ΙΜF latest

 

(Photo: IMF Photo) The Democratic Republic of the Congo faces many challenges to its development, but the country’s natural wealth has the potential to lift more people out of poverty and help the world make the transition to renewable energy. In this podcast, IMF African Department head Abebe Aemro Selassie sits down with DRC’s Minister of Finance, Nicolas Kazadi to discuss the country’s pivotal role in the fight for climate preservation and sustainable development. Their conversation took place as part of the Governor Talks series hosted by the IMF during the IMF-World Bank Spring Meetings.   Listen to the podcast on: IMF.org | Apple Podcasts | Spotify | Libsyn |  Soundcloud | Google Podcasts     Thanks for listening to the podcast. We're always looking to improve your experience so let us know if you have any suggestions! Send your comments to me at bedwards2@imf.org.   Bruce Edwards Producer, IMF Podcasts

Dear maria, In today's edition, we highlight: Africa’s economic losses from fragmentation Asia's contribution to global growth Kristalina Georgieva on financial stability risks The DRC's natural wealth and energy transition Climate shocks and economic performance

SUB-SAHARAN AFRICA Geopolitical Divisions Threaten Growth (Credit: IMF Photo/Andrew Caballero-Reynolds) Sub-Saharan Africa stands to lose the most if the world splits into two isolated trading blocs centered around China or the United States and the European Union, IMF economists Qianqian Zhang and Ivanova Reyes write in a Country Focus article. Sub-Saharan African economies could experience a permanent decline of up to 4 percent of gross domestic product after 10 years in this severe scenario, larger than the losses many countries experienced during the global financial crisis, according to the authors’ estimates in the IMF’s latest regional outlook. These losses could be compounded if geopolitical tensions cut off capital flows between trade blocs, with the region losing about $10 billion in foreign direct investment and official development assistance, they add. “Economic and trade alliances with new economic partners, predominantly China, have benefited the region but have also made countries reliant on imports of food and energy more susceptible to global shocks. “If geopolitical tensions were to escalate, countries could be hit by higher import prices or even lose access to key export markets—about half of the region’s value of international trade could be impacted.” Read the regional outlook IMF Managing Director Kristalina Georgieva discussed Africa's Continental Free Trade Area in Nairobi on Friday, alongside World Trade Organization chief Ngozi Okonjo-Iweala and senior officials from Kenya and Morocco. Watch here.

MANAGING DIRECTOR AT MILKEN INSTITUTE Financial stability risks

Kristalina Georgieva spoke to Bloomberg’s Stephanie Flanders about rising interest rates, excessive deregulation, digital currencies and risks to financial stability at the Milken Institute’s Global Conference in Los Angeles. The managing director also discussed China’s increasing clout in debt restructuring negotiations and the importance of strengthening developing economies’ representation at the IMF.

ASIA AND PACIFIC Asia Insulated From Global Bank Stress (Credit: Vijay/Adobe Stock) Global banking stress has so far had only a limited impact on Asian markets, Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, told a press conference in Hong Kong. Speaking at a launch of the department’s Regional Economic Outlook, Srinivasan said that Asian banks and investors had minimal exposure to Silicon Valley Bank and their equity prices have made up most of the losses following the global selloff caused by the failure of the California-based lender. But Srinivasan said pockets of private-sector financial stress may be emerging due to increased leverage and risks from the real-estate sector. “Asian financial systems should be able to withstand these stresses, being well capitalized and with strong liquidity buffers, but financial supervisors will need to remain alert.” Srinivasan also spoke to Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, about the economic outlook for Asia and the Pacific. Watch here.

Asia and the Pacific is a relative bright spot amid the more context of the global economy’s rocky recovery. As the Chart of the Week shows, the region will contribute about 70 percent of global growth this year—a much greater share than in recent years. Growth in Asia and the Pacific is forecast to accelerate to 4.6 percent from 3.8 percent last year, according to our latest regional outlook. The main development has been the reopening of China, where surging consumption is boosting growth across the region despite weaker demand from the rest of the world. Read the regional outlook

MIDDLE EAST AND CENTRAL ASIA Vigilance Needed To Stave Off Financial Stress (Credit: IMF Photo) Despite a series of global shocks, the economies of the Middle East and Central Asia proved resilient in 2022. But growth is expected to slow this year—and potentially next—amid tight policies to fight inflation which is projected to remain persistent. Authorities will need to calibrate the policy mix carefully to reduce core inflation without triggering financial stress, Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, told a press conference in Dubai to launch the latest regional economic outlook.

The Democratic Republic of the Congo faces many development challenges, but the country’s natural wealth has the potential to lift more people out of poverty and help the world make the transition to renewable energy. In a podcast, IMF African Department head Abebe Aemro Selassie sits down with DRC’s Minister of Finance Nicolas Kazadi to discuss the country’s pivotal role in the fight for climate preservation and sustainable development. Their conversation took place as part of the Governor Talks series during the IMF’s Spring Meetings.

FINANCE & DEVELOPMENT MAGAZINE New Directions for Monetary Policy (Credit: IMF/Pete Reynolds) The latest edition of F&D Magazine focuses on New Directions for Monetary Policy. Authors include Gita Gopinath, Raghuram Rajan, Markus Brunnermeier, Masaaki Shirakawa, Christoffer Koch, Greg Kaplan, Giancarlo Corsetti, Michael Weber, Claudio Borio, and many more. Want to get a print copy delivered to your home or office? Click here to subscribe

Weekly Roundup FRAGMENTATION Cooperation Needed for Lasting Prosperity Reviving multilateral cooperation is essential for long-term growth everywhere, Kristalina Georgieva told the Brussels Economic Forum on Thursday. The IMF managing director said that recent supply-chain disruptions and Russia’s invasion of Ukraine had added to national security concerns and prompted countries to try to reduce vulnerabilities by reshoring production. But these trends are creating a more fragmented world with real economic costs, she said. “While the domestic gains can be alluring, in the long term, everybody loses from global fragmentation.” CAPACITY DEVELOPMENT Climate Partnership Forum The IMF on Thursday held the first climate capacity development forum with its partners, dedicated to helping countries address climate-related economic policy challenges. Deputy Managing Director Bo Li highlighted ways the Fund has stepped up climate-related technical assistance and training since the adoption of its climate strategy in 2021 and invited partners to share their capacity-development priorities. “Capacity development helps ensure countries deliver on their climate policy goals,” he said. STAFF PAPER Climate Shocks, Inflation and Growth Inflation and growth respond significantly but also differently to climate shocks, according to a recent IMF staff paper. Temperature shocks result in lower inflation, but droughts and storms lead to higher inflation. All types of climate shocks have a negative impact on economic growth, but the magnitude and pattern of response show variation over the long run. Looking forward, it is important for policymakers to consider how the green transition away from fossil fuels, as an important part of climate change mitigation efforts, will affect inflation and growth dynamics. STAFF PAPER Currencies and Prices The rise or fall of a country’s currency has a greater impact on domestic prices during periods of high inflation and elevated uncertainty. That’s the finding of a new staff paper which analyzes the experience of a large sample of advanced and emerging-market economies over the past 30 years. This “pass-through” effect is also higher when exchange-rate fluctuations are driven by US monetary policy, the authors conclude. STAFF PAPER Mining and Inclusive Development Analysis from a recent IMF staff paper shows that revenues from mining can be crucial for long-run development. Focusing on gold-rich Guinea but drawing implications for other countries, the paper also finds that education and infrastructure policies are complementary: without education, infrastructure policy has a small and mixed impact on poverty and inequality; yet without infrastructure, more education erodes the returns from education even leading to more informality in rural areas. Policymakers must consider the balance between investing in “hard” infrastructure such as roads and other social infrastructure that builds human capital.

MARK YOUR CALENDAR

MAY 11, 5:00 AM ET Caucasus and Central Asia Outlook Subir Lall, the IMF’s Deputy Director of the Middle East and Central Asia Department, will launch the latest Regional Economic Outlook for the Caucasus and Central Asia at the National Bank of Kazakhstan.

Dear maria, In today's edition, we highlight: Europe's knife-edge recovery Anthropology for the modern economist Long-term forces affecting monetary policy Rwanda's green innovation

EUROPE'S OUTLOOK Knife-Edge Path To Defeating Inflation Without Recession (Credit: Lena Mucha/IMF Photos) Europe’s economies mostly avoided recession this winter, but policymakers now face the tricky task of sustaining the recovery, defeating inflation and safeguarding financial stability. In a blog, Alfred Kammer, the director of the IMF’s European Department, says that further increases in interest rates are required in the euro area to tame inflation and central banks should not pause monetary tightening prematurely out of concern that higher rates increase risks to financial stability. Underestimating the persistence of inflation would force central banks to tighten later for longer, he says in the blog, which underscores the conclusions of the department’s latest Regional Economic Outlook. “This would likely require a sharp recession to bring inflation back to target.” To defeat inflation, governments should also pursue more ambitious deficit reduction than embedded in current plans, he adds. “A good starting point would be to phase out most energy relief measures and target any remaining ones more narrowly to vulnerable households.” Read the Regional Outlook Visit the IMF’s Regional Economic Outlook page for discussion of recent developments and prospects for countries in all the world’s regions.

Economists often share a common understanding of the world based on their training and what they’ve learned from other like-minded professionals. In this podcast, author and Financial Times journalist Gillian Tett says anthropology offers insights into public policy challenges and helps economists better understand socioeconomic problems. The conversation took place before a live audience during the Spring Meetings. Read Tett’s Listening To Social Silence article in the IMF's Finance & Development magazine.

FINANCE & DEVELOPMENT How Long-Term Trends Affect Monetary Policy (Credit: IMF/Adobe Stock) Advanced economies are contending with several major long-term structural changes that will affect the way monetary policy is conducted. These ongoing changes include the green transition, remote work, de-globalization, and the rise of central bank digital currency. A recent article in F&D’s Picture This series looks at how long-term trends will affect the natural level of interest rates and how monetary policy is transmitted. (Credit: IMF/Pete Reynolds) F&D: New Directions for Monetary Policy The latest edition of F&D Magazine focuses on New Directions for Monetary Policy. Authors include Gita Gopinath, Raghuram Rajan, Markus Brunnermeier, Masaaki Shirakawa, Christoffer Koch, Greg Kaplan, Giancarlo Corsetti, Michael Weber, Claudio Borio, and many more. Want to get a print copy delivered to your home or office? Click here to subscribe

RESILIENCE AND SUSTAINABILITY TRUST Rwanda Leading Green Innovation

Through the Resilience and Sustainability Trust, the IMF plays an increasingly important role in helping countries with limited room in their budget address long-term challenges, including climate change. Rwanda is the first African country to reach an agreement with the IMF on support from the RST, which will help the country’s climate strategy deliver on ambitious objectives and catalyze more financing.

Weekly Roundup FINANCIAL SECTOR India’s Financial Opportunities Financial innovations and rapid financial sector development bring many opportunities, but they also present challenges for regulation and supervision, said IMF Deputy Managing Director Antoinette Sayeh at an event to discuss a forthcoming IMF book on India’s financial system. Event speakers discussed the linkages between the financial sector and growth, improvements in bank lending to foster productivity, and measures to further develop India’s corporate bond market.  STAFF PAPER Vaccines and Consumer Spending The spread of COVID-19 caused sudden changes in household consumption and reshaped economic activity around the world. A recent IMF staff paper investigates how the vaccine rollout affected day-to-day consumer spending using debit and credit card transactions in three European countries. The results show that vaccinations, along with other policy interventions, have mitigated the severe negative impact of the pandemic and boosted consumer spending. STAFF PAPER Neutral Interest Rates In a staff paper, IMF economists provide a long-run perspective on neutral interest rates with new estimates for 16 advanced economies since the 1870s. The authors say that the decline in “r-star” has been common to many countries since the 1980s. Traditional determinants such as population aging and productivity growth are strongly correlated with the changes in neutral rates while others like the relative price of capital and inequality exhibit only weak relationships.

MARK YOUR CALENDAR

MAY 5, 2:30 PM (EAT)  Trade Integration in Africa Join IMF Managing Director Kristalina Georgieva and WTO Director-General Ngozi Okonjo Iweala for a discussion of how to unleash Africa’s trade potential. Register Here

Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.

Nick Owen Editor IMF Weekend Read nowen@IMF.org