Research and Analytics
Research and Analytics
Asia alone has roughly two billion internet users, with considerable room to grow. Asia’s advanced and emerging market economies have several locally headquartered tech giants—including Alibaba, JD.com, Tencent, Rakuten—and host foreign tech giants such as Facebook. A new set of agreed global tax reforms will change where these tech giants and other global giants pay taxes.
If you’re Jeff Bezos, you’re not going to have some random dude manage your money and hope for the best. You’re not gonna open up a Robinhood account and risk it all on meme stocks like Gamestop. You’re going to hire the type of investor who has a PhD in mathematics and drives a Bugatti; a go-getter who wakes up with a turmeric latte and pores over satellite images of factories in Asia to predict the earnings of some 3D printing company most of us have never heard of. We’re talking about the best of the best in finance.
2020 was a year of extremes. Travel all but ceased for a period. Oil prices wildly fluctuated. Trade in medical products reached new heights. Household spending shifted to consumer goods rather than services and savings ballooned as people stayed home amid a global shutdown.
In our latest External Sector Report we found that the global reaction to the pandemic further widened global current account balances—the sum of absolute deficits and surpluses among all countries—from 2.8 percent of world GDP in 2019 to 3.2 percent of GDP in 2020. Those balances are set to widen further as the pandemic continues to rage in much of the world.
The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed.
Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade for advanced economies, and a more modest one for emerging market and developing economies.
Some central banks are currently debating whether to tighten monetary policy to fight inflationary pressures, after having eased decisively in response to the COVID-19 shock. In making such decisions, central bankers have to consider how much businesses and consumers will respond. The structure of the financial system and the future expectations of consumers and businesses are key drivers of how effective monetary policy actions will be. Yet there’s another, overlooked, driver: corporate market power.
Rising world food prices for producers are making headlines and causing concerns among the public. The most recent data show a moderation in consumer food price inflation globally, but as we explain below, that could change in the coming months. This would only add to the high prices that consumers in many countries already lived through last year.
High public debt levels and the uncertain outlook for international aid limit the scope for growth through large public investment programs. The private sector will have to play more of a role in economic development if countries are to enjoy a strong recovery and avoid economic stagnation. Heads of state from Africa made this one of their resounding messages during the recent summit on “Financing African Economies” held in Paris in May.
Many countries have stepped up in the global fight against the pandemic, as have institutions such as the World Health Organization, the World Bank, Gavi (the Global Alliance for Vaccines and Immunization), the African Union, and others.
Yet, more than a year into the COVID-19 crisis, new cases worldwide are higher than ever. Urgent action is needed to arrest the rising human toll and economic strain.
IMF is pleased to announce these free online courses on the edX platform starting in May, including its new course on Inclusive Growth (IGx). All courses have a single deadline at the end of dates below, many ending on August 31 and some ending April 15, 2022.
While it’s had some ups and downs, the stock market has soared to historic heights in recent years. For many, that’s great news: it’s a sign that the economy and their retirement accounts are doing really well. For Jan Eeckhout, however, the booming stock market is a sign that there’s something deeply wrong with the economy.
Sure, the economist says, he has a retirement account with stocks, and he personally benefits from the ongoing bonanza on stock exchanges. But the rocket ride of the stock market is powered by the exploding profits of increasingly powerful corporations. Their increasingly ridiculous profits, he says, are eating the income of the vast bulk of workers and hurting the overall economy. That notion is the central thesis of his forthcoming book, The Profit Paradox: How Thriving Firms Threaten the Future of Work.
