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Bijan B. Aghevli

For the latest thinking about the international financial system, monetary policy, economic development, poverty reduction, and other critical issues, subscribe to Finance & Development (F&D). This lively quarterly magazine brings you in-depth analyses of these and other subjects by the IMF’s own staff as well as by prominent international experts. Articles are written for lay readers who want to enrich their understanding of the workings of the global economy and the policies and activities of the IMF.

International Monetary Fund. External Relations Dept.

Corporate sector behavior in the major industrial countries has undergone a sea change since the equity market bubble burst in 2000. Companies in many industrial countries have elected to use sharply higher profits, net of interest payments and taxes, to accumulate financial assets and repay debt rather than reinvest in their businesses or increase dividend payments. As a result, nonfinancial companies have, in effect, been lending resources to the household and government sectors rather than borrowing from them—a reversal of the pattern of behavior generally seen in past decades (see chart).

David Burton, a U.K. national who has worked at the IMF since 1981, took over as Director of the Asia and Pacific Department in late 2002. Laura Wallace spoke with him about the dramatic changes that are now shaping the region, including the increasing economic prominence of China, deepening regional integration, a bigger emphasis on transparency, and the recent massive buildup of foreign exchange reserves.

International Monetary Fund. Asia and Pacific Dept

Abstract

This year will likely see the first contraction of global economic activity in the post–World War II era. As financial firms in advanced countries have come under severe stress, credit has dried up, household wealth has shrunk, and uncertainty has increased. These developments, in turn, have triggered a sharp and synchronized collapse in global demand, setting off a corrosive feedback loop between the financial and corporate sectors that is posing major challenges to policymakers around the world. In the fourth quarter of last year, global GDP fell at an unprecedented 5 percent annualized rate, and has likely fallen by a similar amount in the first quarter of this year.

International Monetary Fund. Asia and Pacific Dept

Abstract

Asia is in the midst of a major downturn. With external demand for Asia’s products vanishing as a result of a sharp deleveraging in advanced economies, export and industrial production growth in the region have plunged to levels unimaginable a year ago. In turn, weakness in exports is spilling over to domestic demand, with investment in particular showing signs of declining at a high rate. As such, it is no surprise that both the IMF and other forecasters now expect large contractions in GDP for 2009 in many of the region’s economies.

International Monetary Fund. Asia and Pacific Dept

Abstract

As Asia has plunged into recession, anxieties about the region’s corporate sector have grown. And not without reason. The collapse of global demand has decimated corporate revenues, forcing many companies to scramble to find financing to tide them over until their earnings revive. But financing has proved hard to find. For eight months from mid-2008 not a single emerging Asian corporate was able to issue an international bond, even as obligations on previous issues continued to mature. Finally, in March 2009, international bond markets opened again, but to only a handful of companies, the highest-rated and best-established ones. Others found they still could not borrow internationally, and many even encountered difficulty borrowing domestically, as banks became reluctant to lend in the face of deteriorating economic prospects.

International Monetary Fund

Japan has made progress in addressing major economic challenges. Executive Directors emphasized for a comprehensive program designed to resolve financial and corporate sector weaknesses, end deflation, and rein in fiscal imbalances. They stressed the need to maintain strong fiscal and monetary policies and also accelerate structural reforms. They welcomed the program for financial revival and commended Japan's continued commitment to overseas development assistance. They stressed the need to improve the legal framework for antimoney laundering and countering the financing of terrorism.

International Monetary Fund

This 2004 Article IV Consultation highlights that Japan’s economic recovery continued in 2003 and into the first part of 2004. For 2003, GDP growth reached 2½ percent, double the mid-year consensus forecast, and continued at about 6 percent on an annualized basis in the first quarter of 2004. As the economic recovery broadens further, real GDP is projected to expand by 4½ percent in 2004 and 2½ percent in 2005, with CPI deflation ebbing to zero by the end of this period.

International Monetary Fund
This 2004 Article IV Consultation highlights that Japan’s economic recovery continued in 2003 and into the first part of 2004. For 2003, GDP growth reached 2½ percent, double the mid-year consensus forecast, and continued at about 6 percent on an annualized basis in the first quarter of 2004. As the economic recovery broadens further, real GDP is projected to expand by 4½ percent in 2004 and 2½ percent in 2005, with CPI deflation ebbing to zero by the end of this period.
International Monetary Fund
This Selected Issues paper focuses on Japan’s public debt and the challenges facing small- and medium-size enterprises in Japan. Historically, Japan’s public debt has been financed in a fairly smooth manner. The large pool of household savings and the stable domestic institutional investor base appear to have contributed to this successful experience. However, Japan is already undergoing rapid population aging, which will likely limit the market’s future absorptive capacity of public debt. In addition, structural shifts in institutional investors could also serve to reduce market demand.