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Business and Economics > Finance: General

You are looking at 1 - 5 of 5 items for :

  • Type: Journal Issue x
  • Spillover Notes x
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Cover Spillover Notes
Regional Spillovers in Sub-Saharan Africa: Exploring Different Channels
Francisco Arizala
,
Mr. Matthieu Bellon
,
Ms. Margaux MacDonald
,
Mr. Montfort Mlachila
, and
Mustafa Yenice
After close to two decades of strong economic activity, overall growth in sub-Saharan Africa decelerated markedly in 2015–16 as the largest economies experienced negative or flat growth. Regional growth started recovering in 2017, but the question remains of how trends in the economies stuck in low gear will spill over to the countries that have maintained robust growth. This note illuminates the discussion by identifying growth spillover channels. The focus is on trade, banking, financial, remittance, investment, fiscal, and security channels, which are the most prominent and most likely to transmit growth trends across borders. In addition to bringing together findings from a broad array of existing research, the note identifies countries that are the most likely sources of regional spillovers and those that are most likely to be impacted, and provides estimates for the size of these channels. It finds that intraregional trade and remittance flows are an important channel for growth spillovers, while banking channels are less important but will remain a risk going forward. Finally, the note documents other important spillover channels through financial markets contagion, revenue-sharing arrangements in fiscal unions, commodity-pricing policies, corporate investment, and forced migration. The main takeaway is that the level of interdependence among sub-Saharan countries is higher than is generally assumed. Consequently, there is a need for additional emphasis on regional surveillance and spillover analysis, along with traditional bilateral surveillance.
Keywords:
SN; economic activity; trading partner; foreign direct investment; emerging market; real GDP; IMF staff calculation; origin country; remittance flow; sub-Saharan Africa region; sub-Saharan Africa origin; oil-producing country; trade spillover; SACU member country; inflation rate; gravity equation estimation; Remittances; Spillovers; Exports; Emerging and frontier financial markets; Regional trade; Sub-Saharan Africa; Africa; Global; East Africa; Southern Africa
Cover Spillover Notes
China Spillovers: New Evidence From Time-Varying Estimates
Davide Furceri
,
João Tovar Jalles
, and
Ms. Aleksandra Zdzienicka
Until recently, China has been the leading contributor to global economic growth and—since the recent global financial crisis—a stabilizing driver of its evolution. However, as China recently began to rebalance its economy away from investment and exports and toward consumption, its GDP growth slowed significantly—partly reversing the country’s contribution to global output and trade growth—and is expected to continue to decline gradually over the medium term. There is little consensus regarding the consequences of a China’s growth slowdown for the rest of the world, with some arguing that a significant slowdown in China may have large implications and possibly lead to a worldwide recession if the “rebalancing” process is not well managed, and others suggesting that even a significant slowdown in China is unlikely to have large global effects, as its role in the world economy is still limited This note contributes to the ongoing debate by analyzing how growth shocks in China affect particular regions and country groups and how the impact and key transmission channels of these growth shocks have increased over time. It finds that historically, the average impact of growth shocks in China on global output has been statistically significant but limited, but since the early 2000s, the magnitude of spillovers has significantly increased. Trade linkages remain the main transmission channels, with larger effects for net commodity exporters and countries mostly exporting manufacturing goods. Also, spillover effects tend to be larger during periods of high global uncertainty and have been positively associated with an increase in the share of industry in total value in China, which suggests an important role of the “rebalancing” process.
Keywords:
SN; spillover effect; growth shock; idiosyncratic shock; net commodity exporter; growth slowdown; real GDP growth; Spillovers; Emerging and frontier financial markets; Production growth; Exports; Global; Sub-Saharan Africa
Cover Spillover Notes
Spillovers from China: Financial Channels
Miss Nkunde Mwase
,
Mr. Papa M N'Diaye
,
Ms. Hiroko Oura
,
Mr. Franto Ricka
,
Katsiaryna Svirydzenka
, and
Ms. Yuanyan S Zhang
Although China’s much-needed transition to a new growth path is proceeding broadly as expected, the transition is still fraught with uncertainty, including regarding the Chinese authorities’ ability to achieve a smooth rebalancing of growth and the extent of the attendant slowdown in activity. Thus, in the short run, the transition process is likely to entail significant spillovers through trade and commodities, and possibly financial channels. This note sheds some light on the size and nature of financial spillovers from China by looking at the impact of developments in China on global financial markets, with a particular emphasis on differentiation across asset classes and markets. The note shows that economic and financial developments in China have a significant impact on global financial markets, but these effects reflect primarily the central role the country plays in goods trade and commodity markets, rather than China’s financial integration in global markets and the direct financial linkages it has with other countries.
Keywords:
SN; China; market; yield; asset; commodity; price; role China; cross-border holding; developments in China; spillovers from China; China's integration; China to LIDCs; equity price; Financial sector development; Bond yields; Stocks; Stock markets; Foreign direct investment; Global
Cover Spillover Notes
China's Footprint in Global Commodity Markets
Ms. Christina Kolerus
,
Mr. Papa M N'Diaye
, and
Christian Saborowski
This note assesses empirically the role Chinese activity plays in global commodities markets, showing that the strength of China’s economic activity has a significant bearing on commodity prices, but that the impact differs across commodity markets, with industrial production shocks having a substantial impact on metals and crude oil prices and less so on food prices. The size of the impact on the prices of specific commodities varies with China’s footprint in the market for those commodities; the empirical estimates indicate that, over a one-year horizon, a 1 percent increase in industrial production leads to a 5–7 percent rise in metals and fuel prices. The surprise component in Chinese industrial production announcements has a bearing on commodity prices that is comparable in magnitude to that of industrial production surprises in the United States, and this impact is much larger when global risk aversion is high.
Keywords:
SN; price; commodity; China; demand; market; price elasticity; effects from shock; interaction terms; import share; food price; food commodity; Commodity prices; Commodity markets; Industrial production; Metal prices; Global
Cover Spillover Notes
Spillover Implications of China's Slowdown for International Trade
Patrick Blagrave
and
Mr. Esteban Vesperoni
Using a panel vector autoregression and a novel measure of export-intensity-adjusted final demand, this note studies spillovers from China’s economic transition on export growth in 46 advanced and emerging market economies. The analysis suggests that a 1 percentage point shock to China’s final demand growth reduces the average country’s export growth by 0.1–0.2 percentage point. The impact is largest in Emerging Asia, where an export-growth-accounting exercise suggests that China’s economic transition has reduced average export growth rates by 1 percentage point since early 2014. Other countries linked to China’s manufacturing sector, as well as commodity exporters, are also significantly affected. This suggests that trading partners need to adjust to an environment of weaker external demand as China completes its transition to a more sustainable growth model.
Keywords:
SN; China demand shock; final demand; China-demand shocks; growth shock; demand condition; growth slowdown; processing-trade export; China shock; Export performance; Exports; Emerging and frontier financial markets; Global; Asia and Pacific