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Tag Archives: Global economy

The Evidence Is in on Negative Interest Rate Policies

By Luis Brandao-Marques and Gaston Gelos عربي, 中文, Español, Français, 日本語, Português, Русский  Interest rates are low, and “lower for longer” has become something of a mantra among policy makers, regulators, and other market watchers. But negative interest rates raise an entirely new set of questions. After eight years of experience with negative interest rate policies, the initial skepticism (paying interest to borrowers rather than savers was certainly unprecedented) has proven largely...

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Staying Afloat: New Measures to Support European Businesses

By Alfred Kammer and Laura Papi Español, Français  Much of Europe rang in the start of 2021 with new lockdowns and weak economic activity. This same period saw the roll out of effective vaccines. While the end of the pandemic will remain a race between the virus and vaccines, there is now light at the end of the tunnel. At the same time, government programs aimed at supporting lives and livelihoods have been highly successful. Amid the pandemic’s enormous human toll, these measures provided...

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The Haves and Have-nots Of the Digital Age

By Gita Bhatt Accelerated by the pandemic, the digital future is coming at us faster than ever before, and maybe faster than we can imagine. In this issue of Finance & Development magazine, we explore the possible consequences—the good, the bad, and the gray. For millions, technology has been a lifeline, changing the way we work, learn, shop, and entertain ourselves. In a year like no other, it has spurred game-changing digital shifts. Governments moved quickly, using mobile solutions to...

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The Great Divergence: A Fork in the Road for the Global Economy

By Kristalina Georgieva عربي, Español, 日本語, Русский  As G20 finance ministers and central bank governors meet virtually this week, the world continues to climb back from the worst recession in peacetime since the Great Depression. The IMF recently projected global GDP growth at 5.5 per cent this year and 4.2 per cent in 2022. But it is going to be a long and uncertain ascent. Most of the world is facing a slow rollout of vaccines even as new virus mutations are spreading—and the prospects for...

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Divergent Recoveries in Asia: History is not Destiny

by Davide Furceri, Jonathan D. Ostry, and Anthony C.K. Tan  中文,  日本語 Asian economies are performing better than expected. In the IMF’s latest World Economic Outlook Update, we upgraded our growth estimate for 2020 by 0.7 percentage point from our previous forecast in October, to a contraction of 1.5 percent—in regional terms, a better outcome than other parts of the world. This is largely driven by stronger-than-expected performance among advanced economies in the region, as well as some...

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Structural Factors and Central Bank Credibility Limit Inflation Risks

By Gita Gopinath After ending last year with unexpectedly strong vaccine success and hope that the pandemic and economic distress it caused would recede, we woke up to the reality of new virus variants and the unpredictable, winding road that it can lead the world down. Something similar has happened with the discourse on inflation. At the end of last year, after a historic collapse of the global economy estimated at -3.5 percent, inflation was below target in 84 percent of countries. This...

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Public and Private Money Can Coexist in the Digital Age

By Tobias Adrian and Tommaso Mancini-Griffoli We value innovation and diversity—including in money. In the same day, we might pay by swiping a card, waving a phone, or clicking a mouse. Or we might hand over notes and coins, though in many countries increasingly less often. Today’s world is characterized by a dual monetary system, involving privately-issued money—by banks of all types, telecom companies, or specialized payment providers—built upon a foundation of publicly-issued money—by...

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Why Climate Change Vulnerability Is Bad for Sovereign Credit Ratings

By Serhan Cevik and João Tovar Jalles عربي, 中文, Español, Русский  Climate change has made the world a riskier place. The destruction wrought by heatwaves, droughts, hurricanes, and coastal flooding doesn’t stop with the toll on human lives and livelihoods—it can also have deep consequences for a country’s finances. Recent IMF staff research has found that a country’s vulnerability or resilience to climate change can have a direct effect on its creditworthiness, its costs of borrowing, and,...

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Chart of the WeekWhen it Comes to Services vs. Manufacturing, Words Matter

By Reda Cherif and Fuad Hasanov Efforts to revive national manufacturing sectors get a lot of airtime. After all, the sector propelled many East and South East Asian economies—the so-called “East Asia Miracle”—and was a gateway to the middle class for millions of workers. However, for all the obsession with manufacturing, economists for their part seem to be more preoccupied with services. To confirm this, we combed through thousands of IMF reports on countries’ economies from 1978 to 2019....

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Latin America and Caribbean’s Winding Road to Recovery

By Alejandro Werner, Anna Ivanova, and Takuji Komatsuzaki Español, Português Latin America and Caribbean economies managed to bounce back from COVID-19’s initial economic devastation earlier in 2020. But the pandemic’s resurgence towards the end of the year threatens to thwart an uneven recovery and add to the steep social and human costs. After the sharp contraction in the second quarter of last year, the brisk recovery in the third quarter exceeded expectations in some larger economies,...

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