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International Monetary Fund. Strategy, Policy, & Review Department
The Fund has a range of modalities and tools to cover spillovers. However, there remains scope to enhance synergies between global and country-specific spillover coverage and to foster cross-country dialogue. Practical guidance and enhanced information-sharing would also allow for more systematic surveillance of spillovers. Furthermore, the COVID-19 pandemic has underscored the need to continue expanding the research frontier covering new spillovers and channels and developing new tools and data sets. Therefore, filling these remaining gaps in the Fund’s spillover work would allow for a more coordinated and evenhanded surveillance of spillovers.
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper focuses on Venezuelan migration and the labor market. Over 2 million migrants have crossed the border from Venezuela and continue to join Colombia’s labor market—which remains weak overall with rising unemployment and falling participation. There is so far little evidence of displacement effects on account of immigration, however, as the Colombian informal sector has capably absorbed most of the migrant inflow. A more granular view of Colombia’s local labor markets does not show weaker employment outcomes in those that have received the most migrants. However, with many of these workers being highly skilled and attached to the informal sector, evidence of labor misallocation highlights the need to continue integration policies. The government is conducting efforts to accelerate the validation of Venezuelan degrees for easing the integration of professional migrants and high-school educated migrants who wish to continue their university studies in Colombia.
International Monetary Fund. European Dept.
This Selected Issues paper estimates the long-run economic impact of Brexit on the United Kingdom under two distinct assumptions for the post-Brexit relationship between the United Kingdom and the European Union. These illustrative scenarios entail different degrees of higher trade costs, a more restricted European Union migration regime and reduced foreign inward investment. A standard multicountry and multisector computable general equilibrium model is used to quantify the impact of higher trade barriers. There is substantial sectoral heterogeneity in the impact, and regions with higher concentrations of the more affected sectors are likely to confront greater losses. The empirical analysis suggests the speed of sectoral labor relocation across sectors has been relatively low in the UK. Irrespective of these empirical estimates, policies, such as retraining, would be critical to facilitate faster adjustment of the economy to the post-Brexit equilibrium thereby helping to minimize the associated costs to individuals and in aggregate.
International Monetary Fund. European Dept.
This Selected Issues paper focuses on long-term impact of Brexit on the European Union (EU). This paper examines consequences of Brexit on the EU27 under various post-Brexit scenarios by using two different complementary approaches. Our results, which are broadly in line with recent findings in the literature, are twofold. First, Brexit would have negative effects on the EU27 as well, given the depth and the complexity of the EU-U.K. integration. Similar to various empirical studies, it has been observed that the estimated long-term output and employment losses (in percent) for the EU27 in the study are on average lower than the corresponding losses for the UK estimated in the literature. The level of output and employment are estimated to fall at most by up to 1.5 percent and 0.7 percent in the long run in the event of a ‘hard’ Brexit scenario, respectively. A “soft” Brexit outcome would lead to much lower losses.
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper proposes a simple nowcast model for an early assessment of the Salvadorian economy. The exercise is based on a bridge model, which is one of the many tools available for nowcasting. For El Salvador, the bridge model exploits information for the period 2005–17 from a large set of variables that are published earlier and at higher frequency than the variable of interest, in this case quarterly GDP. The estimated GDP growth rate in the 4th quarter of 2017 is 2.4 percent year-over-year, leading to an average GDP growth rate of 2.3 percent in 2017. This is in line with the GDP growth implied by the official statistics released two months later, in March 23, 2018.
Mr. Emre Alper
,
Ms. Wenjie Chen
,
Mr. Jemma Dridi
,
Mr. Herve Joly
, and
Mr. Fan Yang
This paper assesses the extent of economic and financial integration among the East African Community (EAC) along a number of dimensions and, where possible, whether integration has increased in the wake of the major regional integration policy milestones.
International Monetary Fund. Research Dept.

Abstract

Selon l'édition 2016 des Perspectives de l'économie mondiale, la croissance mondiale devrait ralentir à 3,1 % en 2016 avant de remonter à 3,4 % en 2017. Ces prévisions, revues à la baisse de 0,1 point de pourcentage pour 2016 et 2017 par rapport à l'édition d'avril, reflètent des perspectives plus moroses pour les pays avancés à la suite du vote, en juin dernier, en faveur de la sortie du Royaume-Uni de l'Union européenne (Brexit), et en raison d'une croissance inférieure aux attentes aux États-Unis. Cette évolution exerce une pression à la baisse sur les taux d'intérêts mondiaux car la politique monétaire devrait rester accommodante sur une plus longue durée. En dépit d'une réaction des marchés plutôt rassurante à l'annonce du Brexit, l'impact final est très imprévisible car la forme que prendront les dispositions institutionnelles et commerciales entre le Royaume-Uni et l'Union européenne est incertaine. L'attitude des marchés financiers par rapport aux pays émergents s'est améliorée grâce aux baisses de taux d'intérêt attendues dans les pays avancés, à la diminution des inquiétudes suscitées par les perspectives à court terme de la Chine, qui a désormais pris des mesures favorables à la croissance, ainsi qu'à une certaine stabilisation des prix des produits de base. Mais les perspectives varient considérablement entre les pays et les régions : les pays émergents d'Asie, en particulier l'Inde, présentent une croissance robuste, tandis que les pays d'Afrique subsaharienne connaissent un net ralentissement. Dans les pays avancés, la morosité des perspectives, soumises à une incertitude considérable et à des risques à la baisse, pourrait alimenter encore la grogne politique et faire gagner du terrain aux mouvements anti-intégrationnistes. Plusieurs pays émergents ou en développement doivent encore relever des défis immenses pour s'ajuster à la baisse des prix des produits de base. Au vu de ces perspectives préoccupantes, il est plus urgent que jamais d'adopter largement des politiques publiques propices à la croissance et de gérer les vulnérabilités.

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.

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.

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.