Föhrenbergkreis Finanzwirtschaft

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Archive for 11. April 2019

High Debt Hampers Countries’ Response to a Fast-Changing Global Economy

Posted by hkarner - 11. April 2019

April 10, 2019, IMF Blog

By Vitor Gaspar, John Ralyea, and Elif Ture

Economic growth is slowing and public debt remains high across the world. Meanwhile, demographic changes and technological advances are reshaping the global economy.

Everyone’s opportunities for a good education, along with their job prospects, healthcare, and retirement income depend on the tax and spending choices governments make as they respond to these challenges.

What should policymakers do?

In the new Fiscal Monitor, we argue that they can take a long-term view to foster higher and more inclusive growth. This means getting their fiscal houses in order by gradually lowering debt to prepare for the next downturn and upgrading fiscal policy to invest in people’s futures. This requires better allocating spending, creating more room in the budget, and improving tax policy.

Preparing for the next downturn Den Rest des Beitrags lesen »

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Italy Warns of Bigger Budget Deficit

Posted by hkarner - 11. April 2019

Did anybody expect something different? Except the EU Commission! (hfk)

Date: 10-04-2019
Source: The Wall Street Journal

Finance Ministry forecasts a 2.4% gap, wider than the 2% agreed upon with the European Union in December

ROME—Italy’s populist government conceded it won’t hit the budget-deficit target agreed on with European Union authorities, setting the stage for renewed tensions with Brussels.

Italy’s finance ministry on Tuesday said this year’s deficit will be 2.4% of gross domestic product, rather than 2% as agreed with the EU in December after tense negotiations that rattled financial markets.

The Italian government also cut its 2019 economic-growth forecast to 0.2%, including a boost from its latest fiscal proposals, compared with an earlier forecast of 1%.

Some private-sector economists have predicted an even worse year. Italy’s economy has been in recession since late 2018, because of the combined effects of Europe’s growth slowdown, global trade tensions and Italy’s financial tensions. Den Rest des Beitrags lesen »

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Weak Spots in Global Financial System Could Amplify Shocks

Posted by hkarner - 11. April 2019

By Tobias Adrian and Fabio Natalucci

In the United States, the ratio of corporate debt to GDP is at record-high levels. In several European countries, banks are overloaded with government bonds. In China, bank profitability is declining, and capital levels remain low at small and medium-size lenders.

Vulnerabilities like these are on the rise across advanced and emerging market economies, according to the IMF’s latest Global Financial Stability Report. They aren’t all setting off alarm bells just yet. But if they continue to build, especially with still-easy financial conditions, they could amplify shocks to the global economy, raising the odds of a severe economic downturn a few years down the road.

With the right mix of policies, countries can sustain growth while keeping vulnerabilities in check.

This poses a dilemma for policymakers seeking to counter a slowing global economy, as discussed in the World Economic Outlook. By taking a patient approach to monetary policy, central banks can accommodate growing downside risks to the economy. But if financial conditions remain easy for too long, vulnerabilities will continue to build, and the odds of a sharp drop in economic growth at some later point will be higher. Den Rest des Beitrags lesen »

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