Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘IMF’

Debt will kill the global economy. But it seems no one cares

Posted by hkarner - 7. Januar 2020

Date: 05‑01‑2020

Source: The Observer

Warnings from the IMF and World Bank have been dismissed. But even if they are wrong, a demographic crisis looms

The IMF says that large amounts of corporate debt in eight key economies could become unserviceable in the event of a recession.

The warning signs are clear. Debt is rising on every continent and especially in the business sector, which has spent the past decade ramping up its borrowing to previously unheard‑of levels.

Last October, the International Monetary Fund said that almost 40% of the corporate debt in eight leading countries – the US, China, Japan, Germany, Britain, France, Italy and Spain – would become so expensive during a recession that it would be impossible to service. In other words, tens of thousands of businesses, employing millions of people, would have gambled with high levels of borrowing and lost, making themselves insolvent.

Worse, the IMF said the risks were “elevated” in eight out of 10 countries that boasted systemically important financial sectors, adding that this situation was a repeat of the years running up to the last financial crisis.

Last month, the World Bank joined in. It said emerging‑market and developing economies (EMDEs) had pushed their borrowing to a record $55 trillion (£42tn) in 2018. Den Rest des Beitrags lesen »

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The Economic Cost of Devaluing “Women’s Work”

Posted by hkarner - 31. Dezember 2019

Kristalina Georgieva, Cristian Alonso, Era Dabla-Norris, and Kalpana Kochhar

As much as half of the world’s work is unpaid.  And most of it is done by women.

This imbalance not only robs women of economic opportunities. It is also costly to society in the form of lower productivity and forgone economic growth. It follows that a fairer allocation of unpaid work would not only benefit women, but would also lead to more efficient work forces and stronger economies.

For these reasons, reducing gender imbalances in unpaid work is part of the United Nations Sustainable Development Goals.

Examples of unpaid work include cooking, cleaning, fetching food or water, and caring for children and the elderly.  These tasks are not counted as part of economic activity because they are difficult to measure based on values in the marketplace. Yet their economic value is substantial, with estimates ranging from 10 to 60 percent of GDP.

In our new study, we find that unpaid work declines as economic development increases particularly because there is less time spent on domestic chores. Social institutions and values can constrain the redistribution of unpaid work by preventing men from sharing the burden at home.

Unpaid work declines as economic development increases.

Overworked and underpaid Den Rest des Beitrags lesen »

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Striking the Right Balance Between Sustainable Development and Sustainable Debt

Posted by hkarner - 20. Dezember 2019

By Kristalina Georgieva

Over the past two decades, sub-Saharan Africa has made considerable economic progress: extreme poverty levels have declined by one third; life expectancy has increased by a fifth; and real per capita income has grown by about 50 percent on average. Yet, sub-Saharan Africa is still only half-way to meeting the Sustainable Development Goals.

To achieve these goals, sub-Saharan Africa will need financing. One of the ways to access financing is through borrowing. It makes sense for governments to incur debt if done wisely. If debt is used to finance projects that boost productivity and living standards, such as investing in roads, schools, and hospitals—and if governments can recoup enough of the benefits of these investments to repay the incurred debt—then borrowing is worthwhile.

But room for borrowing has become more limited in this region as public debt levels increased rapidly between 2011 and 2016—they have since stabilized at around 55 percent of GDP on average. Countries in the region have also relied more heavily on commercial borrowing on domestic and international financial markets—such borrowing accounted for more than 70 percent of the increase in debt stock this decade. This shift to non-concessional financing means more spending on debt service, and less on social and infrastructure investment. Den Rest des Beitrags lesen »

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2019 in Review: The Global Economy Explained in 5 Charts

Posted by hkarner - 19. Dezember 2019

By Gita Gopinath, Gian Maria Milesi-Ferretti, and Malhar Nabar

Global growth this year recorded its weakest pace since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors.

Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already under way.

Further pressures came from country-specific weakness in large emerging market economies such as Brazil, India, Mexico, and Russia. Worsening macroeconomic stress related to tighter financial conditions (Argentina), geopolitical tensions (Iran), and social unrest (Venezuela, Libya, Yemen) rounded out the difficult picture. Den Rest des Beitrags lesen »

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The Power of Text: How News Sentiment Influences Financial Markets Get email updates

Posted by hkarner - 17. Dezember 2019

By Damien Puy

How do investors react to news? This question has been at the core of the financial research agenda for several decades. Now, two forces make this question even more pressing.

First, innovations in information technologies have dramatically increased the reach of financial and economic news and the speed at which it travels. Real time newswires, such as Reuters and Bloomberg, generate and disseminate information almost instantaneously to an ever-increasing set of market participants.

Second, a growing number of countries, especially emerging markets, have opened their financial markets to the rest of the world. This makes it possible for foreign news to affect local market conditions much more directly.

For a long time, however, studying the impact of news on investors’ behavior and asset prices remained a daunting task. What is news exactly? What does it talk about? And how can we identify, in a systematic way, good (or bad) news? Den Rest des Beitrags lesen »

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Central Bank Digital Currencies: 4 Questions and Answers

Posted by hkarner - 13. Dezember 2019

By Tobias Adrian and Tommaso Mancini-Griffoli, IMF Blog

Central Bank Digital Currencies (CBDC) is a complex and multidisciplinary topic requiring active analysis and debate. It raises questions related to monetary policy, central banking operations, and payment systems—as well as financial stability and legal foundations and regulation.

Below are some of the most pressing questions and answers on the topic.

What is the IMF’s role around CBDCs now and in the future?

The IMF can help in three ways: by informing the policy debate, by convening relevant parties to discuss policy options, and by helping countries develop policies. Because CBDC is a novel topic, the IMF has mostly been active in the first two areas, but it is gradually moving into the third area as member countries consider CBDC options and seek advice.

First, the IMF can help inform the policy debate. The IMF is currently investigating implications of CBDC available across borders. Other institutions, such as the Bank for International Settlements and the Committee on Payments and Market Infrastructure, among others, have also contributed to the topic. The IMF is well-placed to study CBDC, because it can draw on its in-house experts. Moreover, a potential world with multiple CBDCs could raise important questions about cross-border payments and the international monetary system, which are at the core of the IMF’s mandate. Den Rest des Beitrags lesen »

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A New Climate Economy

Posted by hkarner - 27. November 2019

By Gita Bhatt

“Everybody talks about the weather, but nobody does anything about it.” The quip, attributed to 19thcentury American humorist Mark Twain, might describe the current state of play on climate change. In Twain’s day, it was absurd to suppose humans could do anything about the weather.

Today, we understand that we can and we must.

The changing climate, largely wrought by humans, is bringing rising sea levels, temperature extremes, and more frequent and harsher storms. These threaten to displace lives, livelihoods, and communities, with clear economic consequences, often at a high price tag, around the world.

Simply put, climate is the biggest risk the world faces. What can we do to move from talk to action?

This issue of Finance & Development looks at the economic and financial impact of climate policy choices. It points to concrete solutions that offer growth opportunities, driven by technological innovation, sustainable investment, and a dynamic private sector.

For IMF Managing Director Kristalina Georgieva, dealing with climate change requires not only mitigating damage, but also adapting for the future. This means pricing risk and providing incentives for green investment. Kenneth Gillingham shows that in the long run, the costs of climate action may be lower than we think. Ian Parry estimates that aggressive carbon taxes would help individual nations meet their emission-reduction goals and scale up action globally. Mark Carney and others show how harnessing finance can open enormous opportunities—from transforming energy to reinventing protein. Finally, Ralph Chami and fellow researchers highlight how saving whales can help save the planet. Den Rest des Beitrags lesen »

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Europe’s Wage-Price Puzzle

Posted by hkarner - 12. November 2019

By Richard Varghese

Does higher wage growth fuel inflation? In Europe, that has historically been the case. But the link between wage growth and inflation has weakened in recent years amid low inflation expectations, robust corporate profitability, and strong competitive pressures.

The price of labor—namely wages—is rising at a robust pace, especially in the European Union’s newer member states. Yet, surprisingly, inflation has barely risen. We set out to shed light on this puzzle in Chapter 2 of the Regional Economic Outlook: Europe.

It is likely that robust wage growth will not meaningfully spur inflation in the near future.

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A Map of Inequality in Countries

Posted by hkarner - 7. November 2019

By William Gbohoui, Raphael Lam, and Victor Lledo

Social and economic inequality between and within regions in countries is rising in many advanced economies and is now at the forefront of the policy debate because of perceptions that some people and places have been left behind. Changes in global trade and technology have shifted jobs and industries on the map, but the economic gains within countries are not well shared.

One might think the solution is for people to move in search of better jobs and lives. But people find it harder to move to booming cities with more jobs like Washington D.C., San Francisco or London in part because they can’t afford to live there, or because they do not have the right skills required for higher-paying jobs.

Our recent paper studies regional inequality in 20 advanced economies, including the United States, Canada, Italy and Germany. We find that regional disparities in income are large, persistent, and increasing over time. Den Rest des Beitrags lesen »

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The Monetarist Era is Over

Posted by hkarner - 1. November 2019

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

Central bankers have been the first to recognize that the effectiveness of monetary policy in managing demand and stabilizing economic cycles has reached its limits. The problem is that many politicians and academic economists remain in denial.

LONDON – A mood of foreboding dominated this month’s annual meetings of the International Monetary Fund and World Bank in Washington, DC. But fear of a global recession was not the real cause. Although the latest update of the IMF’s World Economic Outlook showed economic activity slowing this year to its weakest level since 2009, the projected global growth rate of 3% is still far above levels associated with past recessions and would be consistent with decent economic conditions in most parts of the world – not a bad outcome for the 11th year of a sustained global expansion. And for next year, the IMF predicts that growth will accelerate to 3.4%, very close to the 3.6% estimate of the world economy’s long-run sustainable trend.

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