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Structural Reforms Give Biggest Help To Lagging Countries

September 22, 2017

Structural reforms can jumpstart productivity in countries with weaker initial productivity, and help them catch up with their peers (photo: The Palmer/iStock).

Labor and product market reforms, which make economies more efficient, can benefit all countries. But they are especially helpful in jumpstarting productivity in countries where productivity is weaker. This is good news as it implies that reforms are one route through which countries with lower per capita incomes can catch up with richer countries instead of persistently lagging behind: economic hardship is not destiny. Our new paper provides fresh arguments in favor of the often-difficult structural reforms. Continue reading “Structural Reforms Give Biggest Help To Lagging Countries” »

By IMFBlog| September 22nd, 2017|developing countries, Economic outlook, Economic research, Global Governance, Globalization, Government, growth, inclusive growth, International Monetary Fund, labor markets, Low-income countries, productivity, Reform, structural reforms|

More Action Needed on European Bank Profitability

By John Caparusso, Rohit Goel and Will Kerry

August 30, 2017

Versions in Español (Spanish), Deutsche (German), Français (French)

A woman withdraws money from an automated teller machine in Italy: Some European banks have too many branches relative to assets (photo: Martin Moxter imageBROKER/Newscom)

European banking has made considerable progress in the past few years: Banks have built up capital, regulation is stronger and supervision has been enhanced. But profitability remains weak, posing risks for financial stability.

In a sample of more than 170 large European lenders with combined assets of $35 trillion, roughly half generated a weak return on equity in 2016, and banks representing only 15 percent of assets generated a healthy return on equity, defined as more than 10 percent. Weak profitability is also shown in a low return on assets for domestic banks in many European countries. The drivers of these weak returns reflect varying combinations of low income, high costs, or provisions needed to build buffers against non-performing assets.

Continue reading “More Action Needed on European Bank Profitability” »

By IMFBlog| August 30th, 2017|banking, Economic outlook, euro zone, Europe, Financial markets, financial policy, Financial regulation, Government, IMF, International Monetary Fund, monetary policy, Uncategorized|

Banking on Reform: Can Volcker, Vickers and Liikanen Resolve the Too-Important-to-Fail Conundrum?

by José Viñals and Ceyla Pazarbasioglu

The global regulatory landscape governing banks has changed from its pre-crisis status quo.

In addition to the Group of Twenty advanced and emerging economies led global regulatory reforms, like Basel III, the United States and the United Kingdom have decided to directly impose limits on the scope of banks' businesses. The European Union is contemplating a similar move.

We discussed these structural banking reforms a few weeks ago with officials from finance ministries, central banks, and supervisory authorities from around the world during the IMF and World Bank Spring Meetings. The design and implementation of these measures will have implications for global financial stability and sustainable growth, so we wanted to bring people together for the first global debate of the issue with G20 and other countries.

Continue reading “Banking on Reform: Can Volcker, Vickers and Liikanen Resolve the Too-Important-to-Fail Conundrum?” »

By IMFBlog| May 14th, 2013|Advanced Economies, Europe, Finance, Financial Crisis, Financial regulation, G-20, IMF, International Monetary Fund|

Bringing the Informal Sector into the Fold

The informal economy is large and pervasive—and, often, ignored; however, the experience of those who work in the informal sector came under the media spotlight when Tunisian street vendor Mohamed Bouazizi set himself on fire that fateful day in December last year, sparking the Arab Spring protests.

By IMFBlog| November 16th, 2011|Economic research, Employment, growth, Inequality, Middle East|

Lively Debate on the Dead Sea Shores

One of my biggest (and heartening) takeaways was that there were more young people bubbling with ideas and entrepreneurial spirit (ready to take risk) than ever before at this regional forum—which reflects a growing recognition of their current role in the Arab Spring and the role they will have to play in the future as drivers of economic change.

By IMFBlog| October 24th, 2011|Economic outlook, Emerging Markets, Employment, growth, Inequality, Middle East, Public debt, عربي|

Growing Pains: Europe’s Dilemma

By Bas Bakker

(Versions in Español and Français )

As the crisis in Europe deepens, it is worth asking how it all went wrong in the first place. In the past decade there have been stark differences in per capita GDP growth in Europe. Growth rates have ranged from close to zero in Italy and Portugal to more than 4 percent in the best performers. Why do some countries in Europe grow much faster than others? And how can those falling behind catch up before it is too late?

In part, these differences reflect “convergence”. It is much easier for poor countries to grow faster than it is for rich countries because they can import technology they do not already have. It is much more difficult to grow fast if you are already rich and at the technology frontier—now you can only get richer by innovation.

Continue reading “Growing Pains: Europe’s Dilemma” »

By IMFBlog| October 21st, 2011|Advanced Economies, Economic Crisis, Employment, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt|

An Important Starting Point—with One Gap

I had one major source of unhappiness with last week’s conference on macroeconomic policies in the wake of the financial crisis: the participants were largely silent about the dismal outlook in the advanced economies for the next several years. With the exception of that one critical omission, I was impressed by the discussion. One striking feature was the consensus that there is no consensus. The crisis has, appropriately, made macroeconomists and policymakers humble about what we know. There were, however, some specific issues on which there was, if not unanimity, considerable agreement.

By IMFBlog| March 16th, 2011|Advanced Economies, Economic Crisis, Economic outlook, Economic research, Fiscal policy, growth, IMF, International Monetary Fund|

Raising Competitiveness: Recipe for Tapping into the Middle East’s Growth Potential

With the global economy on the mend, countries in the Middle East and North Africa are witnessing a pickup in trade and economic growth. But, within the region, the picture is mixed. Indeed, for the region’s oil-importing countries, we are likely to see growth nudge up from 4½ percent in 2009 to around 5 percent this year. However, that is well below the growth rate required to create the 18 million jobs needed over the next decade. For these countries, greater competitiveness will be the crucial ingredient to boosting economic growth and employment. In this blog post, Masood Ahmed explores what we mean by ‘competitiveness’ and what are the policy actions governments need to take to raise it.

By IMFBlog| October 29th, 2010|Economic outlook, International Monetary Fund, Middle East, عربي|

It’s Hip to Be Square—Why Good Financial Sector Supervision Is Important

As the financial crisis taught us, supervision is incredibly important. Countries with the same set of rules had very different experiences during the crisis. Why? There are clearly many reasons but one of them is “better supervision.” After all, rules are only as good as their implementation. In some countries, the financial supervisor became the unsung hero of the crisis. One might say “It’s hip to be square!”

By IMFBlog| May 27th, 2010|Financial Crisis, Financial regulation, Fiscal Stimulus, growth, IMF, Multilateral Cooperation, recession|

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