region’s vulnerabilities to further global shocks. While the region’s fundamentals—built up over the past decade—remain relatively strong, economic uncertainties in Europe and the United States pose large downside risks. The world economy has entered a dangerous new phase and, as the IMF’s Managing Director stated recently, “what makes the situation all the more urgent is that it has implications for every country.” Our Regional Economic Outlook for Asia and the Pacific emphasizes these risks, and stresses the need for policymakers to remain vigilant and nimble in this extraordinarily uncertain climate. The view from here in Tokyo—looking out at the region—may be more serene than the view from other advanced country capitals, but there are storm clouds on the horizon.

Macroprudential Policy—Filling the Black Hole

2017-04-15T14:25:34-04:00April 8, 2011|

When the global financial system was thrown into crisis, many policymakers were shocked to discover a gaping hole in their policy toolkit. They have since made significant progress in developing macroprudential policy measures aimed at containing system-wide risks in the financial sector. Yet progress has been uneven. Greater efforts are needed to transform this policy patchwork into an effective crisis prevention toolkit. Given the enormous economic and human cost of the recent financial debacle, we cannot afford to miss this opportunity for substantial reform. We need further collective efforts to fill the policy black hole. It is our best chance of avoiding future crises.
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