The COVID-19 pandemic has pushed debt levels to new heights. Compared to end-2019, average 2021 debt ratios are projected to rise by 20 percent of GDP in advanced economies, 10 percent of GDP in emerging market economies, and about 7 percent in low-income-countries. (more…)
by Vitor Gaspar
The world economy is experiencing important transitions and associated uncertainties.
- Commodity prices have fallen sharply, with adverse consequences for exporting countries.
- China’s rebalancing and the prospect of U.S. interest rate increases are having important and costly spillover effects on other economies.
- And these and other factors are posing important fiscal challenges, especially for emerging markets.
(Version in Español)
“It was the best of times, it was the worst of times.” With these words Charles Dickens opens his novel “A Tale of Two Cities”. Winners and losers in a “tale of two commodities” may one day look back with similar reflections, as prices of metals and oil have seen some seismic shifts in recent weeks, months and years.
This blog seeks to explain how demand — but also supply and financial market conditions — are affecting metals prices. We will show some contrast with oil, where supply is the major factor. Stay tuned for a deeper analysis of the trends in a special commodities feature, which will be included in next month’s World Economic Outlook.
This year’s IMF Annual Meetings are going on the road…to Lima, Peru. All the big debates will focus on economics, finance, inequality, financial inclusion, emerging markets, commodities and many more.
Since you’ve been reading gossip magazines at the beach busy this summer, we thought you might like a handy refresher on some of our blogs in recent months about Latin America.
If, as has been observed, demography is destiny, this will be the African century.
Most countries in sub-Saharan Africa are on the cusp of a demographic transition—the years when the share of young and old in the population declines and those in working age range (15-64 years) increases.
Elsewhere, this transition has generally been accompanied by higher savings, incomes, and economic growth. Our latest Regional Economic Outlook for sub-Saharan Africa looks at how the transition might play out and the implications for economic policies.
Global financial markets traditionally take their cue from the United States. Unexpected Fed rate hikes have unsettled global markets in the past. The entire global financial system threw a tantrum when then Fed Chairman Ben Bernanke merely suggested in May 2013 that the end to bond-buying and other policies could soon begin. However for the past year, the gears of global markets seem to have been thrown into reverse — it is German government bonds, known as Bunds, rather than U.S. bonds, known as Treasuries, that appear to be driving prices in global bond markets. This role reversal could add a new layer of complexity to investor calculations as they prepare for the beginning of Fed interest rate hikes, which are expected later in 2015. Also, as developments in Greece lead to rises and falls in Bund and Treasury yields, this is a trend worth keeping an eye on.
Private investment has been decelerating throughout emerging markets since mid-2011, and Latin America has been no exception (see Chart 1). This trend has raised concerns not only because weaker investment has played an important role in the broader regional slowdown, but also because Latin America’s investment rates were lower than in most other regions even before the slowdown began.
This blog looks at the drivers of corporate investment and highlights the extent to which falling commodity export prices have contributed to lower capital spending. Given the poor outlook for commodity prices and what our analysis suggests, this does not bode well for countries in the region going forward unless they can tackle some of the long-standing obstacles to increase investment.