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Europe > Ukraine

You are looking at 1 - 10 of 21 items for :

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Cover IMF Working Papers
Medium-term Macroeconomic Effects of Russia’s War in Ukraine and How it Affects Energy Security and Global Emission Targets
Hugo Rojas-Romagosa
Russia’s war in Ukraine has disrupted the supply of natural gas for many European countries, triggering an energy crisis and affecting energy security. We simulate the medium-term effects of these trade disruptions and find that most European countries have limited GDP losses but those more dependent on Russian natural gas face moderate losses. European fossil fuel consumption and emissions are reduced and after accounting for the war impacts, achieving Europe’s emission targets becomes slightly less costly. In terms of energy security, the war eliminates European energy dependency from Russian imports, but most of the natural gas and oil imports will be substituted by other suppliers. We also find that constructing a new Russian pipeline to China does not provide significant macroeconomic benefits to either country.
Keywords:
Energy supply; energy security; trade disruptions; greenhouse gas emissions; computable general equilibrium; baseline share; w.r.t. baseline price; w.r.t baseline price; oil import; Natural gas sector; Imports; Exports; Electricity; Europe; Global
Cover IMF Staff Country Reports
Republic of Kazakhstan: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper applies a range of quantitative methods to explain recent inflation dynamics in Kazakhstan. It presents an overview of recent developments and utilizes a principal component analysis to decompose inflation in Kazakhstan between global, regional, and domestic sources. In addition, it estimates a Phillips curve model, augmented with external variables, to quantify the drivers of inflation. The paper also estimates a vector autoregressive model to look more closely at dynamic effects. The results show that external factors have had a strong impact on inflation dynamics in Kazakhstan in the recent period, but domestic factors remained important. Looking ahead, inflation in Kazakhstan will depend significantly on the global environment but will also be shaped by domestic policy decisions. In the near term, premature monetary policy loosening should be avoided. In the medium term, efforts to strengthen the monetary policy framework should continue to help moderate the volatility of inflation and reach the inflation target. Fiscal policy should remain supportive of price stability.
Keywords:
I. data definition; inflation expectation; inflation in Kazakhstan; I. simulation result; drivers of inflation; Inflation; Oil exports; Oil production; Consumption; Real exports; Global
Cover IMF Working Papers
Demand vs. Supply Decomposition of Inflation: Cross-Country Evidence with Applications
Melih Firat
and
Otso Hao
What are the contributions of demand and supply factors to inflation? To address this question, we follow Shapiro (2022) and construct quarterly demand-driven and supply-driven inflation series for 32 countries utilizing sectoral Personal Consumption Expenditures (PCE) data. We highlight global trends and country-specific differences in inflation decompositions during critical periods such as the great financial crisis of 2008 and the recent inflation surge since 2021. Validating our inflation series, we find that supply-driven inflation is more reactive to oil shocks and supply chain pressures, while demand-driven inflation displays a more pronounced response to monetary policy shocks. Our results also suggest a steeper Phillips curve when inflation is demand-driven, holding significant implications for effective policy design.
Keywords:
Inflation decomposition; demand vs supply; Phillips curve; monetary policy; supply chain pressures; supply decomposition of inflation; demand-driven inflation; supply-driven inflation; decomposition analysis; inflation decomposition methodology; Inflation; Supply shocks; Oil production; Output gap; Oil prices; Global; Asia and Pacific; Europe
Cover IMF Staff Country Reports
Republic of Serbia: 2023 Article IV Consultation, First Review Under the Stand-By Arrangement, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Republic of Serbia
International Monetary Fund. European Dept.
This 2023 Article IV Consultation highlights that Serbia has made impressive economic gains over much of the past decade: living standards improved, inflation fell, public finances were strengthened, and reserves increased, helped by ample foreign direct investment (FDI) inflows. But spillovers from the war in Ukraine—especially the sharp increase in international energy prices—and deep-rooted problems in Serbia’s energy sector that came to a head last year, led to large external and fiscal financing needs, prompting the authorities to request a IMF-supported Stand-By Arrangement (SBA). Tighter monetary policy is needed to reduce inflation. The National Bank of Serbia should ensure that real ex-ante policy rates become positive and that such rates stay positive until the path of inflation is clearly converging to target. Fiscal policy should work alongside monetary policy as fiscal consolidation helps disinflation and lowers public debt. In addition, any fiscal over-performance should be saved or used for priority investments.
Keywords:
inflation expectation; rate hike; food price inflation; precautionary Stand-By Arrangement; budget financing; inflation dynamics; SBA approval; A. monetary policy; Inflation; Energy sector; Government finance statistics; Loans; Global; Europe
Cover IMF Staff Country Reports
Republic of Serbia: Third Review Under the Policy Coordination Instrument, Request for a Stand-By Arrangement, and Cancellation of the Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia
International Monetary Fund. European Dept.
In the wake of the Covid pandemic, Serbia embarked on a well-paced consolidation path to rebuild buffers, supported by a program under the Policy Coordination Instrument (PCI). Given higher energy prices and domestic electricity production problems, high global inflation, weaker trading partner growth, and spillovers from Russia’s war in Ukraine, the authorities have requested financial support under a two-year Stand-by Arrangement (SBA) of SDR 1,898.92 million (290 percent of quota, about EUR 2.4 billion). The SBA supports economic and financial policies to address external and fiscal financing needs, maintain macroeconomic and financial stability, and continue to strengthen the economy’s performance and resilience through structural reforms. The PCI was cancelled upon approval of the SBA.
Keywords:
oil price shock; energy price inflation; energy price pressure; public debt debt ratio; reference rate; existing Policy Coordination Instrument; Inflation; Energy prices; Energy sector; Imports; Tariffs; Global; Europe
Cover IMF Working Papers
A Bottom-Up Reduced Form Phillips Curve for the Euro Area
Thomas McGregor
and
Mr. Frederik G Toscani
We develop a bottom-up model of inflation in the euro area based on a set of augmented Phillips curves for seven sub-components of core inflation, and auxiliary regressions for non-core items. The disaggregated structure of the model improves on the forecasting performance of a standard one-equation Phillips curve, especially since the onset of the Covid-19 pandemic in early-2020 and the following energy shocks. We find a key role for international energy and food prices in explaining the recent surge in inflation – as of Q2 2022, they account for 75 percent of the increase in headline inflation and 30 percent of the increase in core. Economic slack and inflation expectations explain another 10 percent of headline and 20 percent of core inflation. Around one-third of the increase in core inflation remains unexplained by the model. Out of sample projections show high uncertainty around the inflation path while suggesting that inflation pressures are unlikely to dissipate quickly. We argue that the bottom-up approach offers a useful complement to the forecaster’s toolbox–especially in the current environment of sectoral shocks - by improving forecast accuracy, shedding additional light on the drivers of inflation, and providing a framework in which to apply ex-post judgement in a structured way.
Keywords:
Euro area; Inflation; Phillips curve; inflation expectation; inflation pressure; augmented Phillips curves; forecast accuracy; drivers of inflation; Natural gas sector; Fuel prices; Oil prices; Food prices; Global
Cover Shifting Commodity Markets in a Globalized World
Shifting Commodity Markets in a Globalized World

Abstract

A survey of the complex and intertwined set of forces behind the various commodity markets and the interplay between these markets and the global economy. Summarizes a rich set of facts combined with in-depth analyses distillated in a nontechnical manner. Includes discussion of structural trends behind commodities markets, their future implications, and policy implications.

Keywords:
BOOK; price; metal; demand; oil price; natural gas; food security; commodities supercycle; metal market; food price; Natural gas sector; Oil; Metals; Non-renewable resources; Oil prices; Global; Europe; Sub-Saharan Africa; Asia and Pacific; North America; price differential; mining research; energy market; Caribbean; South America
Cover IMF Staff Country Reports
Ukraine: Staff Report for the 2013 Article IV Consultation and First Post-Program Monitoring
International Monetary Fund. European Dept.
This paper discusses Ukraine’s 2013 Article IV Consultation and First Post-Program Monitoring. The Ukrainian economy has been in recession since mid-2012, and the outlook remains challenging. In January–September 2013, GDP contracted by 1¼ percent year-over-year, reflecting lower demand for Ukrainian exports and falling investments. Consumer prices stayed flat, held down by decreasing food prices and tight monetary policy. The fiscal stance loosened in 2012–2013, contributing to the buildup of vulnerabilities. Ukraine remains current on all its payments to the IMF, and the authorities have reaffirmed their commitment to repay all outstanding IMF credit.
Keywords:
ISCR; CR; government; energy company Naftogaz; CDS spread; NBU intervention; staff appraisal; gross reserve; deficit monetization; Exchange rates; Loans; Global; Eastern Europe; Europe; baseline General government; Energy sector
Cover IMF Working Papers
Quasi-Fiscal Deficits and Energy Conditionality in Selected CIS Countries
Mr. Tapio Saavalainen
and
Joy Mylène ten Berge
Quasi-fiscal deficits of public utility companies are common in all member countries of the Commonwealth of Independent States (CIS). They constitute a significant impediment to efficient resource allocation and endanger macroeconomic stability. This paper presents a simple framework for measuring and monitoring such deficits and highlights their macroeconomic relevance. It reviews the progress under IMF conditionality aimed at correcting these imbalances during 1993-2003. The paper suggests that the extensive conditionality under the IMF-supported programs has yielded only limited progress in reducing the energy sector's financial imbalances. In conclusion, different policy options are discussed in light of the lessons learned.
Keywords:
WP; state capture; aluminum smelter; country authorities; state debt; trading company; Energy; quasi-fiscal deficit; transition; conditionality; governance; CIS country; enterprise restructuring; energy enterprise; government decree; General government cash deficit; nonviable enterprise; Tariffs; Energy sector; Electricity; Privatization; Europe; Central Asia
Cover IMF Staff Country Reports
Republic of Kazakhstan: Selected Issues
International Monetary Fund
This Selected Issues paper on the Republic of Kazakhstan underlies growth of the non-oil sector, fiscal management of oil wealth, and bank credit growth. The share of tradables in the non-oil sector has declined significantly, both in terms of value added and employment, while many nontradable activities, especially services and construction, have expanded. Kazakhstan can sustain non-oil deficits of more than 5 percent of GDP in the near term without reducing the value of oil wealth. Recent developments in the pattern of bank lending and borrowing have led to increased exposure to the property sector and international financial markets.
Keywords:
ISCR; CR; tenge; exchange rate; deficit; revenue; purchasing power parity; oil sector; oil wealth; bank lending; sector growth; growth path; CIS economy; Real exchange rates; Oil; gas and mining taxes; Bank credit; Global