Global ETF News Older than One Year
Construction Activity Can Signal When Credit Booms Go Wrong
February 12, 2020--No global real estate market despite higher price synchronisation and growing role of international investors, central banks find.
In Spain, private sector credit as a share of GDP almost doubled between 2000 and 2007. This increase was accompanied by a boom in housing prices-which doubled in real terms over the same period. The economy as a whole also grew at a record pace.
But then in 2008, Spain's credit bubble burst, and with it came loan defaults, bank failures, and a prolonged economic slowdown.
A less-noticed development in Spain was in the construction sector, where employment grew by an astounding 47 percent, compared to the economy-wide increase of 27 percent.
view the IMF Staff Discussion Note-Discerning Good from Bad Credit Booms:The Role of Construction
Source: IMF
South Africa: Bridging the Income Divide
February 7, 2020--South Africa suffers among the highest levels of inequality in the world. As our Chart of the Week shows, the country's wealth is concentrated in the upper levels of society. The top 20 percent of the population holds over 68 percent of income, while the poorest 40 percent possess only 7 percent of income.
That inequality isn't only seen in income distribution; it also manifests itself in unequal access to opportunities-education, health, and jobs-and regional disparities. Meanwhile, low growth and rising unemployment have perpetuated inequality. High unemployment is a major factor. South Africa's unemployment rate is significantly higher than other emerging markets, and nearly 60 percent of the country's youth (aged 15-24) are unemployed.
Source: BIS
Interest Rate Controls, Capital Flow Restrictions, and Other Potentially Costly Financial Market Regulatory Tools
February 6, 2020--With the surge in public debt in the wake of the global financial crisis, financial repression-administrative restrictions on interest rates, credit allocation, capital movements, and other financial operations-has come back on the agenda.
In our recent working paper, we argue that countries would be better-off without financial repression. By distorting market incentives and signals, financial repression induces losses from inefficiency and rent-seeking that are not easily quantified.
Source: IMF
Growth and economic well-being: third quarter 2019, OECD Household income growth continues to outpace GDP growth
February 6, 2020--Growth in real Household income per capita provides a better picture of changes in households' economic well-being than real GDP growth per capita, which it outpaced for the fourth straight quarter in the third quarter of 2019.
Growth in real household income per capita in the OECD area increased slightly to 0.5%, while GDP growth per capita was stable at 0.3%.
Source: OECD
Assessing Climate-Change Risk by Stress Testing for Financial Resilience
February 5, 2020--As society braces for the potential havoc a changing climate could induce, it's vital to gauge the range of shocks that the economy may soon endure. One way to quantify the effects of the potentially systemic shocks that could ripple through the financial system is to administer "stress tests"-a well-designed analytical process that has, for decades, been used by the IMF, World Bank and financial supervisors for detailed scenario planning to prevent future financial crises.
Measuring the Risks
Stress testing for financial resilience to climate risk stands out as an important new tool in a new IMF staff paper. Climate stress testing measures ways in which a climate crisis would affect the financial system, both globally and on a country-by-country level.
Source: IMF
Libra as a currency board: are the risks too great?
January 27, 2020--The Libra Association claims it will be analogous to a currency board regime, but they have overlooked the problems of monetary management that come with it
Facebook's Libra project to create a digital currency has had a difficult start, with criticism from authorities, and the departure of some founding members.
Libra's critics have mostly focused on risks associated with money laundering, financial stability and data privacy. But the project also raises questions about monetary management.
Libra's promotors present it as a payment system innovation. It is, however, also a new monetary system, because it implies the creation of a new currency-at least in the project's initial form-and because the Libra Association itself has characterised its approach as "similar to the way in which currency boards (eg of Hong Kong) have operated'.
Currency boards are a type of monetary system in which the issuer balances its liabilities with assets in the form of foreign currency.
Source: bruegel.org
Self-Service Blockchain Track and Trace Platform for Businesses Launched
January 23, 3030--Today, consumers are more concerned than ever about the social and environmental impacts of the products they purchase. Almost 90% would like big brands to help them be more environmentally friendly and ethical. Blockchain technology offers a way to showcase sustainability and environmentally friendly practices, but private blockchains do not address rising customer transparency demands.
Source: World Economic Forum (WEF)
Tentative Stabilization, Sluggish Recovery?
January 20, 2020--In the October World Economic Outlook, we described the global economy as in a synchronized slowdown, with escalating downside risks that could further derail growth. Since then, some risks have partially receded with the announcement of a US-China Phase I trade deal and lower likelihood of a no-deal Brexit.
Monetary policy has continued to support growth and buoyant financial conditions. With these developments, there are now tentative signs that global growth may be stabilizing, though at subdued levels.
In this update to the World Economic Outlook, we project global growth to increase modestly from 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent in 2021. The slight downward revision of 0.1 percent for 2019 and 2020, and 0.2 percent for 2021, is owed largely to downward revisions for India. The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels.
view the IMF World Economic Outlook, January 2020 Tentative Stabilization, Sluggish Recovery?
Source: IMF
2019 in Review: The Global Economy Explained in 5 Charts
January 18, 2019--Global growth this year recorded its weakest pace since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors.
Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already under way.
Further pressures came from country-specific weakness in large emerging market economies such as Brazil, India, Mexico, and Russia. Worsening macroeconomic stress related to tighter financial conditions (Argentina), geopolitical tensions (Iran), and social unrest (Venezuela, Libya, Yemen) rounded out the difficult picture.
Source: IMF
IMF Staff Discussion Note-Finance and Inequality
January 17, 2020--Summary:
The study examines empirical relationships between income inequality and three features of finance: depth (financial sector size relative to the economy), inclusion (access to and use of financial services by individuals and firms), and stability (absence of financial distress).
Using new data covering a wide range of countries, the analysis finds that the financial sector can play a role in reducing inequality, complementing redistributive fiscal policy. By expanding the provision of financial services to low-income households and small businesses, it can serve as a powerful lever in helping create a more inclusive society but-if not well managed-it can amplify inequalities.
view the IMF Staff Discussion Note-Finance and Inequality
Source: IMF
