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Business and Economics > Finance: General

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Cover IMF Staff Country Reports
People’s Republic of China—Hong Kong Special Administrative Region: 2024 Article IV Consultation Discussions-Press Release; and Staff Report
International Monetary Fund. Asia and Pacific Dept
Hong Kong SAR’s economy is on a path of gradual but uneven recovery following a protracted period of shocks. While the unemployment rate has declined to historical lows, employment loss has been sizable and domestic demand has remained weak amid tight financial conditions and property market downturn, both locally and in Mainland China. The territory’s integration with Mainland China, including in the context of the Greater Bay Area (GBA) initiative, has significantly increased in recent years, but rising regional competition has put pressure on some of its traditional growth engines, prompting the authorities to pursue new sources of growth, including from innovative, technology-driven sectors.
Keywords:
consultation discussion; exchange regime; surveillance topic; rate of HK; surveillance effort; Housing; Housing prices; Climate finance; Global; Asia and Pacific
Cover IMF Working Papers
Portfolio Inertia and Expected Excess Returns in Currency Markets: Evidence from Advanced Economies
Bas B. Bakker
The economic literature has long attributed non-zero expected excess returns in currency markets to time-varying risk premiums demanded by risk-averse investors. This paper, building on Bacchetta and van Wincoop's (2021) portfolio balance framework, shows that such returns can also arise when investors are risk-neutral but face portfolio adjustment costs. Models with adjustment costs but no risk aversion predict a negative correlation between exchange rate levels and expected excess returns, while models with risk aversion but no adjustment costs predict a positive one. Using data from nine inflation targeting economies with floating exchange rates (2000–2024), we find strong empirical support for the adjustment costs framework. The negative correlation persists even during periods of low market stress, further evidence that portfolio adjustment costs, not risk premium shocks, drive the link between exchange rates and excess returns. Our model predicts that one-year expected excess returns should have predictive power for multi-year returns, with longer-term expected returns as increasing multiples of short-term expectations, and the predictive power strengthening with the horizon. We confirm these findings empirically. We also examine scenarios combining risk aversion and adjustment costs, showing that sufficiently high adjustment costs are essential to generate the observed negative relationship.These findings provide a simpler, testable alternative to literature relying on assumptions about unobservable factors like time-varying risk premiums, intermediary constraints, or noise trader activity.
Keywords:
Exchange Rates; Portfolio Balance; Uncovered Interest Parity; Portfolio Adjustment Costs; Risk Premium; Currency Markets; Expected Returns; excess return; portfolio adjustment; adjustment cost; portfolio balance framework; portfolio Inertia; Exchange rate adjustments; Return on investment; Currencies; Interest rate parity; Global
Cover IMF Working Papers
Production Network Features of Industrial Policy
Vanya Georgieva
Industrial policy has gained popularity in recent years and across all regions and income levels. Consequently, it is increasingly important to understand how governments choose the sectors they target. This analysis explores the role of domestic production networks in sector targeting, while controlling for other sector and global value chain characteristics. Combining datasets on industrial policy (Global Trade Alert) and input-output linkages (ICIO, OECD) provides novel insight into the network features of industrial policy. In particular, a sector’s ‘centrality’—i.e., its degree of connectedness - within the domestic production network is an important and significant predictor of sector intervention. The results indicate that industrial policy is used differently across regions, income groups, time periods, and types of policy tools. Notably, emerging economies tend to target more central sectors, while advanced economies target less central ones, on average. However, there has been a global shift toward more central sectors over time. Lastly, subsidies are deployed on more central sectors, while tariffs are used on less central ones.
Keywords:
Industrial Policy; Trade Policy; Subsidies; Global Value Chains; Production Networks; Spillovers; production network feature; input-output linkage; sector intervention; advanced economy; import tariff result; country-sector control variables; standard deviation; Exports; Income; Export restrictions; Emerging and frontier financial markets; Global; Asia and Pacific; Europe; Middle East and Central Asia
Cover IMF Staff Country Reports
Republic of Kosovo: 2024 Article IV Consultation and Third Reviews Under the Stand-By Arrangement and the Arrangement Under the Resilience and Sustainability Facility-Press Release; and Staff Report
International Monetary Fund. European Dept.
This paper presents Republic of Kosovo’s 2024 Article IV Consultation and Third Reviews under the Stand-By Arrangement (SBA) and the Arrangement under the Resilience and Sustainability Facility (RSF). Kosovo’s economic performance has been strong, with growth accelerating in 2024 and inflation falling sharply. The near-term outlook is favorable despite some downside risks. The authorities continue to show strong performance under both programs. All quantitative targets and structural conditions for the completion of the Third Review under the SBA were met. Most RSF Reform Measures have been completed. Fiscal policy should continue to balance sustainability and development objectives and be framed within a solid, rules-based fiscal framework. The 2025 budget envisages a fiscal impulse with full-year implementation of spending measures announced in 2024, a proposed increase in public wages, and the expected improvement in public investment execution. Structural reforms are urgently needed to raise potential growth. Priority should be given to further advancing green reforms and decarbonization, implementing policies to boost female labor-force participation, attracting foreign capital—including from the diaspora—into productive sectors of the economy, and accelerating digitalization.
Keywords:
Kosovo authorities; governance reform; EBRD's operation; RSF implementation; CBK governance; EIB's involvement; Budget planning and preparation; Income; Europe; Global; Middle East; Western Europe
Cover Finance & Development
Finance & Development, December 2024: Finance & Development, December 2024
International Monetary Fund. Communications Department
Finance & Development, December 2024
Keywords:
housing sector; IMF photo; affordability crisis; cotton textile industry; housing supply; Housing prices; Housing; Mortgages; Global financial crisis of 2008-2009; Global; Africa; Caribbean; Europe; Middle East
Cover Policy Papers
2024 Review Of The Fund's Transparency Policy And Open Archives Policy—Background Paper 1 On Key Trends
International Monetary Fund. Strategy, Policy, & Review Department
On November 15, 2024, the IMF’s Executive Board concluded the Review of the IMF’s Transparency Policy and Open Archives Policy and approved a number of reforms. As an international institution, making important documents available to the public on timely basis enhances the IMF’s credibility, accountability, and effectiveness and is critical to fulfill its mandate of promoting global economic and financial stability. While transparency at the IMF is achieved through a range of policies and practices, the Transparency Policy and the Open Archives Policy form the core elements of the IMF’s transparency framework. The Fund has come a long way since the inception of these policies in the early nineties. Most Board documents are now published, published more quickly, and under more consistent and evenhanded application of modification rules. The information available in the Fund’s archives has increased and is more easily accessible to the public. While experience suggests that these policies are effective in delivering on their objectives, the landscape in which the Fund operates has evolved since these policies were last reviewed in 2013. In a more interconnected and shock-prone world the pace with which policymakers need to make decisions has accelerated and the expectations of stakeholders on the availability and timeliness of the Fund’s analysis and policy advice has grown. Against this backdrop, the 2024 Review of the IMF’s Transparency Policy and Open Archives Policy focuses on targeted reforms to (i) support faster publication of board documents and communications of Board’s decisions; (ii) strengthen the rules and processes to modify Board documents prior to publication; and (iii) allow faster release of some documents in the Fund’s archives accessible to the public. The reforms further clarify the scope and objectives of these policies, their implementation processes, and how to strengthen knowledge sharing. The review was supported by data analysis as well as surveys and consultations with key stakeholders, including Executive Directors, country authorities, IMF missions chiefs, and civil society organizations as detailed in the three background papers accompanying this 2024 review.
Keywords:
Accountability; Archives; Communication; Independence; Lending; Modification Rules; Publication; Surveillance Transparency; country paper; publication rate; transparency Policy review; IMF's transparency Policy; lags of country document; Financial Sector Assessment Program; Global financial crisis of 2008-2009; Income; Financial sector; Anti-money laundering and combating the financing of terrorism (AML/CFT); Central and Eastern Europe; Global; Caribbean
Cover Technical Assistance Reports
Vietnam: Technical Assistance Report-Financial Soundness Indicators Mission (April 3–7, 2023)
International Monetary Fund. Statistics Dept.
The mission worked with officials of the Macroprudential Supervision Department (MSD) of the State Bank of Vietnam (CBS) to enhance the compilation and reporting of financial soundness indicators (FSIs) for deposit takers (DTs). The mission reviewed source data, prepared new spreadsheets, and implemented updated FSIs report forms in line with the 2019 FSIs Compilation Guide. The mission also discussed the potential for compiling FSIs for the rapidly growing insurance sector in Vietnam. Alongside these improvements, the SBV will be able to produce updated and improved FSIs for financial sector surveillance.
Keywords:
Vietnam; Financial Soundness Indicators; 2019 FSIs Compilation Guide; deposit takers; insurance corporations.; bank Supervisory Agency; FSIs Guide; IMF's Statistics Department; G. FSIs data; Vietnam development bank; E. FSIs compilation framework; Financial statements; Commercial banks; Insurance companies; Income
Cover 2024年10月《世界经济展望》
2024年10月《世界经济展望》
政策转向，威胁上升
International Monetary Fund. Research Dept.

Abstract

最新一期《世界经济展望》报告指出，全球经济增长稳定但乏善可陈，风险偏向下行。伴随通胀下行，货币政策已有所放松。当局需要作出调整，确保财政政策走上可持续道路，并重建财政缓冲。理解货币政策在近期全球通胀下行中的作用，以及影响结构性改革的社会接受度的因素，将是促进未来经济实现稳定、更快增长的关键所在。

Keywords:
全球增长；通货膨胀；经济预测；风险情景；货币政策；结构性改革的社会接受度
Cover Perspectivas de la economía mundial, octubre de 2024
Perspectivas de la economía mundial, octubre de 2024
Giro en las políticas, amenazas en aumento
International Monetary Fund. Research Dept.

Abstract

En la última edición de Perspectivas de la economía mundial (informe WEO) se prevé un crecimiento estable pero con tasas desalentadoras, y que la balanza de riesgos se inclina a hacia el deterioro. Conforme la política monetaria se relaja en vista de la continuidad del proceso de desinflación, es necesario cambiar la marcha para garantizar que la política fiscal siga una trayectoria sostenible y que se reponga el margen de maniobra fiscal. Para promover un crecimiento estable y más vigoroso en el futuro será esencial comprender la función de la política monetaria en el reciente proceso de desinflación mundial, así como los factores que inciden en la aceptabilidad social de las reformas estructurales.

Keywords:
crecimiento mundial; inflación; proyección económica; escenarios de riesgo; política monetaria; aceptabilidad social de las reformas estructurales
Cover World Economic Outlook, October 2024
World Economic Outlook, October 2024
Policy Pivot, Rising Threats
International Monetary Fund. Research Dept.

Abstract

The latest World Economic Outlook reports stable but underwhelming global growth, with the balance of risks tilted to the downside. As monetary policy is eased amid continued disinflation, shifting gears is needed to ensure that fiscal policy is on a sustainable path and to rebuild fiscal buffers. Understanding the role of monetary policy in recent global disinflation, and the factors that influence the social acceptability of structural reforms, will be key to promoting stable and more rapid growth in the future.

Keywords:
global growth; inflation; economic projection; risk scenarios; monetary policy; social acceptability of structural reforms; inflation expectation; commodity market development; advanced economy; debt restructuring process; growth resilience; Emerging and frontier financial markets; Labor markets; Global; Middle East and Central Asia; Caribbean; Sub-Saharan Africa; Middle East