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International Monetary Fund

This study relates Australian household saving more closely to movements in asset market using event study analysis and econometric analysis. In this study, the policy challenges for Australia from rebalancing in China, a temporary growth slowdown in China, and a recession in advanced countries are analyzed. The Globally Integrated Monetary and Fiscal Model (GIMF) is used for policy challenges. The impact of the mining boom on the Australian labor market is also discussed in this paper.

International Monetary Fund. External Relations Dept.

Alassane D. Ouattara, a Côte d’lvoire national, is resigning as Deputy Managing Director of the IMF, a position he has held since July 1994. He was Director of the IMF’s African Department from 1984 to 1988 (and was appointed a Counsellor of the IMF in 1987), Governor of the Banque Central des Etats de l’Afrique de l’Ouest from 1988 to 1990, and Prime Minister of Côte d’lvoire from 1990 to 1993. Ouattara spoke with Laura Wallace of the IMF’s External Relations Department about the world economy, debt relief, conflict prevention, social issues, and the IMF’s changing role.

International Monetary Fund. Asia and Pacific Dept

Abstract

The global economy is projected to enter a major downturn amid a significant and deepening financial crisis. The credit turmoil that began in advanced countries has spread to emerging and developing economies, raising concerns over a synchronized slowdown and a global credit squeeze. Extraordinary policy actions globally have helped to shore up confidence, but financial markets are likely to remain under considerable stress as the process of deleveraging continues for some time and growth slows markedly. Aggressive policy easing, some stabilization in the U.S. housing market next year, and lower commodity prices should lay the groundwork for a recovery to take hold in late 2009. However, the pace of the recovery is likely to be very gradual given the considerable financial constraints on activity. Moreover, there is great uncertainty about the duration and depth of the expected downturn. Against this backdrop, growth in Asia is expected to slow substantially along with that in the rest of the world, as exports weaken and spillovers from the global financial turmoil weigh on domestic activity. The risks to the outlook are significant and firmly tilted to the downside, stemming mainly from a deeper and more-protracted global slowdown and tighter financial conditions from continued deleveraging. With commodity prices projected to ease, inflation should subside, providing room for policies to support growth and stabilize financial conditions.

International Monetary Fund. Asia and Pacific Dept

Abstract

Emerging Asia has recently experienced a sharp rise in inflation, although concerns have now shifted away from inflation onto growth. After reaching double-digit levels in several countries in the region and breaching the target in almost all inflation-targeting regimes, inflation has peaked in most cases through a combination of declining commodity prices, tightened monetary policy, and slowing growth. At the same time, the global financial crisis and concerns that it may translate into a hard landing for global and regional growth have understandably become the main focus of policymakers.

International Monetary Fund. Asia and Pacific Dept

Abstract

While policymakers are understandably focused on short-term growth prospects in the current environment, Asia continues to face longer-term challenges to which attention will need to return over time. One of the key challenges is rapid population aging, which could have a significant macroeconomic impact on the region in coming decades. In particular, diverse demographic trends across Asia could influence external positions and, thereby, capital flows over the long term. Moreover, aging could affect returns on asset classes and change the structure of financial markets. Preemptive policy responses at both the country and regional levels would help to accommodate these aging-related changes.

Shai Bernstein, Emanuele Colonnelli, Mr. Davide Malacrino, and Tim McQuade
New firm formation is a critical driver of job creation, and an important contributor to the responsiveness of the economy to aggregate shocks. In this paper we examine the characteristics of the individuals who become entrepreneurs when local opportunities arise due to an increase in local demand. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals, as measured by their level of experience, education, and past occupations involving creativity, problem-solving and managerial roles. In contrast, we find no such response within the same municipalities among skilled, yet older individuals, highlighting the importance of lifecycle considerations. These responsive individuals are younger and more skilled than the average entrepreneur in the population. The entrepreneurial response of young individuals is larger in municipalities with better access to finance, and in municipalities with more skilled human capital. These results highlight how the characteristics of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.
YASIN A.A. OLUM, Dr. TAPAS KUMAR CHAKRABARTY, and LAWRENCE E. HARRISON

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. Asia and Pacific Dept

Abstract

The November 2008 Asia and Pacific REO focuses on the difficult economic environment facing policymakers in the region. Chapter 1 provides an overview of the outlook for the region. With growth slowing, and the global financial crisis increasingly affecting the region, macroeconomic and financial policies will need to be proactive. Chapter 2 looks more closely at inflation in Asia, finding that it is increasingly imported and volatile, which raises important questions about monetary policy frameworks in the future. Chapter 3 takes a longer-term look at how the expected rapid aging of the region may affect capital flows and financial markets in the years to come.

International Monetary Fund. Research Dept.

Abstract

According to the October 2016 "World Economic Outlook," global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017. The forecast, revised down by 0.1 percentage point for 2016 and 2017 relative to April’s report, reflects a more subdued outlook for advanced economies following the June U.K. vote in favor of leaving the European Union (Brexit) and weaker-than-expected growth in the United States. These developments have put further downward pressure on global interest rates, as monetary policy is now expected to remain accommodative for longer. Although the market reaction to the Brexit shock was reassuringly orderly, the ultimate impact remains very unclear, as the fate of institutional and trade arrangements between the United Kingdom and the European Union is uncertain. Financial market sentiment toward emerging market economies has improved with expectations of lower interest rates in advanced economies, reduced concern about China’s near-term prospects following policy support to growth, and some firming of commodity prices. But prospects differ sharply across countries and regions, with emerging Asia in general and India in particular showing robust growth and sub-Saharan Africa experiencing a sharp slowdown. In advanced economies, a subdued outlook subject to sizable uncertainty and downside risks may fuel further political discontent, with anti-integration policy platforms gaining more traction. Several emerging market and developing economies still face daunting policy challenges in adjusting to weaker commodity prices. These worrisome prospects make the need for a broad-based policy response to raise growth and manage vulnerabilities more urgent than ever.