IMF Weekend Read

 

Dear MARIA,   In today's edition, we highlight: Stocks and Bonds Are More in Step Pivoting China’s Economy to Consumption-led Growth How South Africa Can Unlock its Economic Potential Graduate Student Award: IMF MENA Research Conference How Does the IMF Finance Itself? FINANCIAL SECTOR Stock-Bond Diversification Offers Less Protection From Market Selloffs New IMF analysis shows that the traditional strategy of diversifying investments by holding both stocks and bonds has become less effective. Historically, the two asset classes have tended to move in opposite directions: when stock markets fell, investors often bought bonds, which then rose in value and helped cushion losses on their equity holdings. This inverse relationship underpinned widely used portfolios, such as the classic 60/40 mix.   However, since about 2020, stocks and bonds have increasingly faced simultaneous price drops during sharp market selloffs, reducing the protective value of bonds. This change reflects shifting dynamics in fixed-income markets, including inflation pressures, rising sovereign bond issuance, and diminished bond holdings by central banks.   The breakdown in the stock-bond relationship means that traditional diversification may offer very limited protection in turbulent markets. Investors and policymakers may need to rethink risk management, explore alternative assets, and strengthen fiscal and monetary frameworks to maintain financial stability. Read the Blog COUNTRY FOCUS How China’s Economy Can Pivot to Consumption-led Growth China’s economy has remained resilient despite multiple shocks. Last year, growth reached 5 percent and is projected at 4.5 percent in 2026. Yet this resilience masks deeper challenges. A prolonged property-market slump and weak consumer spending has led to deflationary pressures and left growth overly dependent on exports. As excessive reliance on exports becomes less sustainable, boosting consumption has emerged as China’s central policy priority.   A comprehensive macroeconomic policy package centered on additional fiscal stimulus, accommodative monetary policy, and greater exchange rate flexibility would help lift domestic demand. There is also room to rebalance public spending by shifting from industrial policy support and investment towards stronger social protection. In other words, if people could rely more on public healthcare, pensions, and unemployment benefits, they would have more confidence to increase their spending on other things.   Complementary reforms—such as easing hukou restrictions and increasing tax progressivity—would also reduce excess saving and boost consumption. Together, these measures could lift the consumption‑to‑GDP ratio by about 4 percentage points over five years, supporting more balanced and resilient growth in China and the world. Read the Article COUNTRY FOCUS Unlocking South Africa's Economic Potential South Africa demonstrated remarkable economic resilience last year by maintaining macroeconomic stability in the face of global turbulence and keeping inflation under control. And yet the country still faces relatively slow economic growth, high public debt, and significant unemployment, especially among young people. There are also concerns about the reliability of key infrastructure, such as electricity, freight rail, ports, and water.   So, what can policymakers do? To help unlock South Africa’s vast economic potential, policy actions will need to focus on low and steady inflation, a sound financial system, and healthy government finances. This will need to be coupled with fundamental reforms to support stronger economic growth. To learn more, read our Country Focus interview with Delia Velculescu, the IMF’s mission chief for South Africa. Read the Article MIDDLE EAST & NORTH AFRICA 2026 IMF MENA Research Conference: Call for Papers and Graduate Student Award Are you a graduate student researching economic issues in MENA countries? If so, here’s your chance to bring your research into IMF policy and academic discourse.   The IMF is accepting paper submissions for the 2026 MENA Research Conference in Rabat, Morocco. Selected presenters will have their travel expenses and accommodation covered. Moreover, a monetary prize will be awarded for the top submission.   The conference will explore how the region can respond to external shocks through macroeconomic and financial policies; harness digitalization and AI to boost productivity; and invest in energy and infrastructure. The deadline for paper submission is March 31st. Learn More F&D MAGAZINE How Does the IMF Finance Itself? (Credit: iStock/Andrii Yalanskyi) The IMF may be best known for providing loans to crisis-hit countries. But what about its own finances? How does it fund its critical functions and cover its running costs?   Let’s remember that the IMF is not only a global financial firefighter. “It’s also a source of essential policy advice and helps its member countries bring about the right macroeconomic conditions for boosting growth, creating jobs, and lifting living standards,” writes Anna Postelnyak in F&D’s Back to Basics explainer series.   This unique mandate comes with a unique financial structure. “Think of it as a credit union for countries—with a lending capacity of nearly $1 trillion,” she notes. Read the Article SURVEY Asia-Pacific Perspectives: Survey on the IMF’s Work Do you live in the Asia Pacific region? If so, do you have a few minutes to share your views on the IMF’s work and communications in your country or in the region? Take our short survey by clicking the link below. Your feedback will help us improve our engagement ahead of the 2026 Annual Meetings in Thailand. After completing the survey, you will have the option to sign up for a free subscription to the IMF’s Finance & Development (F&D) magazine. Take the Survey 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.  Noha Elbadawy  Editor | IMF Weekend Read   nelbadawy@IMF.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431