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Global Financial Stability Improves; Getting the Policy Mix Right to Sustain Gains

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

The world’s financial system has become safer and more stable since our last assessment six months ago. Economic activity has gained momentum. The outlook has improved and hopes for reflation have risen. Monetary and financial conditions remain highly accommodative. And investor optimism over the new policies under discussion in the United States has boosted asset prices. These are some of the conclusions of the IMF’s latest Global Financial Stability Report.

But it’s important for governments in the United States, Europe, China and elsewhere to follow through on investor expectations by adopting the right mix of policies. This means preventing fiscal imbalances, resisting calls for higher trade barriers, and maintaining global cooperation on regulations needed to make the financial system safer. Continue reading “Global Financial Stability Improves; Getting the Policy Mix Right to Sustain Gains” »

By IMFBlog| April 19th, 2017|capital flows, capital markets, China, developing countries, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Financial markets, financial policy, Fiscal policy, growth, inclusive growth, Inequality, International Monetary Fund, labor markets, Low-income countries, monetary policy, productivity, Uncategorized|0 Comments

Redesigning Argentina’s Economic Landscape

By Roberto Cardarelli

Versions in Português (Portuguese), and Español (Spanish)

Most people know Argentina as the land of tango, Malbec, and some of the greatest soccer players of all times. But Argentina is also famous for being home to some of the most diverse and extreme landscapes of the world—from subtropical rainforests and Iguazu Falls in the north to the glaciers of Perito Moreno in the south, and from the lowest site in South America (Laguna del Carbón) to the highest elevation in the Americas (Aconcagua mountain).

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By IMFBlog| November 21st, 2016|Economic research, Fiscal policy, Government, growth, inflation, International Monetary Fund, Reform|0 Comments

Close But Not There Yet: Getting to Full Employment in the United States

By Ravi Balakrishnan and Juan Solé

(Version in Español)

Last month’s report on U.S. jobs was disappointing, with far fewer jobs than expected added in March. A longer-term look at trends yields a different picture, however. Over the past year, U.S. job creation has been impressive. Payroll gains have averaged 260,000 per month—well above the 160,000 monthly average seen throughout the 2010–13 recovery.

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By IMFBlog| April 28th, 2015|Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Financial Crisis, Government, growth, IMF, International Monetary Fund, Uncategorized|0 Comments

India’s Investment Slowdown: The High Cost of Economic Policy Uncertainty

By Rahul Anand and Volodymyr Tulin

India, after witnessing spectacular growth averaging above 9 percent over the past decade, has started to slow in the last few years. The slump in infrastructure and corporate investment has been the single biggest contributor to India’s recent growth slowdown.

India’s investment growth, averaging above 12 percent during the last decade fell to less than one percent in the last two years. What is especially worrisome is that more and more investment projects are getting delayed and shelved, while the pipeline of new projects has become exceptionally thin.

This slowdown has sparked an intense public debate about its causes. Some commentators, including representatives of the business community, argue that high interest rates, which raise financing costs, are the major culprit, dampening investment. Others maintain that interest rates are only partly responsible for the current weak levels of investment, suggesting that a host of other factors, particularly on the supply side, are at play.

Our new Working Paper seeks to shed some light on the reasons behind this investment malaise. Using a novel index of economic policy uncertainty—an innovation in our analysis—we find that heightened uncertainty regarding the future course of broader economic policies and deteriorating business confidence have played a significant role in the recent investment slowdown.

Continue reading “India’s Investment Slowdown: The High Cost of Economic Policy Uncertainty” »

By IMFBlog| March 25th, 2014|Asia, Economic outlook, Economic research, Emerging Markets, Finance, growth, International Monetary Fund, Investment, Uncategorized|0 Comments

China’s Growth: Why Less is More

By Steven Barnett

(Version in 中文)

Less growth in China today will mean higher income in the future. So rather than worry, we should welcome the slowdown in China’s economy. Why? Because by favoring structural reforms over short-term stimulus, China’s leadership is illustrating their commitment to move to a more balanced and sustainable growth model.

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By IMFBlog| October 29th, 2013|Asia, Economic outlook, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Public debt, Uncategorized|3 Comments

Achieving China’s Great Promise

By Murtaza Syed

(Version in 中文)

Anticipation of the U.S. Federal Reserve’s exit from quantitative easing has dominated headlines in recent weeks. Half a world away, less conspicuously, but no less importantly, China, the globe’s second largest economy, is designing its own policy adjustments: firstly, unwinding the fiscal and monetary stimulus that helped shield it from the Great Recession and lifted global growth (but which also created some vulnerabilities), and secondly transitioning out of a growth model that has generated spectacular growth over the last three decades, but which is now running out of fuel.

Managed well, these twin adjustments would allow China to prolong its economic miracle in a sustainable way, with a significant positive impact for the rest of the world.

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By IMFBlog| August 8th, 2013|Asia, Economic Crisis, Emerging Markets, Employment, Finance, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt, Uncategorized|5 Comments

Inclusive and Sustained Growth in Asia: The Role of Fiscal Policy

ASingh By Anoop Singh

(Versions in 中文 and 日本語)

Fiscal management has improved in Asia over the past decade. It has become more responsive to economic conditions and thereby helped stabilize growth, especially during the global financial crisis. While these are important achievements, major challenges still lie ahead—as our latest Asia and Pacific Regional Economic Outlook points out.

What are these key challenges? In a nutshell, fiscal policy can, and should do more to make Asia’s growth sustainable and more inclusive.

In the near term, budget consolidation has to proceed as the recovery takes hold to rebuild the fiscal space needed to respond to future output fluctuations.

At the same time several emerging and low income economies need to create room for higher infrastructure and social spending to support long-term growth, reduce income inequality, and fight poverty.

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By IMFBlog| May 8th, 2013|Advanced Economies, Asia, Economic Crisis, Emerging Markets, Finance, Financial Crisis, growth, IMF, International Monetary Fund|0 Comments

The Lessons of the North Atlantic Crisis for Economic Theory and Policy

Guest post by: Joseph E. Stiglitz
Columbia University, New York, and co-host of the Conference on Rethinking Macro Policy II: First Steps and Early Lessons

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

In analyzing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last 30 years—as liberalization policies became dominant—have given us a wealth of experience and mountains of data. If we look over a 150 year period, we have an even richer data set.

With a century and half of clear, detailed information on crisis after crisis, the burning question is not How did this happen? but How did we ignore that long history, and think that we had solved the problems with the business cycle? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris.

Continue reading “The Lessons of the North Atlantic Crisis for Economic Theory and Policy” »

By IMFBlog| May 3rd, 2013|Advanced Economies, Debt Relief, Economic Crisis, Emerging Markets, Europe, Finance, Financial Crisis, growth, IMF, International Monetary Fund|8 Comments

Emerging Asia: At Risk of the “Middle-Income Trap”?

By Anoop Singh

(Versions in 中文 and 日本語)

Emerging economies in Asia have weathered the global financial crisis relatively unscathed and appear to be on track for continued strong growth this year and the next. Perhaps because the region has been doing rather well, policymakers’ concerns have increasingly shifted towards medium-term risks: could growth and fast convergence to living standards in advanced economies—come to an end?

In fact, while the economic performance of emerging economies in Asia remains undoubtedly strong in international comparison, it has already shown signs of gradual weakening.

Continue reading “Emerging Asia: At Risk of the “Middle-Income Trap”?” »

By IMFBlog| April 29th, 2013|Advanced Economies, Asia, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund|0 Comments

How to Sustain Recent Financial Gains: Fix Old Risks and Meet New Challenges

By José Viñals

(Versions in عربي ,日本語, Español)

Policymakers’ decisive actions since our last report in October have increased global financial stability by reducing acute risks.

In the euro area, policymakers averted a financial cliff.

In the United States, the worst fears of the fiscal cliff had been averted, while balance sheet repair and continued monetary easing have supported financial markets and the recovery.

In Japan, new policy initiatives have caught the imagination of global markets that Japan may finally leave its deflation valley.

But our latest Global Financial Stability Report concludes that improved financial markets and gains in financial stability will not be sustained—and new risks are likely to emerge—unless policymakers address key underlying vulnerabilities.

Continue reading “How to Sustain Recent Financial Gains: Fix Old Risks and Meet New Challenges” »

By IMFBlog| April 17th, 2013|Economic Crisis, Europe, Finance, Financial Crisis, growth, International Monetary Fund|0 Comments

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