Chart of the Week: Why Energy Prices Matter

By IMFBlog

June 5, 2017

Versions in   عربي (Arabic),  中文 (Chinese), Español (Spanish)

(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” »

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” »

Services Exports Open a New Path to Prosperity

By Prakash Loungani, Chris Papageorgiou, and Ke Wang

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

Services, which already account for 50 percent of world income and 70 percent of employment, are also becoming an important part of international trade. Services exports—accounting for nearly one fourth of total exports—have come to play a central role in the global economy, thanks in large part to advances in technology. Continue reading “Services Exports Open a New Path to Prosperity” »

Getting into Higher Gear: Why Structural Reforms Are Critical for Revving Up Global Growth

David Lipton 2016-1By David Lipton

Versions in عربي (Arabic), Español (Spanish)

Almost a decade after the start of the global financial crisis, the world economy is still trying to achieve escape velocity. The IMF’s recent forecast for global growth is a disappointing 3.1 percent in 2016 and 3.4 percent in 2017. And the outlook remains clouded by increased economic and political uncertainty, including from the impact of the Brexit vote.

Policymakers have taken forceful macroeconomic policy action to support growth, such as fiscal stimulus and appropriately accommodative monetary policy. But a lasting recovery remains elusive. Continue reading “Getting into Higher Gear: Why Structural Reforms Are Critical for Revving Up Global Growth” »

Bad Debt in Emerging Markets: Still Early Days

by John Caparusso, Yingyuan Chen, Evan Papageorgiou and Shamir Tanna

(Versions in 中文, PortuguêsРусский, and Español)

Emerging markets have had a great run. The fifteen largest emerging market economies grew by 48% from 2009 to 2014, a period when the Group of Twenty economies collectively expanded by 6%.

How did emerging markets sustain this growth? In part, they drew upon bank lending to drive corporate credit expansion, strong earnings, and low defaults. This credit boom, combined with falling commodity prices and foreign currency borrowing, now leaves emerging market firms vulnerable and financial sectors under stress, as we discuss in the latest Global Financial Stability Report.

Continue reading “Bad Debt in Emerging Markets: Still Early Days” »

Ten Take Aways from the "Rethinking Macro Policy: Progress or Confusion?"

blanchBy Olivier Blanchard

On April 15-16, the IMF organized the third conference on "Rethinking Macro Policy."

Here are my personal take aways.

1. What will be the "new normal"?  

I had asked the panelists to concentrate not on current policy challenges, but on challenges in the "new normal." I had implicitly assumed that this new normal would be very much like the old normal, one of decent growth and positive equilibrium interest rates. The assumption was challenged at the conference.

On the one hand, Ken Rogoff argued that what we were in the adjustment phase of the “debt supercycle.” Such financial cycles, he argued, end up with debt overhang, which in turn slows down the recovery and requires low interest rates for some time to maintain sufficient demand.  Under that view, while it may take a while for the overhang to go away, more so in the Euro zone than in the United States, we should eventually return to something like the old normal.

Continue reading “Ten Take Aways from the "Rethinking Macro Policy: Progress or Confusion?"” »

Multi-Track Monetary Policies in Advanced Economies: What This Means for Asia

By James Daniel and Rachel van Elkan

Since mid-2014, diversity and divergence—applying to countries’ economic situations, policies and performance—have dominated global economic discussions. Differing economic performance in major advanced countries has led to divergent monetary policies.

Both the Bank of Japan and the European Central Bank have started significant expansions of their balance sheets, while the U.S. Federal Reserve has ended its bond-buying program and is expected to start raising rates. This has had many effects, in particular, contributing to a sharp depreciation of the Yen and the Euro against the U.S. dollar (see chart 1).

Continue reading “Multi-Track Monetary Policies in Advanced Economies: What This Means for Asia” »

Oil Prices and Public Finances: A Double-Edged Sword

By Benedict Clements and Marta Ruiz-Arranz 

(Versions in 中文, Français, 日本語Русскийعربي and Español)

Plunging oil prices have taken the public finances on an exciting ride the past six months. Oil prices have fallen about 45 percent since September (see April 2015 World Economic Outlook), putting a big dent in the revenues of oil exporters, while providing oil importers an unexpected windfall.  How has the decline in oil prices affected the public finances, and how should oil importers and exporters adjust to this new state of affairs?

In the April 2015 Fiscal Monitor, we argue that the oil price decline provides a golden opportunity to initiate serious energy subsidy and taxation reforms that would lock in savings, improve the public finances and boost long-term economic growth.

Continue reading “Oil Prices and Public Finances: A Double-Edged Sword” »

Time to Act on the G-20 Agenda: The Global Economy Will Thank You

2014MDNEW_04By Christine Lagarde

(Versions in 中文, Français, 日本語Русский, Türk, and Español)

Implementation, investment, and inclusiveness: these three policy goals will dominate the G-20 agenda this year, including the first meeting of finance ministers and central bank governors in Istanbul next week. As Turkish Prime Minister Ahmet Davutoğlu recently put it: “Now is the time to act” – şimdi uygulama zamanı.

There is a lot at stake. Without action, we could see the global economic supertanker continuing to be stuck in the shallow waters of sub-par growth and meager job creation. This is why we need to focus on these three “I’s”:

Continue reading “Time to Act on the G-20 Agenda: The Global Economy Will Thank You” »

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