Five Keys to a Smart Fiscal Policy

By Vitor Gaspar and Luc Eyraud

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

We live in a world of dramatic economic change. Rapid technological innovation has fundamentally reshaped the way we live and work. International trade and finance, migration, and worldwide communications have made countries more interconnected than ever, exposing workers to greater competition from abroad. While these changes have brought tremendous benefits, they have also led to a growing perception of uncertainty and insecurity, particularly in advanced economies.

Today’s conditions require new, more innovative solutions, which the IMF calls smart fiscal policies. By smart policies we mean policies that facilitate change, harness its growth potential, and protect people who are hurt by it. At the same time, excessive borrowing and record levels of public debt have limited the financial resources available to government. So, fiscal policy must do more with less. Fortunately, researchers and policy makers are realizing that the fiscal tool kit is broader and the tools more powerful than they thought. Five guiding principles sketch the contours of these smart fiscal policies, which are described in chapter one of the IMF’s April 2017 Fiscal Monitor. (more…)

Global Economy Gaining Momentum—For Now

By Maurice Obstfeld

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

Momentum in the global economy has been building since the middle of last year, allowing us to reaffirm our earlier forecasts of higher global growth this year and next. We project the world economy to grow at a pace of 3.5 percent in 2017, up from 3.1 percent last year, and 3.6 percent in 2018. Acceleration will be broad based across advanced, emerging, and low-income economies, building on gains we have seen in both manufacturing and trade.

Our new projection for 2017 in the April World Economic Outlook is marginally higher than what we expected in our last update. This improvement comes primarily from good economic news for Europe and Asia, as well as our continuing expectation for higher growth this year in the United States.

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Two Things That Keep Central Banks’ Reserve Managers Awake at Night

By Veronica Bacalu, Vincent Fleuriet, and Asad Qureshi

One of the central bank’s roles is to manage a country’s international reserves. But, central bank reserve managers have been losing sleep over two main issues: low interest rates, and how best to communicate the choices they make. (more…)

Chart of the Week: Access to Banking Services

By iMFdirect

Version in: Français (French), and Español (Spanish)

Did you know that while many people in advanced economies have multiple bank accounts, there are barely two bank accounts for every ten people in low-income economies? Access to financial services is essential to spread the fruits of economic growth to all, not just to the fortunate few.  (more…)

What the Fed Rate Rise Means for Corporate Debt in Emerging Markets

By Adrian Alter and Selim Elekdag

Versions in عربي (Arabic), and Español (Spanish)

In December 2016, the U.S. Fed raised interest rates for the first time in a year, and said they planned more increases in 2017.  Emerging market currencies took a bit of a dive, but overall investors didn’t overreact and run for the doors with their money.  For the bigger picture, you can read IMF Chief Economist Maurice Obstfeld’s blog that outlines how the U.S. election and Fed decision will impact the global economy.  (more…)

The World Economy: Moving Sideways

maury-obstfeld-weo_220x150By Maurice Obstfeld

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

A return to the strong, sustainable, balanced, and inclusive growth that Group of Twenty leaders called for at Hangzhou in September still eludes us. Global growth remains weak, even though it shows no noticeable deceleration over the last quarter. The new World Economic Outlook sees a slowdown for the group of advanced economies in 2016 and an offsetting pickup for emerging and developing economies. Taken as a whole, the world economy has moved sideways. Without determined policy action to support economic activity over the short and longer terms, sub-par growth at recent levels risks perpetuating itself—through the negative economic and political forces it is unleashing.

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Make in India: Which Exports Can Drive the Next Wave of Growth?

By Rahul Anand, Kalpana Kochhar, and Saurabh Mishra

The expansion of India’s exports of services between 1990 and 2013 has been nothing short of spectacular, putting India on a par with the world’s high-income economies in terms of service-product sophistication and as a share of total exports. This has created unique opportunities for continued growth. By contrast, when it comes to exports of manufactured goods, India has lagged behind its emerging-markets peers, both in quality and as a percentage of the total export basket, leaving substantial room for improvement.

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Act Now, Act Together

By Vitor Gaspar and Luc Eyraud

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

Public finances have had a rough year. A new reality is emerging. Against this backdrop, countries need to act now to boost growth and build resilience. They must also be prepared to act together to fend off global risks.

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The Change in Demand for Debt: The New Landscape in Low-income Countries

By Andrea F. Presbitero and Min Zhu

(Versions in 中文 (Chinese), Français, and Português)

Many low-income developing countries have joined the group of Eurobond issuers across the globe— in sub-Saharan Africa (for example, Senegal, Zambia, and Ghana), Asia (for example, Mongolia) and elsewhere, raising over US$21 billion cumulatively over the past decade. Tapping these markets provides a new source of funds, but also exposes borrowers to shifts in investor sentiment and rising global interest rates.

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