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From intro to the WEO: The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000–19) average of 3.8 percent. Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and […]

I have a confession to make in being on board "team transitory", or the belief that the recent (global) increase in inflation is due to largely temporary factors. As these factors fade, we are set to resume the previous economic environment of relatively benign inflation. On the demand side, these temporary factors include increased demand for consumer goods as people stayed more at home due to the pandemic. Economic stimulus provided by rich countries to their citizens further fueled this demand. On the supply side, disruptions in goods production, transportation and retail also arose due to the pandemic. More demand + less supply = inflation. Meanwhile, critics of the idea that high inflation is transitory argue that there have been changes in the world economy which contradict the transitory idea such as the emergence of a major war on the European continent--the first since the end of WWII--causing strains in the availability of commodities like energy and grains. Also, prices of not only goods but also services should be factored in since the latter have increased, too. In other words, inflation is becoming entrenched and is not a temporary phenomenon. Little-noticed in this debate is the International Monetary Fund (IMF) weighing in recently with its most recent take on the matter. According to the IMF, there were longstanding economic phenomena well underway before the pandemic that point to lower inflation whose momentum will be very difficult to overcome. These include: Total factor productivity falling significantly, which lowers economic output;Demographic changes resulting in fewer persons of working age (and more retirees), which also reduces economic output;For developed countries at least, inflows of capital from developing countries in search of more secure returns. While there too are factors pushing up rates such as running sizable national budget deficits (that have to be funded by offering higher returns to lenders), the overall picture in the developed world is of declining rates, on the balance. Here is another IMF chart:  Absent some unforeseen modern-day productivity boom or baby boom, you would generally expect rates to trend downward in the developed countries. As they become older--like China whose population is already falling outright--developing countries should follow the same path. Add in other factors the IMF found also lead to lower rates such as elevated and rising inequality--rich people tend to save more and spend less--as well as the decreasing labor share of income--leaving workers with less disposable income--and the picture for rate moderation is compelling. On this matter at least, I think this IMF research is spot on, with some caveats. We are not quite sure when current (transitory) inflation pressures let up precisely, but they will eventually be swamped by stronger factors favoring lower rates. Aging and diminished productivity along with a handful of other factors will lead us back to a low rate economic environment once more. You have to be brave to bet otherwise.

Theme[1] Four critical developments in the global economy with profound implications require urgent changes at the IMF: (1) the increasing relevance of the global demand for liquid assets evident in recent crises, with the concomitant fragilities that this brings about, eg, global liquidity shocks; (2) record levels of sovereign debt with important increases in domestic […]
La entrada Urgent: the IMF must reform se publicó primero en Elcano Royal Institute.

This week we're focusing on a new book about IMF lending. The IMF – the International Monetary Fund – exists, among other things, to provide policy advice and financial support to governments facing economic difficulties. But are its programmes effective?

More upbeat than WSJ April survey mean: Figure 1: GDP (bold black), April WSJ survey (light blue), GDPNow (4/15) (red square), NY Fed (light green square), St. Louis Fed (blue inverted triangle), IMF April 2024 WEO (chartreuse triangles), all in bn.Ch.2017$ SAAR. Source BEA via FRED, Philadelphia Fed, Atlanta Fed, NY Fed, St. Louis Fed […]

The IMF publishes a Fiscal Monitor report twice a year about levels of spending and taxes around the world. The April 2024 report, subtitles “Fiscal Policy in the Great Election Year,” contains some warnings about the size of US budget deficits. For context, here a table with fiscal balances for high-income countries, with actual data … Continue reading The IMF Warns about US Budget Deficits
The post The IMF Warns about US Budget Deficits first appeared on Conversable Economist.

The IMF released its latest World Economic Outlook and associated forecast tables overnight. There is no reason to think the IMF is any better as a forecaster than anyone else (ie not very good at all) but they do look at a bunch of advanced countries all at the same time, against a common global … Continue reading A few snippets from the IMF WEO

If ever a country needed an IMF economic program to stabilize its economy, it has to be Recep Erdogan's Turkey. It is that years of Erdogan's erratic economic policy management has considerably undermined both domestic and international economic confidence.
The post It Is Time for the IMF in Turkey appeared first on American Enterprise Institute - AEI.

The IMF said officials need to have the "courage and determination" to push forward on CBDCs.

China's Belt and Road Initiative, which is celebrating its 10th anniversary this week, has now advanced more than US$330 billion, which is about 80% of the lending of the World Bank over that period. The ...

How can progressive industrial strategies deliver cross-border synergies? How can social justice be hard-wired into their design? How can industrial policy be designed to align with countries' broader economic strategies?
Der Beitrag Progressive Economics Network Meetings During IMF Spring Meetings in Washington, D.C. erschien zuerst auf Das Progressive Zentrum.

Fossil fuels benefited from record subsidies of $13m (£10.3m) a minute in 2022, according to the International Monetary Fund, despite being the primary cause of the climate crisis.The IMF analysis found the total subsidies for oil, gas and coal in 2022 were $7tn (£5.5tn). That is equivalent to 7% of global GDP and almost double what the world spends on education.So, what should we in Britain do about this? Well, first, perhaps see how much we in Britain are contributing to the problem. The numbers are available as a spreadsheet here. We'll not claim to have been exhaustive in our reading but we think that the IMF is claiming a £1.7 billion direct subsidy to fossil fuels in the UK. Which is a triviality. Either in the context of the global numbers the IMF is presenting us with or in the context of the UK economy. It's the indirect numbers that actually make up by far the bulk here. And the IMF calculates those by insisting that fossil fuel use should cover all externalities of its use plus whatever the VAT rate is on top. Anything less than that is a subsidy.Well, if we take that straight then of course subsidies to renewables are vastly larger than normally claimed. The lower domestic energy VAT rate applies there, no? But we can also look at the detail of their claim that the UK has indirect subsidies on petrol and diesel. Page 14 here. They are counting £tens of billions of fossil fuel subsidies there. But close examination shows that to be unwarranted. In fact, we'd say wrong. Because the effects specific to fossil fuels - pollution etc - are entirely and fully covered. The parts that aren't are congestion and road damage. But if we all switched to EVs tomorrow then those two would be the same - higher in fact, given greater car weights. So that externality is not a subsidy to fossil fuels but to autonomous transport. Really shouldn't be included here at all.Actual close examination shows that we in Britain don't subsidise fossil fuels above anything but the level of utmost triviality. Which is presumably why the Guardian didn't give us the national numbers, only the global.

It was one too many mentions of Equatorial Guinea that prompted me to pull together this very quick follow-up to my post yesterday showing some snippets from the newly-released IMF WEO. For my tastes, these comparisons of forecast growth in real GDP per capita for New Zealand and the group of advanced countries are most … Continue reading GDP and GDP pc: where does NZ rank in the IMF numbers?

Those with seats at the table of the international financial institutions, Jayati Ghosh writes, cling to their power.

Alex Gladstein on how "monetary colonialism" has crippled the Third World