China’s Rebalancing Explained in 6 Charts

By Longmei Zhang

Version in 中文 (Chinese)

The word “rebalancing” is often used to describe China’s economic transition. But what does it mean? And how much is China rebalancing? A recent IMF paper attempts to answer these questions.  (more…)

Who Wins and Who Loses As China Rebalances

By Serkan Arslanalp, Thomas Helbling, Jaewoo Lee, and Koshy Mathai

Version in 中文  (Chinese)

China’s economy leaves nobody indifferent. The world is watching closely as the second largest economy in the world is shifting its growth model from an export-driven one to one centered on household consumption. As China’s economy slows and rebalances, its impact is being felt on an already fragile global economy, and particularly in the rest of the Asia region. Our recent studies show that while China’s rebalancing will adversely affect some Asian economies, it will also open opportunities for several others.

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Turkey’s Recipe to Escape the Middle-Income Trap

By Gregorio Impavido and Uffe Mikkelsen

(Version in Türk)

Turkey is going through a time of economic transition, with slowing growth that risks the country being caught in a “middle-income trap,” unable to join the ranks of high income economies. 

The country grew at 6 percent per year on average in the period 2010-13, with policies supportive of domestic consumption. This has generated a large current account deficit, mostly financed by short-term capital flows. The reliance on consumption at the expense of investment, slow export growth, and sizable investment needs have hurt potential growth, with the economy already growing more modestly. Moreover, Turkey’s low domestic savings and competitiveness challenges have limited investment as well as exports, which have also suffered from the slow growth in Europe.

With current policies, Turkey's economy is expected to grow only 3.5 percent annually over the next five years. Going forward, the economy must be rebalanced to make it more competitive and to restore output and employment growth.

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Euro Area: An Unbalanced Rebalancing?

By John Bluedorn and Shengzu Wang

Since the financial crisis, the euro area current account, made up mostly of the trade balances of the individual countries, has moved from rough balance into a clear surplus. But the underlying rebalancing across economies within the euro area has been highly asymmetric, with some debtors, like Greece, Ireland, and Spain, seeing large current account improvements (sometimes into surplus), while creditors, like Germany and the Netherlands, have basically maintained their surpluses (Chart 1). A set of new staff papers look at the drivers of the improvements in debtor current accounts and the persistence of creditor current accounts, and whether these developments are a cause for concern.

Euro Area Current Account.Chart1

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Dealing with Uncertain Economic Times: The Outlook for Asia

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.

Keeping Asia from Overheating

Asia’s vigorous pace of growth has seen the region play a leading role in the global recovery. But there are signs that higher commodity prices are spilling over to a more generalized increase in inflation. Expectations of future inflation have picked up. And accommodative macroeconomic policy stances, coupled with limited slack in some economies, have added to inflation pressures. Against this backdrop, the need for policy tightening in Asia has become more pressing than it was six months ago, especially in economies that face generalized inflation pressures. How should policymakers address these challenges?

By | May 19th, 2011|Asia, Economic outlook, IMF, International Monetary Fund|5 Comments

Tipping the Scales—Rebalancing Growth in Asia

The center of global economic growth is moving from the West to Asia. Over the last 30 years, the Asian economy has grown by over 7 percent each year, doubling in size every decade. This success has been based in large part on outward-oriented growth strategies. But, there is growing awareness that Asia’s export-led growth needs to be balanced by a second engine of growth. How to achieve this rebalancing is a key theme of a new book from the IMF, launched in Hong Kong, on Rebalancing Growth in Asia—Economic Dimensions for China.

By | April 29th, 2011|Asia, Economic Crisis, Economic outlook, Emerging Markets, International Monetary Fund|Comments Off on Tipping the Scales—Rebalancing Growth in Asia

Investing in a Rebalancing of Growth in Asia

Continuing my travels through Asia for the launch of our latest Regional Economic Outlook: Asia and Pacific, I am writing to you today from Singapore. Last week, I wrote about the near-term outlook for Asia. Today, I turn to the key medium-term challenge—an issue emphasized by G-20 ministers over the weekend—the need to rebalance economic growth. For much of Asia, this means shifting away from heavy reliance on exports by strengthening domestic sources of growth. While much of the discussion on this issue has focused on ways to increase consumption, the role of investment is equally important and should not be overlooked.

By | October 25th, 2010|Asia, Economic outlook, IMF, International Monetary Fund|1 Comment
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