IMF Weekend Read

 

Dear MARIA,   In today's edition, we highlight: The oil market as tensions flare again Europe’s economic gains from financial reform Gold’s growing role in international reserves World Cup statistics OIL MARKET Why A Supply Recovery Is Needed to Prevent More Economic Pain  The closure of the Strait of Hormuz cut off roughly a fifth of global oil supply and created the largest disruption to the oil market in decades. Yet oil prices rose far less than many feared because “energy markets and prompt policy actions bought the global economy time,” Jean-Marc Natal and Azim Sadikov explain in a new blog.   Higher prices curbed demand, especially in Asia, production outside the Gulf increased more than expected, and governments and companies drew down inventories to fill the gap. Together, these shock absorbers helped the global economy weather a supply disruption that exceeded those seen during several previous oil crises.   But as tensions flare again in the Middle East, much of that room to maneuver has been used up. Spare capacity has been deployed, demand has already adjusted, and inventories have been drawn down. Unless stocks are rebuilt and energy supplies become more diversified, the world could be more exposed when the next shock arrives. Read the blog EUROPE Financial Market Reform Could Lift Growth Europe has the savings, talent, and innovative companies to support stronger economic growth. But it needs more effective tools to finance that innovation. Banking and venture capital markets that are more integrated could help channel savings into promising businesses across borders and make it easier for startups to scale up. Our Chart of the Week blog explains how financial market reforms, deeper venture capital markets and greater availability of long-term risk capital could raise the European Union’s GDP by close to 3 percent over the long term, with even larger gains possible when paired with reforms that support innovation, skills, and a stronger business environment. Read the blog GOLD A Growing Reserve Role Gold has become a much larger share of central bank reserves in recent years—but not primarily because central banks have been buying more of it. A new IMF Note finds that the increase largely reflects soaring gold prices rather than large-scale accumulation of physical gold.  Valuation gains can make reserve positions look stronger on paper without increasing the foreign-currency liquidity available in a crisis, the authors argue. Reserve managers should therefore avoid treating higher gold prices as a lasting improvement in reserve adequacy.  Read the note IMF REFRESH Adapting to a Changing World How should countries adapt to a world of repeated shocks and structural transformations? In remarks delivered at the Atlantic Council, Christian Mumssen, the director of the IMF’s Strategy Policy and Review Department, described how a rapid succession of shocks is overlapping with major shifts in demographic, environmental, technological and geopolitical conditions.  “We have, of course, navigated big changes before,” he said. “What’s different today is that these major transformations are all happening at the same time, and they are interacting.” He went on to argue that countries can navigate this evolving landscape by focusing on policies that preserve macroeconomic stability, enhance resilience, manage uncertainty, and enable private sector growth.  As the world changes, the IMF has embarked on a comprehensive update and upgrade of its toolkit and policy frameworks spanning economic surveillance, lending programs, assessment of debt sustainability for low-income countries, financial stability, and external balances. This will ensure it can support its members as they navigate a shock-prone and transforming world. Read the speech F&D MAGAZINE A Policy Role for Economists Federal Reserve Chairman Kevin Warsh last week announced that Harvard economics professor Karen Dynan would be among 15 men and women to lead a sweeping review of how the US central bank conducts policy operations. The June 2025 issue of Finance & Development magazine featured an article by Dynan on how economists could reclaim a policy role. Acknowledging missteps, listening well, defending data, and avoiding jargon would help the profession engage, she wrote.  Read the F&D article WORLD CUP Tournament Statistics After 103 matches, the World Cup final between Spain and Argentina will take place on Sunday. Whoever you’re supporting, explore the IMF Statistics Department’s podcast series, How Do You Measure That?, and discover how everything from tournament attendance and prize money to ticket sales and betting is measured. Listen to the podcast 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.  Nicholas Owen Senior Editor | IMF Weekend Read  NOwen@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