Managing Housing Market Risks in the United Kingdom

2017-04-14T01:58:22-04:00July 28, 2014|

Ruy LamaBy Ruy Lama

House prices are rising rapidly in the UK at an annual rate of 10.5 percent. House price inflation is particularly high in London (20 percent per year), and it is gradually accelerating in the rest of the country. The recent increases in house prices have been getting a lot of attention, and understandably have raised questions about living standards and whether another “boom-bust” cycle has begun.

House Prices

The current UK housing cycle raises two important questions. What is driving the rise in house prices? And how should macroeconomic policies respond?

Macroeconomic policies should tackle two crucial issues in the housing market: (i) mitigating systemic financial risks during upswings in house prices and leverage; and (ii) encouraging an adequate supply of housing in order to safeguard affordability. In this blog, we discuss how the UK authorities are addressing these two issues and what additional policies may be necessary to manage risks from the housing market.

[…]

Less Red Tape, More Credit: How the Private Sector Can Flourish in the Middle East

2017-04-14T02:12:43-04:00January 6, 2014|

Min ZhuBy Min Zhu

(Versions in عربي)

To almost all economists it is clear that the private sector is critically important in creating jobs and achieving strong growth. The public sector is already overburdened in most countries. But what is not clear is how to support the private sector for it to play this important role.

To shed some light on how to facilitate strong job creation and growth by the private sector in the Middle East and North Africa, we held a conference in Riyadh, Saudi Arabia, in December 2013, jointly with the Council of Saudi Chambers and the International Finance Corporation.

As the date of the conference approached, registrations kept increasing, and by the time we opened the conference, the registration numbers had skyrocketed to more than 800! I can think of no better sign of the importance of this topic for the people in this region.

[…]

Darn Them Piggies! Pork Prices & the Inflation Outlook for China

2017-04-15T14:19:17-04:00September 11, 2011|

It was pretty clear to me on a recent visit that China has become one of the biggest global markets for Angry Birds. The game was everywhere and around 100 million Chinese downloads are expected this year. It made me wonder if this was somehow linked to rising concerns over inflation and a way of getting back at those (increasingly expensive) mischievous green pigs. During the past year, views on China’s economy have yo-yoed from concerns about the recovery, to hand-wringing about inflation and overheating, and then back to talk of hard landing. Inflation peaked in July and was all set to quickly retreat in the latter part of this year. Unfortunately, just as China appeared to be heading out of the (inflationary) woods, pork happened. An ongoing (and literal) hog cycle caused pork prices to skyrocket. While the hog-cycle will soon turn and the effects should wash out reasonably quickly, the bad news is that the return to more normal times and lower inflation will be postponed once again.

Capital Flows to Asia Revisited: Monetary Policy Options

2017-04-15T14:22:06-04:00June 2, 2011|

Capital flows emerging Asia should be high on the ‘watch list’ for policymakers in the region. But, perhaps, not in the way we had previously anticipated. Twelve months ago we were keenly attuned to the risks posed by the foreign capital that flooded into Asia from mid-2009 onwards. Now, what we’re seeing is not really all that “exceptional.” With the recent surge, net overall capital flows to emerging have not surpassed the peaks reached in past episodes of large inflows to the region. Of course, that’s not to say it's all blue skies. The nature of inflows is different this time—dominated by portfolio flows—and that poses new challenges and risks for policymakers.

Capital Flows to the Final Frontier

2017-04-15T14:22:18-04:00May 24, 2011|

Sub-Saharan Africa’s “frontier markets”—the likes of Ghana, Kenya, Mauritius, and Zambia—were seemingly the destination of choice for an increasing amount of capital flows before the global financial crisis. Improving economic prospects in these countries was a big factor, but frankly, so too was a global economy awash with liquidity. Then the crisis hit. And capital—particularly in the form of portfolio flows—was quick to flee these countries as was the case for so many other economies. Fast forward to 2011. Capital flows are coming back to the frontier, but in dribs and drabs. In our recent Regional Economic Outlook we examined the experience of sub-Saharan Africa’s frontier markets, with a view to understanding how they can best make use of these inflow to meet their own development and growth objectives.

Confessions of a Dismal Scientist—Africa’s Resilience

2017-04-15T14:24:39-04:00May 3, 2011|

Like many economists, I tend to fear the worst. I have witnessed phenomenal changes for the better in sub-Saharan Africa over the past 20 odd years. Part of me still worries that this trajectory will not endure. But, the more I see of the region’s economic performance and outlook, the more I’m changing my tune. Good macroeconomic policies in many more countries the years before the crisis put them in good stead to weather the crisis relatively well. As we report in our latest Regional Economic Outlook, output in sub-Saharan Africa looks set to expand by around 5½ this year and 6 percent in 2012. My latest worry is the recent sharp increase in food and fuel prices on world markets. To help minimize the dislocation that this shock may entail, countries should consider a two-pronged policy response.

The Next Phase of Asia’s Economic Growth

2017-04-15T14:24:51-04:00April 28, 2011|

As the economic recovery has matured across much of Asia, the region has continued to be a driving force in the strengthening global recovery. Yet, recent tragic events—around the globe, and the earthquake and tsunami in Japan—are an all too poignant reminder of the fragility of our economic circumstances and, indeed, life. Much of this weighs on my mind as I am here in Hong Kong to launch our April 2011 Regional Economic Outlook: Asia and Pacific. While the outlook is by no means gloomy, policies will need to tackle new downside risks that have emerged and how to manage the next phase of Asia’s growth.

Who’s Talking About the Future of Macroeconomic Policies

2017-04-15T14:27:13-04:00April 5, 2011|

Last month's conference at the IMF spurred plenty of discussion about the future of macroeconomic policies after the global financial crisis. Economic models, policy tools, and how they are applied need to catch up with changes in the global economic and financial system. You've heard here about views from the conference, but there's been plenty of discussion going on outside the IMF. Here's a snapshot....
Go to Top