IMF update

Dear MARIA, In today's edition, we highlight: Korea's rapid aging doesn't have to be economic destiny Thailand can ease household debt burden by using a coordinated approach Anne Krueger on how to deal with debt's downside Iceland and the IMF IMF Youth Challenge in Economics for MENA students, and more COUNTRY FOCUS Korea's Rapid Aging Doesn’t Have to Be Economic Destiny (Credit: justhavealook/Jamesteohart/Amy S Kim/iStock by Getty Images) Strong economic fundamentals and sound macroeconomic policies have helped the Korean economy through multiple shocks in recent years. However, potential growth has slowed more quickly than in other major advanced economies, and the economic expansion is likely to moderate this year. The country also is aging more rapidly than almost all others. That’s likely to reduce the labor supply and weigh on investment demand, further lowering growth and diminishing living standards. Aging could shrink the labor force by more than a quarter by 2050, leading to an average annual decline of 0.67 percentage point in potential growth. The good news is that reforms would help address this adverse impact of aging in Korea, write the IMF’s Rahul Anand, Diaa Noureldin, Zexi Sun, and Xin Cindy Xu in a new Country Focus article. Increasing labor force participation rates, especially among female and older workers, would help limit the decline in the supply of available workers. Improving the efficiency of resource allocation across firms within sectors could increase aggregate productivity growth. And better and broader use of artificial intelligence would help support potential growth, the authors write. Read the Article COUNTRY FOCUS Thailand Can Ease Household Debt Burden by Using a Coordinated Approach (Credit: tawatchaiprakobkit/HuyNguyenSG/aomam/iStock by Getty Images) Thailand’s elevated level of household debt contributed to delaying the country’s post-pandemic recovery, which took longer than in other economies in the region. Borrowing surged during the health crisis as people struggled to meet basic needs, and lingering repayment burdens continue to constrain consumer spending. Though household debt is down slightly from its peak during the pandemic, it is still historically high at 89 percent of economic output. In addition to weighing on consumption, this also hurts investment and the economy more broadly. That could fuel financial instability if the most vulnerable people and small enterprises continue to struggle to repay debt, write the IMF’s Corinne Deléchat, Seunghwan Kim, and Ying Xu in a new Country Focus article. Such an economic drag from debt and the potential for more serious complications underscore the need for a coordinated and comprehensive remedy. The authors examine measures to reduce household debt by drawing on experiences in other countries. Thailand must also address a main reason that debt remains elevated, the authors note. More than half of workers aren’t formally employed, which deprives them of job security and social protection and makes them particularly vulnerable to economic shocks. Strengthening social protection would not only help reduce inequality but also curb household debt, especially for informal loans, which could mitigate financial stability risks. Read the Article F&D MAGAZINE How to Deal with Debt's Downside Mounting debt in developing economies is a growing concern, and international arrangements for rescuing countries from debt distress must be reformed, Anne Krueger writes in F&D magazine. Sri Lanka was one of the first countries with China as a large creditor to reach a point where its debts proved unsustainable, the former IMF first deputy managing director says. It took almost two years for the rest of the international community to work out an agreement that China could support. “There must be a stronger arrangement under which a holdout sovereign creditor will not receive debt service payments until it accepts the same terms as other creditors.” Read the Article Iceland's journey from financial crisis to economic stability demonstrates the power of international cooperation and resilience. Through IMF support, the country established the stable foundation needed for businesses to grow. Today, ventures like Eimverk Distillery, Iceland's first whiskey producer, showcase how this stability enables entrepreneurs to transform local resources into international opportunities. From stability in currency markets to economic diversification, Iceland's 15-year transformation stands as a testament to successful recovery.  MIDDLE EAST AND NORTH AFRICA Call for Submissions: 2025 IMF Youth Challenge in Economics (Credit: JohnnyGreig/iStock Photo) The International Monetary Fund invites postgraduate students from the Middle East and North Africa (MENA) region to participate in the 2025 IMF Youth Challenge in Economics to showcase their research on macroeconomic policy topics relevant to the Middle East and North Africa (MENA) region. This competition aims to encourage innovative thinking and provide a platform for young economists to contribute to the policy dialogue in the MENA region. Selected finalists will be invited to present their work at the IMF-American University in Cairo MENA Research Conference, taking place May 18–19, 2025, in Egypt. Eligibility: Open to MENA nationals enrolled in a master’s or doctoral program in economics or a related field, at any institution worldwide. Submission Requirements: A 3-page research summary on a macroeconomic topic relevant to the MENA region Proof of postgraduate enrollment A faculty recommendation letter Deadline: April 21, 2025 (deadline extended from April 14) Apply here: 2025 IMF Youth Challenge in Economics Weekly Roundup NEW STAFF PAPER Unconventional Monetary Policies in Small Open Economies This new IMF staff paper provides a comprehensive assessment of the macroeconomic and fiscal impact of unconventional monetary tools in small open economies. Authors Jesper Lindé, Marcin Kolasa, and Stefan Laseen undertake a case study of the Swedish Riksbank's asset purchases and negative policy rates from 2015-2019. They find that the Riksbank's unconventional policy measures provided meaningful macroeconomic stimulus to economic activity and inflation, with the dual benefit of reducing overall government debt by about 5 percent of GDP. MARK YOUR CALENDAR APRIL 17, 10:00 AM ET 2025 Spring Meetings Curtain Raiser   Join us virtually on Thursday, April 17, from 10 AM to 10:45 AM ET (2 PM to 2:45 PM GMT) for the 2025 IMF Spring Meetings Curtain Raiser event. IMF Managing Director Kristalina Georgieva will deliver a speech on the outlook for the global economy and policy priorities for member countries. The event will be livestreamed at IMF.org. Thank you 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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