Over the last six months, global financial stability risks increased as a result of the following developments: First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference. Second, falling commodity prices and concerns about China’s economy have put…
Wednesday, 13 April 2016 00:00

Act Now, Act Together

Public finances have had a rough year. A new reality is emerging. Against this backdrop, countries need to act now to boost growth and build resilience. They must also be prepared to act together to fend off global risks.   Worsening public finances The April 2016 Fiscal Monitor shows that public debt continues to rise in every corner of the…
Wednesday, 13 April 2016 00:00

US 1Q16 GDP Growth: 0.1% Or 1.1%?

I recently wrote an article talking about US GDP growth expectations for 1Q16 in accordance with the GDPNow model from the Federal Reserve Bank of Atlanta. According to the latest forecast by the model (April 8, 2016), US GDP growth for 1Q16 is likely to be 0.1% with growth expectations having slumped significantly in the recent past as indicated by…
The leading narrative in the foreign exchange markets is told and re-told to explain how the Japanese yen has surged this year despite an ever wilder monetary experiment pursued by the Abe government. The story seems plausible to many, and thus is deeply challenging for the backers of sound money principles. The financial TV commentators tell us that the yen…
Tuesday, 12 April 2016 00:00

Global Growth: Too Slow for Too Long

This article was first published in the iMF Direct Blog By Maurice Obstfeld Global growth continues, but at an increasingly disappointing pace that leaves the world economy more exposed to negative risks. Growth has been too slow for too long. The new World Economic Outlook released today anticipates a slight acceleration in growth this year, from 3.1 to 3.2 percent,…
This article was first published in the iMF Direct Blog By Jose Viñals, Simon Gray, and Kelly Eckhold   We support the introduction of negative policy rates by some central banks given the significant risks we see to the outlook for growth and inflation. Such bold policy action is unprecedented, and its effects over time will vary among countries. There have…
I have opined in the past that expansionary monetary policies will do little for China and the economy needs gradual transformation from largely investment and production oriented economy to an increasingly consumption based economy. The chart of the day shows investment as a percentage of GDP for China, Asian Tigers and the United States of America. Clearly, China’s investment as…
In several of my recent articles, I have discussed global economic indicators that point to meaningful slowdown in the world economy. I wrote today on the GDPNow indicator that estimates US GDP growth for 1Q16 at 0.1%. While China’s PMI has improved in March 2016, it is too early to conclude that the country is on the path to sustainable…
The equity markets trending higher is a function of several factors and some of the major factors includes GDP growth trend, corporate earnings trend, inflation, geo-political factors and the liquidity factor. Since the financial crisis of 2008-09, the fundamental factor of liquidity has played an important role is supporting asset markets globally and it includes equities. This article discusses if…
According to the GDPNow indicator from the Federal Reserve Bank of Atlanta, US GDP growth for 1Q16 is estimated at 0.1%. If this holds true, the economy has witnessed a sharp slowdown in March 2016 as is evident from the GDPNow estimate chart below.     It is important to mention here that in the last four quarters, the average…