IMF update

 

Dear MARIA, We just published a new blog—please find the full text below.  Countries That Close Gender Gaps See Substantial Growth Returns (Credit: IMF Photo) By Antoinette M. Sayeh, Alejandro Badel, and Rishi Goyal Narrowing the gap between the share of men and women who work is one of the very important reforms policymakers can make to revive economies amid the weakest medium-term growth outlook in more than three decades. With global growth predicted to languish at just 3 percent over the next five years and with traditional growth engines sputtering, many economies are missing out by not tapping women’s potential. Only 47 percent of women are active in today’s labor markets, compared with 72 percent of men. The average global gap has fallen by only 1 percentage point annually over the past three decades and remains unacceptably wide. To blame are unfair laws, unequal access to services, discriminatory attitudes and other barriers that prevent women from realizing their full economic potential. The result is a shocking waste of talent, leading to losses in potential growth. We estimate that emerging and developing economies could boost gross domestic product by about 8 percent over the next few years by raising the rate of female labor force participation by 5.9 percentage points—the average amount by which the top 5 percent of countries reduced the participation gap during 2014-19. As the Chart of the Week shows, that’s more than the economic “scarring,” or output losses, inflicted on countries by the pandemic. Policymakers can of course lift growth in many ways, from governance reforms to strengthen institutions, to financial reforms to unlock capital for investment, as discussed in a recent IMF blog. Complementing these reforms with measures to narrow gender gaps would greatly amplify these returns. Unfortunately, present policies do not come close to closing gender gaps. Many researchers say it’s inevitable that women’s labor force participation will eventually reach that of men, even if it takes centuries. But gender gaps are unlikely to ever close if present policy trends persist, as we show in a new research paper. Our analysis of three decades of data shows that countries have made progress increasing women’s participation, but economies of all income levels experienced several setbacks—a result of shocks, crises and policy reversals. The pandemic, for example, eroded progress closing gender gaps, especially for women with young children. Setbacks like this cause scarring that slows and often reverses progress toward gender equality. As a result, gender gaps in labor force participation will narrow but never close if countries continue on their present policy path. Gaps would remain large for most countries, exceeding 16 percentage points in one out of ten countries. Countries must step up efforts to break down barriers to women’s participation in the labor market—such as limited access to education, health, assets, finance, land, legal rights, and care services. They should systematically take account of how macroeconomic, structural, and financial policy packages impact women. The IMF’s gender strategy aims to assist member countries in these efforts.   Jeff Kearns Managing Editor IMF Blog jkearns@IMF.org   Thank you again for your interest in IMF Blog. Read more of our latest content here. Take good care!

(Photo: COURTESY OF ELIANA LA FERRARA) A functioning economy provides people with access to credit, insurance, and, among other things, investment opportunities. But what happens in poor communities where they are landless and have no wealth? Eliana La Ferrara says the social structure within those communities offers the collateral they need to make the economy work. La Ferrara is a Professor of Public Policy at Harvard Kennedy School and an award-winning economist whose work has helped us understand how the economics of the poor are deeply interwoven into the social fabric and norms of their communities. Journalist Rhoda Metcalfe sat down with La Ferrara to discuss her work in Africa, and how she came to focus on development issues that are often overlooked. The interview is part of the IMF series on extraordinary Women in Economics.    Listen to the podcast on: IMF.org | Apple Podcasts | Spotify | Libsyn |  Soundcloud | Google Podcasts   Read the transcript     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

Saudi Arabia Saudi Arabia's Economy Grows as it Diversifies Photo Credit: tokyo studio/Adobe Stock Saudi Arabia’s economy is undergoing a transformation, as it implements reforms to reduce oil dependence, diversify income sources, and enhance competitiveness. This year marks an important juncture as the midpoint of Saudi Arabia’s ambitious Vision 2030 journey. As shown in the latest IMF annual review of the country's economy, progress has been most notably reflected in non-oil growth, which has accelerated since 2021, averaging 4.8 percent in 2022. Despite lower overall growth reflecting additional oil production cuts, non-oil growth will remain close to 5 percent in 2023, spurred by strong domestic demand. Diversification has been driven by improvements in the regulatory and business environment. As a result of a new set of laws to promote entrepreneurship, protect investors’ rights, and reduce the costs of doing business, new investment deals and licenses grew by 95 percent and 267 percent in 2022, respectively. In addition, the Saudi Investment Fund (PIF) has been deploying capital, including to help stimulate private sector investment.  Charting the course ahead The economy’s non-oil growth has been spurred by strong domestic demand, particularly private non-oil investment. Sustaining this performance requires pursuing sound macroeconomic policies and maintaining the reform momentum, irrespective of developments in oil markets. Challenges ahead include making sure large projects generate returns and boost productivity, which are vital for sustained economic growth and will help further diversify the economy. There is a need to continue the ongoing efforts to foster a more conducive environment for innovation and invest in workforce skills that complement the diversification agenda. Streamlining fees and taxes faced by businesses—particularly at local and city levels—will further boost private sector development. The PIF’s growing role in the economy should continue to stimulate private sector investment. Lastly, rigorous monitoring and evaluation can help minimize risks from targeted interventions and industrial policies, ensuring that these policies (which are not a substitute for broader structural reforms) attain the intended benefits. **** Amine Mati is an Assistant Director and Sidra Rehman is an Economist. Both are in the IMF’s Middle East and Central Asia Department. RELATED LINKS Saudi Arabia and the IMF Staff Report