International Monetary Fund :Weekend Read

 

Dear MARIA, In today's edition, we highlight: September 2024 F&D magazine Fed rate cuts may revive bond flows to emerging economies Women lead record number of central banks Jamaica's Nigel Clarke appointed new IMF Deputy Managing Director Nicholas Bloom on remote work and growth, and much more F&D MAGAZINE Sustained Economic Growth Hinges on Productivity Gains as Populations Age (Illustration by Eiko Ojala) Productivity is a foundation of prosperity. The only way a country can raise its standard of living sustainably is to produce more with existing or fewer resources. This cannot be done without improving productivity. It’s that simple, writes the Fund’s Gita Bhatt in the September issue of F&D magazine. “Everything else about productivity is surprisingly complex, however. It is difficult to explain, difficult to measure, and, as the past couple decades show, difficult to improve,” writes Bhatt, the magazine’s Editor-in-Chief. “We know that productivity must play a more important role in driving sustained growth as our societies age. But there’s no consensus on how to reverse the broad slowdown in productivity growth seen across almost all countries over the past 20 years.” Especially vexing is the sluggish growth of what economists call total factor productivity—a way of measuring how efficiently businesses turn capital and labor into output—the part that basically captures innovation and technology, she notes. The September issue of F&D brings together leading researchers to help explain the withering of productivity gains, how to counter these trends, and how to spark economic dynamism. Read the Article Subscribe to F&D magazine MONETARY POLICY Fed Rate Cuts May Help Revive Bond Flows to Emerging, Developing Economies (Credit: IMF Photo/Filmontary) Capital flows to emerging market and developing economies went through several boom-bust cycles in recent decades, often partly driven by external developments such as monetary policy decisions in major advanced economies, write the Fund’s Paula Arias and Robin Koepke in a new blog. During the recent global monetary tightening, inflows to many emerging market and developing countries proved relatively resilient, benefitting from robust policy frameworks and healthy international reserves. However, some of the most vulnerable countries were disproportionately affected by higher external borrowing costs, as illustrated by a sharp slowdown in Eurobond issuance, the authors write. The Chart of the Week highlights the sharp slowdown of Eurobond net issuance by emerging market and developing economies, which fell to an annual $40 billion in 2022-23, down 70 percent relative to the prior two years.  This year, global interest rate conditions have started to become more favorable for borrowers, as central banks in several major advanced economies moved toward easing monetary policy. This supported a recovery in Eurobond issuance to $40 billion in the first quarter of 2024 as countries such as Benin and Côte d’Ivoire returned to the market. The onset of a Fed easing cycle may support an additional rebound in Eurobond issuance and a broader revival of capital flows to emerging market and developing economies. Read the Blog INCLUSION AND GENDER Women Lead Record Number of Central Banks, but More Progress is Needed (Credit: Jeenah Moon for Newsday) Women are leading more central banks than ever before, thanks to appointments in the past year, but recent gains still leave the share of female governors far short of parity, says the IMF in a recent blog. The number of women in governor roles rose to 29 this year from 23 last year, though that left the share of female leaders at just 16 percent of the world’s 185 central banks, according to an April report by the Official Monetary and Financial Institutions Forum (OMFIF). Greater gender balance in senior positions may help increase the diversity of thought and checks and balances, in turn contributing to increased economic and financial stability and improved performance, IMF research shows. Appointments this year in Bosnia and Herzegovina and Papua New Guinea are examples of how smaller economies are driving more progress on gender balance, according to OMFIF, a London-based think tank for monetary, economic and investment issues. This year’s rise was the biggest gain in more than a decade of surveys, but a recent Chart of the Week shows how central banks still have much room to make progress toward greater parity in the ranks of top policymakers steering the global economy. Read the Blog IMF LEADERSHIP Jamaica’s Nigel Clarke to be Appointed IMF Deputy Managing Director (Credit: IMF Photo) IMF Managing Director Kristalina Georgieva recently announced to the Executive Board her proposal to appoint Nigel Clarke to the position of Deputy Managing Director, effective October 31, 2024. He will succeed Antoinette M. Sayeh, who, as previously announced, steps down on September 12. Clarke has been Jamaica’s Minister of Finance and the Public Service, and a Member of Parliament, since March 2018. Prior to this, he served as Ambassador of Economic Affairs from 2016.  “Mr. Clarke is an exceptional public servant and policymaker, with proven leadership in institution building and economic crisis management, who has stewarded his country’s economy to a stronger and more sustainable position,” said Georgieva in the announcement. “Since 2016, he has been the IMF’s chief counterpart on successive and historically successful programs for Jamaica, including an Extended Fund Facility, a precautionary Stand-By Arrangement, and most recently a Precautionary Liquidity Line plus Resilience and Sustainability Facility, leaving the country with robust economic fundamentals. Nigel also brings a wealth of experience from a stellar private sector career.”  Read the Announcement Working from home was not an option for most people before March 11, 2020, when work and home life suddenly collided. The pandemic upended many aspects of doing business, but the daily commute is one routine that seems unlikely to return to what it was. Nicholas Bloom was studying the potential impact of remote work long before the pandemic launched it into the mainstream and now has data to suggest businesses should stick to the hybrid working model. Learn more in this podcast. Weekly Roundup BLOG AI and Central Banks Central banks have been pioneers in leveraging emerging technologies to enhance the efficiency of their functions, write the IMF’s Yan Liu, Alessandro Gullo, and Marianne Bechara in a blog published by the University of Oxford’s Faculty of Law. AI can significantly strengthen central banks’ agility to predict and mitigate crises. However, central banks should proceed with caution on the AI journeys as many unknowns lie ahead, including those on data governance, cybersecurity, legal liability, and central banks’ governance, the authors say.  STAFF PAPER Changing Climate in Brazil: Key Vulnerabilities and Opportunities Changing climate conditions are already affecting Brazil’s economy. Rising temperatures and temperature variability have increased both present occurrences and future likelihood of extreme weather events. Agriculture and power generation are key sectors at risk, with potential repercussions for the financial sector. In a new staff paper, the authors discuss vulnerabilities as well as policies to boost the Amazon’s resilience; invest in climate-smart agriculture and insurance; diversity energy sources; and leverage opportunities for green growth in Brazil. STAFF PAPER Taming Public Debt in Europe The outlook for public debt in Europe has deteriorated sharply in recent years. At the same time, public gross financing needs remain elevated and face additional challenges. A new staff paper quantifies the outlook for Europe’s public debt and financing needs over the medium term and from a regional perspective, updating and extending earlier Fund research, and presents scenario simulations that can help inform policy discussions on taming public debt in Europe. Because of the electricity used by high-powered equipment to “mine” crypto assets, one Bitcoin transaction requires roughly the same amount of electricity as the average person in Ghana or Pakistan consumes in three years, write the IMF’s Shafik Hebous and Nate Vernon-Lin in a recent blog. And Chat GPT queries require 10 times more electricity than a Google search, due to the electricity consumed by AI data centers. As the recent Chart of the Week shows, crypto mining and data centers together accounted for 2 percent of world electricity demand in 2022. And that share is likely to climb to 3.5 percent in three years, according to Fund estimates based on projections from the International Energy Agency. That would be equivalent to current consumption of Japan, the world’s fifth largest electricity user. The climate impact of these activities is cause for concern.  Read our analysis MARK YOUR CALENDAR SEPTEMBER 9, 8 AM ET/12 PM UCT Africa Perspectives: Charting Democracy and Development Please join the IMF's Abebe Aemro Selassie and Professor Emmanuel Gyimah-Boadi (Afrobarometer) for a discussion on the pressing issues facing democracy in Africa and the impact of global politics on the continent’s development trajectory. Watch 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. Miriam Van Dyck Editor IMF Weekend Read mvandyck@IMF.org

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