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The Impact of Fiscal Consolidation and Structural Reforms on Growth in Japan-IMF Working paper
January 13, 2011--With Japan’s public debt reaching historical levels, the need for fiscal consolidation and structural reforms have increased. As fiscal consolidation will require a sustained and large adjustment in the fiscal balance, its growth effect is a concern particularly for the short run.
This paper uses the IMF’s Global Integrated Monetary and Fiscal Model to analyze the growth impact of fiscal consolidation and structural reforms. Although fiscal consolidation has short-term costs, the potential long-term benefits are considerable, and reforms that raise potential growth could support consolidation. Simulations show that the external environment also matters but domestic policies should be the priority.
view paper-The Impact of Fiscal Consolidation and Structural Reforms on Growth in Japan
Source: IMF
China eases corporate rules on renminbi
January 13, 2011--China took a further step towards increasing its currency’s global role, allowing domestic companies to move renminbi offshore for investment purposes.
The shift came as the People’s Bank of China allowed the currency’s daily trading reference point to strengthen through the Rmb6.6 per dollar level for the first time on Thursday, a day after Tim Geithner, US Treasury secretary, reiterated concerns about China’s currency policy.
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Source: FT.com
Gold ETF Flows to Jump in India on Increased Demand, Fund Managers Predict
January 11, 2011--Assets held in gold-backed exchange traded funds in India may surge to a record for a second year as demand gains, investor awareness spreads and more funds are introduced, according to managers in the largest bullion user.
“It’s definitely possible to double,” said Rajan Mehta, executive director at Benchmark Asset Management Co., which runs the nation’s biggest gold exchange-traded fund, or ETF. Funds under management in Indian gold ETFs climbed to a record 35.2 billion rupees ($780 million) last year from 13.5 billion rupees in 2009, according to Association of Mutual Funds in India data.
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Source: Bloomberg
Chinese city allows personal investing abroad
January 10, 2011--A Chinese city celebrated for its cut-throat entrepreneurs has launched a pilot project allowing individuals to invest directly overseas in a move that could signal greater opening of the country’s tightly controlled capital account.
The eastern city of Wenzhou will allow individual residents to spend up to $200m a year in offshore investments, according to an announcement on the city government’s website.
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Source: FT.com
India's financial globalisation
January 7, 2011--Summary: India embarked on reintegration with the world economy in the early 1990s. At first, a certain limited opening took place emphasising equity flows by certain kinds of foreign investors. This opening has had myriad interesting implications in terms of both microeconomics and macroeconomics.
A dynamic process of change in the economy and in economic policy then came about, with a co-evolution between the system of capital controls, macroeconomic policy, and the internationalisation of firms including the emergence of Indian multinationals.Through this process, de facto openness has risen sharply. De facto openness has implied a loss of monetary policy autonomy when exchange rate pegging was attempted. The exchange rate regime has evolved towards greater flexibility.
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Source: IMF
Thai bourse licenses Classic Gold Futures Co.,Ltd. as gold broker
January 6, 2011--The Thailand Futures Exchange (TFEX) has confirmed Classic Gold Futures Co., Ltd. as its sixth official gold broker. The firm will commence trading on January 10.Classic Gold Futures has met all requirements of TFEX, Thailand Clearing House Co., Ltd., and the Securities and Exchange Commission, TFEX Managing Director Kesara Manchusree reported.
Classic Gold Futures Co., Ltd. is a subsidiary of Classic Gold Co., Ltd., which is more commonly known as Chiab Seng Heng. The parent company, which has been operating for more than 25 years, is recognized as a leading importer-exporter of bullion, gold ornaments and other jewelry.
“Since its conception, gold futures have been well-received by investors, and TFEX has thus continued to expand the investor base for this instrument. Classic Gold Futures Co., Ltd., as a new member of TFEX, will help develop the country’s gold futures trade and make it another successful product in the market”, said Ms.Kesara.
Food price inflation spirals in India
January 6, 2011--Indian food prices have hit their highest level in more than a year, rising at an annual rate of 18 per cent in what economists have taken as a worrying sign that the impact of surging commodity prices is hitting the broader economy.
Food inflation in India is being driven by many of the same factors that have pushed the price of global commodities like wheat and barley to record highs. It also highlights rising fears of a global prices in the developing world, with the UN’s Food and Agricultural Organisation warning this week that global prices had surpassed levels seen during the 2007-08 crisis
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Source: FT.com
Asian Financial Integration: Trends and Interruptions -IMF Working Paper
January 5, 2011--The paper compares trends in financial integration within Asia with those in industrialized countries and other regional groups. Declines in cross-country dispersion in equity returns and interest rates suggest increased Asian integration, with the process interrupted by crises and global volatility.
Cross-border equity and bond holdings have also increased, but Asian countries remain considerably more financially integrated with major countries outside the region than with those within the region. The paper also discusses whether potential benefits of regional financial integration, such as increased risk-sharing and stability of the investor base, have materialized.
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Source: IMF
Inflation, Capital Inflows: Asia and the Challenges of Success in 2011
Asian growth expected to slow to more sustainable levels
Future risks posed by financial spillovers and possible slowing of global economy
Exchange rate flexibility, macroprudential policies needed to manage capital inflows
January 5, 2011--Asia—including the Association of Southeast Asian Nations, industrial and Emerging Asia—is expected to post an average of 7 percent growth in 2011, one percentage point slower than last year, but the region will still need to continue managing its exit from stimulus programs and the large capital inflows pouring into the region, says one of the IMF’s leading economists.
In a wide-ranging interview with IMF Survey online looking at the prospects for the world’s fastest growing region, the head of the IMF’s Asia and Pacific Department, Anoop Singh, warned that the strength of Asia’s growth could lead to the threat of inflation.
Asia also had to contend with the risks posed by possibly weaker global economic growth and financial spillovers from advanced economies, suggested Singh, but he predicted that the region’s economic importance would continue to increase. Following is the text of the interview:
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Source: IMF
ListSearchPrint China's Futures Market Turnover Tops CNY 300 Trillion
January 5,2011--China's futures market set a new turnover record in 2010 with CNY 308.665 trillion traded, 2.3 times larger than 2009's futures market turnover. Industry insiders pointed out that the listing of stock index futures and large capital inflows into the commodity futures market were the direct driving forces behind the large rise in futures market
turnover in 2010. Growth is expected to slow in 2011 due to price controls and other related policies. 3.133 billion futures contracts were traded in China in 2010.
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Source: Mondovisione
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