IMF Weekend Read

 

Dear MARIA, In today's edition, we highlight: G20 & building on recent economic resilience Fund's commitment to Pacific Islands Forthcoming March issue of F&D on rethinking economics The return of industrial policy Jamaica, Argentina, carbon prices, and much more

G20 Building on Recent Economic Resilience (Credit: Sailko/Wikipedia CC) In her blog ahead of this week’s G20 meetings in Brazil, IMF Managing Director Kristalina Georgieva urged policymakers to take advantage of the recent resilience in the global economy to tackle the medium-term challenges facing the world. Georgieva noted that, after several years of shocks, the Fund expects global growth to reach 3.1 percent this year, with inflation falling and job markets holding up. This resilience provides a foundation to shift focus to the medium-term trends shaping the world economy. As the Fund’s new report to the G20 makes clear, some of these trends—such as AI—hold promise to lift productivity and improve growth prospects, she said. “In the years ahead, global cooperation will be essential to manage geoeconomic fragmentation and reinvigorate trade, maximize the potential of AI without widening inequality, prevent bottlenecks on debt, and respond to climate change.” Read the blog

ASIA PACIFIC Fund Committed to Supporting Pacific Islands (Credit: IMF photo) The IMF is reaffirming its resolve to assist Pacific Island countries in promoting macro-financial stability, including in light of the region’s increasing vulnerability to climate change, said IMF Deputy Managing Director Bo Li during his visit to Fiji and Papua New Guinea.  In Fiji, Li delivered opening remarks at the Pacific Islands High Level Conference on Charting the Course Towards Shared Prosperity, and spoke at an event marking 30 years of the Fund’s Pacific Financial Technical Assistance Center. In Papua New Guinea, he inaugurated the new Resident Representative Office and met with the Central Bank Governor and Treasury Minister. Digital money and payment systems are evolving rapidly in the Pacific, a new IMF paper reports. Read the remarks

FINANCE & DEVELOPMENT A Place for Politics (Credit: Michael S. Williamson/The Washington Post via Getty Images) Even as the United States took its place as the world’s preeminent economic power after World War II, manufacturing firms fled towns in the Northeast and Midwest, leaving behind rusting steel mills and scarred communities. Society as a whole became richer as new industries sprang up elsewhere, but many rust belt communities are still dealing with the consequences of deindustrialization. Writing in F&D magazine, Harvard professor Jeffry Frieden says the US postwar economic transformation is one example of how policies and trends that increase aggregate social welfare can have painful distributional effects: they beget winners and losers. Democratic politics, Frieden says, is the mechanism by which societies make difficult choices among things that are often hard to compare. Read the full article

New Issue Out Soon This article is a preview of F&D’s March issue, in which we ask, Economics: How should it change? For this issue, we invited leading thinkers to share their views on how economics can rise to today’s challenges. Contributors include Angus Deaton, Atif Mian, Diane Coyle, Jayati Ghosh, John H. Cochrane, Michael Kremer, Dani Rodrik, Jeffry Frieden, Kate Raworth, Katharina Pistor, Michael Olabisi, Niall Kishtainy, Signe Krogstrup, Suresh Naidu, Ulrike Malmendier, Wendy Carlin, and many others.

JAMAICA Supporting Economic Growth and Resilience (Credit: IMF Photo) Jamaica has continued to build a strong track record of investing in institutions and prioritizing macroeconomic stability with support of the Precautionary and Liquidity Line and the Resilience and Sustainability Facility Arrangements, noted a statement from the IMF's board. After two years of rapid post-pandemic recovery, GDP growth in Jamaica is projected at 1.7 percent in FY2023/24, with tourism well above pre-pandemic levels and unemployment falling to a record-low of 4.5 percent by mid-2023.  Going forward, continued efforts to build resilience to global shocks through prudent policies and reforms to tackle supply-side constraints and raise productivity can further unleash Jamaica’s potential and foster inclusive growth over the medium term, the statement noted.

In this podcast, IMF trade expert Michele Ruta sheds light on the return of industrial policy and its potential impact on the global economy.

Weekly Roundup LATIN AMERICA Argentina Statement The IMF’s First Deputy Managing Director, Gita Gopinath, issued a statement at the end of her visit to Argentina. She “recognized the important initial gains in restoring macroeconomic stability and establishing a strong fiscal anchor,” and noted that “consistent and well-communicated monetary and FX policy will be necessary to continue to bring down inflation, rebuild reserves, and strengthen credibility.” STAFF PAPER Carbon Prices and Inflation in the Euro Area Estimates suggest that carbon taxes raised the price of energy but had limited effects on overall consumer prices in the euro area, write the authors of a new IMF staff paper. This paper shows empirically that the consequences of the European Union’s Emission Trading System and national carbon taxation on inflation have been limited in the euro area, so far. STAFF PAPER Political Fragility: Coups d’état and Their Drivers A new IMF staff paper explores the drivers of political fragility by focusing on coups d’état as symptomatic of such fragility. The authors find that the destabilization of a country’s economic, political or security environment—such as low growth, high inflation, weak external positions, political instability and conflict—set the stage for a higher likelihood of coups, with overlapping stressors amplifying each other. STAFF PAPER Constraints on Trade in Latin America There is a widely held perception that countries in the Latin America and Caribbean region are significantly less integrated into global markets than those in other countries, and that this hampers the region’s development potential. A new IMF staff paper studies the factors affecting trade flows to and from countries in the region. Except for services, the region as a whole displays trade volumes that are consistent with economic and geographic characteristics, although there are differences between countries. TECHNICAL NOTE Strengthening Tax Compliance Risk Management A new IMF technical note introduces analytics for compliance risk management in tax administration. Together with its accompanying toolkit, the note is intended as a starter kit to support capacity development in compliance planning, risk, and intelligence groups. Developed primarily for emerging analysts new to tax administration, the note presents both theory and practical aspects of analytics.

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.

Miriam Van Dyck Editor IMF Weekend Read mvandyck@IMF.org