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).
Following a severe and protracted recession, a modest economic recovery has taken hold in the Czech Republic. Economic growth turned modestly positive after the first quarter of 1999, headed by a rebound in household consumption and a recovery of demand in European Union (EU) trading partners. However, investment remained weak owing to banking and corporate sector restructuring. Executive Directors agreed that macroeconomic policies needed to strike a balance between sustaining the pace of recovery and making progress toward achieving medium-term policy objectives.
The paper first uses the production function to analyze the sources of past growth in Singapore and compares it with the experience of other Asian and industrialized economies. This study also provides some thoughts on how to boost medium-term growth prospects in Singapore, and assesses the growth slowdown of the past few years in Singapore reflecting cyclical versus structural factors. The assessment given in this paper suggests that there are returns to be had from investment in education and structural reforms.
This Selected Issues paper assesses the youth unemployment problem in advanced European economies, especially the euro area. Youth unemployment rates increased sharply in the euro area after the crisis. Much of these increases can be explained by output dynamics and the greater sensitivity of youth unemployment to economic activity compared with adult unemployment. Labor market institutions also play an important role, especially the tax wedge, minimum wages, and spending on active labor market policies. The paper highlights that policies to address youth unemployment should be comprehensive and country specific, focusing on reviving growth and implementing structural reforms.
International Monetary Fund. External Relations Dept.
Crisis Stalls Globalization: Reshaping the World Economy" examines the multiple facets of the recession-from the impact on individual economies to the effect on the global payments imbalances that were partially at the root of the crisis-and offers a variety of suggestions for supporting a recovery and averting future crises. Several IMF studies shed light on the depth of the crisis-including a survey of the sharp drop in trade finance, along with quantitative findings about the direct and indirect costs of the financial turbulence-and debate what is to be done from several angles, including the redesign of the regulatory framework and ways to plug large data gaps to prevent future crises and aid in the creation of early warning systems. Opinion pieces discuss the shifting boundaries between the state and markets, the agenda for financial sector reform, and the governance of global financial markets. The issue also includes a historical perspective to see when restructuring the global financial architecture actually succeeds. "People in Economics" profiles Nouriel Roubini; "Back to Basics" looks at what makes a recession; and "Data Spotlight" examines Latin America's debt.
This Selected Issues paper assesses Indonesia’s trade integration relative to underlying country characteristics. The paper analyzes Indonesia’s vulnerabilities, especially compared with the eve of the crisis in 1997. Various indicators suggest that the underlying fundamentals are significantly stronger. The paper examines key features of the financial safety net (FSN) in view of international standards and concludes that the current system is capable of timely addressing bank problems. It looks at determinants of, and constraints to, credit growth in recent years.
International Monetary Fund. Asia and Pacific Dept
The Indonesian economy continues to perform well, supported by robust growth and greater macroeconomic stability. A prudent mix of macroeconomic policies and structural reforms has helped the economy weather the commodity down-cycle and several episodes of emerging market (EM) financial turbulence. Securing and boosting growth in a more uncertain external environment requires maintaining policy buffers, while upgrading the medium-term framework through fiscal and structural reforms.
This 2002 Article IV Consultation highlights that the economic slowdown in the United States triggered a sharp weakening in Mexican economic activity in 2001 from the rapid pace in the preceding year. There was also a marked deceleration in domestic demand growth, as disposable income was adversely affected by a contraction in employment and confidence sagged. Economic activity rebounded strongly in the second quarter of 2002, as exports were supported by stronger demand from the United States and final domestic demand grew sharply.
This report for the 2012 Article IV Consultation with Turkey discusses the macroeconomic conditions after the 2008 global financial crisis. After two years of rapid growth, the economy has slowed and imbalances are unwinding. However, owing to slower domestic demand, the Turkish financial system continues to remain sound. IMF staff supports the authorities’ fiscal objective for 2013 and also the medium-term fiscal plan for 2013–15. But, they recommend a tighter monetary policy stance given the upside risks to inflation.