The International Monetary Fund (IMF) has had an extremely busy year, thanks to the COVID-19 pandemic. The COVID-19 pandemic has caused the IMF to respond to situations faster than ever before, and with new and innovative responses. The IMF is made up of 190 countries, including the United States, China, and the U.K., which are all original members. In the early weeks of the pandemic, the IMF saw more than 100 countries request their financial assistance, which led to the approval of $8.7 billion in emergency financing.
globalEDGE Blog - By Tag: international-monetary-fund
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This past November, I published a blog post regarding the looming threat of rising global debt, which reached $255 trillion by year’s end. The blog discussed the issue of corporate debt default rates being susceptible to sky-rocketing in the event of a recession, which was supported by a report from the International Monetary Fund (IMF). As we stand today, two months into the coronavirus outbreak, this belief is becoming actualized. With factories being halted, stores shut down, and consumer spending down significantly, many countries are expected to face major economical ramifications. In the U.S., Goldman Sachs analysts already project that second-quarter 2020 GDP will decrease by about 25%, which if true, would mean the largest drop ever recorded in U.S. history by a 15% margin.
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According to a report released by the Institute of International Finance on November 14th, global debt reached a staggering high of $250 trillion, rising $7.5 trillion in the first half of 2019. The expectation is that global debt will reach $255 trillion by the end of 2019. The primary contributors to this statistic are the U.S. and China, who account for 60% of the increase.
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Since the financial crisis in 2008, Germany has been the leading economy in the European Union. Due to turmoil in the global economy and some negative internal forces, the historically strong and stable German economy is expected to experience low growth in 2019.
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After recent meetings in Switzerland, the International Monetary Fund cut forecasts of global economic growth in 2019 to 3.5%. This is down from a projected 3.7% released in October and 3.9% in July. In past meetings, the organization characterized growth as “plateauing” but now has come to the agreement that the “global expansion has weakened”.
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In the 2019 World Economic Forum in Davos, Switzerland, representatives from every nation and from the world’s largest businesses have gathered together to discuss new developments, problems, and initiatives around the world. The first two days of this year’s summit featured an address from Brazil’s recently elected president Jair Bolsonaro, discussion on shale oil by John Hess of Hess Corporation, and discussion of the IMF’s lower prospects on 2019’s economic growth.
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Last week the globalEDGE blog looked at how U.S. monetary policy, specifically with respect to inflation rates, was impacting debt markets in emerging economies. Today’s blog post continues the discussion about the implications of the U.S. Federal Reserve’s inflation policies and also provides a survey of currency inflation rates across the world.
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Recent reports published by the World Trade Organization (WTO) have forecast a remarkable recovery in global merchandise trade for 2017. Last year, global merchandise trade failed to reach its projected growth of 1.7%, ending the year with a growth of 1.3%, marking 2016 with the slowest growth since the financial crisis. Among other indicators, WTO Director General Roberto Azevedo blamed the poor performance in 2016 on the slowdown in emerging markets, stating that imports hardly grew in volume terms. However, the six-year trend of disappointing growth may be coming to an end as the world economy gradually begins to regain momentum. In a report released on April 12th, the WTO predicts a 2.4% growth in global merchandise trade by the end of this year, stating that, for the first time in several years all regions of the world economy should experience a synchronized upturn in 2017.
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Greece has been in a state of economic uncertainty and crippling levels of debt since the 2008 financial crisis. Recently though, it’s been estimated that the debt levels will skyrocket and result in Greece owing nearly triple its annual output. Save for any substantial debt relief, the IMF estimates an EU-headed aid program of 86 billion euros will be needed to temporarily keep Greece afloat.
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China has been one of the largest economies in the world for many years, however its place near the top has been impacted in recent times because of its currency. The yuan, the national currency for China, has been depreciating in value and will continue to do so into the first quarter of 2017. This decline has been the biggest for the Chinese yuan in the last two decades. For the past 14 consecutive months, money has been leaving China, causing a slump in the nation’s central banks. About 1.1 trillion dollars of foreign currency has vacated the country since China devalued the yuan in 2015.
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The International Monetary Fund has lowered its global outlook for the 2016-2017 year, despite a fairly strong performance during 2016. The U.K.’s vote to leave the European Union has led to uncertainty macro economically and may lead to a negative impact due to damaging investor confidence and market sentiment. The IMF is projecting that the advanced economies will hold steady with growth at 1.8% for both 2016 and 2017, and the overall global growth is projected to increase by 3.1% in 2016, 3.4% in 2017.
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By 2050, the world’s population will have grown by 32%, but the working age population (ages 15-64) will have only expanded by 26%. Amongst the more advanced economies, by 2050, the working age population will have shrunk 26% in South Korea, 23% in both Germany and Italy, and 28% in Japan. India’s population is expected to grow by 33%, however Russia and China’s working population will contract by 21%.