Africa & World Economy

Financial Perils in Check for Now, Eyes Turn to Risk of Market Correction

By Aminu MusaPosted on January 27, 2021Posted in Africa & World EconomyTagged Assets, Capital Market, COVID-19, Financial, Financial stability, IMF, market, VaccinesNo Comments

Prices for stocks, corporate bonds, and other risk assets have risen higher on the news of vaccine rollouts. Financial markets have shrugged off rising COVID-19 cases, betting that continued policy support will offset any bad economic news in the short term and provide a bridge to the future. As the apparent disconnect between exuberant financial markets and the still-lagging economic recovery persists, it raises the specter of a possible market correction should investors reassess the economic outlook or the extent and duration of policy backstop.

What the Continued Global Uncertainty Means for You,

By Joshua OlorunsaiyePosted on January 23, 2021Posted in Africa & World Economy, AgenciesTagged Global Uncertainty, Uncertainty Spillovers, World Uncertainty IndexNo Comments

Global uncertainty reached unprecedented levels at the beginning of the COVID-19 outbreak and remains elevated. The World Uncertainty Index—a quarterly measure of global economic and policy uncertainty covering 143 countries—shows that although uncertainty has come down by about 60 percent from the peak observed at the onset of the COVID-19 pandemic in the first quarter of 2020, it remains about 50 percent above its historical average during the 1996–2010 period.

Why Nations Fail, America Edition

By Sheriffdeen AdeotiPosted on January 19, 2021Posted in Africa & World EconomyTagged America, Biden, Capitol, Nations, TrumNo Comments

As we approach inauguration day, exactly two weeks after the Capitol insurrection, Americans are on edge. About twenty thousand National Guard soldiers will provide security tomorrow; more troops than in Iraq and Afghanistan. Our political situation feels shaky and our institutions fragile. It’s like we’re living in a bad Tom Clancy novel. We couldn’t reach Tom Clancy, so we called up the authors of Why Nations Fail instead. We wanted to figure out if the insurrection is a sign our nation is failing, and, if so, if there’s anything we can do about it.

Legally Speaking, is Digital Money Really Money?

By Adebisi SamuelPosted on January 14, 2021Posted in Africa & World EconomyTagged Asset, Central Bank, Currency, Digital, Law, LegalNo Comments

Countries are moving fast toward creating digital currencies. Or, so we hear from various surveys showing an increasing number of central banks making substantial progress towards having an official digital currency.

But, in fact, close to 80 percent of the world’s central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is not clear.

When Inequality is High, Pandemics Can Fuel Social Unrest

By Joshua OlorunsaiyePosted on December 15, 2020Posted in Africa & World Economy, AgenciesTagged Inequality, Pandemic, Social unrest, Vicious cycleNo Comments

In the months and years following previous pandemics, the countries most affected saw a rise in social unrest. Based on this historical trend, the COVID-19 pandemic could pose a threat to the social fabric in many countries, but these trends do not pre-determine an outcome.

Navigating Capital Flows – An Integrated Approach

By Adebisi SamuelPosted on December 9, 2020Posted in Africa & World EconomyTagged Capital Flows, Capital Market, Exchange Rate, Fiscal Policy, IPFNo Comments

International capital flows provide significant benefits for economic development but can also generate or amplify shocks. This dilemma has long posed challenges for policymakers in many open economies.

While flexible exchange rates can act as a useful shock absorber in the face of capital flow volatility, this mechanism does not always offer sufficient insulation, in particular when access to global capital markets is interrupted or market depth is limited.

Bank lending rates and spreads in EMDEs: Evolution, drivers, and policies

By Aminu MusaPosted on November 28, 2020Posted in Africa & World EconomyTagged developing economies, EMDEs, Emerging Markets, Financial Sector, Lending RateNo Comments

Banks dominate credit intermediation and savings mobilization in most emerging markets and developing economies (EMDEs). As bank lending interest rates and the lending-deposit interest spreads capture the efficiency with which banks allocate society’s savings to its most productive uses, high lending rates and spreads pose a challenge for policy makers in EMDEs: they can affect monetary policy transmission, hinder private investment and job creation, inhibit financial development and inclusion, and ultimately compromise financial stability.

Biden vs. Biden on China

By Joshua OlorunsaiyePosted on November 24, 2020Posted in Africa & World EconomyTagged Biden, China, Trump, United StatesNo Comments

If Biden talked about China in 2020 like he did back in 2000, he might have lost the election. Three-quarters of Americans now have an unfavorable view of the country — up from about a third in the early 2000s. China, which has an economy 12 times larger than it was in 2000, is now a boogeyman. Trade with China may have slashed costs for American consumers and created countless new jobs in various sectors, but — as organized labor warned back in 2000 — it also destroyed huge numbers of blue-collar jobs.

A Long, Uneven and Uncertain Ascent

By Adebisi SamuelPosted on October 24, 2020Posted in Africa & World EconomyTagged COVID-19, employment, Fiscal Policy, Fiscal Stimulus, Growth, IMF, Monetary Policy, PandemicNo Comments

This crisis is far from over. Employment remains well below pre-pandemic levels and the labor market has become more polarized with low-income workers, youth, and women being harder hit. The poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year. The ascent out of this calamity is likely to be long, uneven, and highly uncertain. It is essential that fiscal and monetary policy support are not prematurely withdrawn, as best possible.

China and the Burgeoning African Debt Crisis

By Aminu MusaPosted on September 24, 2020Posted in Africa & World EconomyTagged Africa, Angola, China, COVID-19, Crisis, Debt, Global Financial Crisis, ZambiaNo Comments

Contrary to the swirling rumors on African social media and in the local press about the supposed imminent danger of Chinese asset seizures in Zambia, it’s not the Chinese that are the problem here… it’s bondholders on Wall Street and in The City.