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Dear Colleague,
In today’s edition, we spotlight global food prices, the economic benefits for Latin America of Venezuelan migration, Daniel Yergin on the energy transition, Seema Jayachandran on women’s lives, foreign investment, public debt, Europe’s house prices, fintech and remittances, and much more.
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Why Countries Must Cooperate on Carbon Prices
(FOOD AND AGRICULTURE ORGANIZATION/LUIS TATO)
Food prices, which reached a record earlier this year, have increased food insecurity and fanned social tensions. They have also strained the budgets of governments struggling with rising food import bills and diminished capacity to fund social protection for the most vulnerable.
Weather, war and material costs are the main factors raising prices, the IMF’s Christian Bogmans, Andrea Pescatori and Ervin Prifti write in a blog, based on a special feature box in the latest World Economic Outlook, published in October.
To defend against new price surges and allow food and fertilizer to flow to those who need it most, the authors say it is vital that international trade remains free.
The Black Sea grain corridor has facilitated cereal exports from Ukraine and brought down prices to pre-invasion levels, mitigating global hunger.
“It is important that there’s also global access to fertilizers, by eliminating trade barriers that are limiting global supply, either directly or as a by-product of the international sanctions imposed on Russia.”
Read the special feature for more analysis of food prices in the latest World Economic Outlook.
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(ADOBE STOCK/HUGOALX)
More than 7 million Venezuelans have fled their country’s collapsing economy since 2015, with 6 million settling in other Latin American countries. In a Country Focus article, the IMF’s Jaime Guajardo and co-authors say the region’s largest refugee episode in history has the potential to increase GDP in host countries by up to 4.5 percentage points by 2030.
The analysis published in a staff paper this week identifies large medium-term growth gains resulting from an increase in the labor force and better alignment of migrants’ skills with jobs. These gains are greater for countries that receive larger and more educated migrant flows relative to the domestic population.
With the right support and integration policies, migration from Venezuela has the potential to increase real GDP in Peru, Colombia, Ecuador, and Chile by 2.5 to 4.5 percentage points relative to a no-migration baseline by 2030, the authors say.
“To reap the benefits from migration, host countries need to integrate the new arrivals into the formal labor force—and society—by promptly offering them work permits and access to education and healthcare.”
Read the staff paper to learn more about the economic opportunities Venezuelan migrants bring to Latin America.
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(ISTOCK/YEVHEN LAHUNOV)
The global disruptions in energy markets and the war in Ukraine have added impetus to the push for renewable energy and the drive toward net-zero carbon emissions. Yet, even as the global consensus around the energy transition becomes stronger, the challenges to that transition are also becoming clearer, writes Daniel Yergin in the December issue of F&D Magazine.
Four challenges—energy security, macroeconomic impacts, the North-South divide, and minerals—will each have significant effects on how the energy transition unfolds, he writes.
“None are easy to grapple with—and they will interact with each other, which will compound their impacts. But recognizing them will promote deeper understanding of the issues and requirements in seeking to achieve the energy transition.”
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The Scramble for Energy—F&D December 2022
Our latest edition of F&D Magazine focuses on what geopolitical tensions mean for the clean transition. Authors include: Fatih Birol, Daniel Yergin, Ricardo Hausmann, Ted Nordhaus, Thijs Van de Graaf, Andrea Pescatori, Jeromin Zettelmeyer, Oya Celasun, Jason Bordoff, Edward Glaeser, Ratna Sahay, and many more.
Want to get a print copy delivered to your home or office?
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Countries in the Middle East and North Africa have resorted to the policies of the past to shield their economies from the spike in commodity prices, but this time subsidies and tax cuts are on a much smaller scale, the IMF’s Filippo Gori and Jeta Menkulasi write in a Country Focus article. Although the current commodity upswing is comparable to those in 2008 and 2011, subsidies this year are estimated to have increased by around half as much as during those previous episodes. Watch a recent webinar on the region's response to volatile commodity prices.
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Economic progress improves lives, but it can also clash with some of the bigger development problems we face, like gender equality and the environment. Seema Jayachandran, a professor of economics at Princeton University, believes striking that balance is key to making economic development work for everyone. In a podcast, Jayachandran talks about her work as part of a special IMF series on extraordinary Women in Economics.
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Public debt plays a pivotal role in the world economy by allowing governments to keep their economies afloat during recessions and to finance investments that lift productivity and growth. But this multitrillion, multinational, multicurrency network of debt obligations comes with risks. Learn more about them in F&D magazine’s latest Back to Basics video.
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Check out the IMF’s updated publications page to gain economic insights from staff discussion notes, country reports, working papers, books, and more. The new website offers easier navigation, better search, and improved graphic design.
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The United States recorded the world’s largest increase of foreign direct investment in 2021, with inflows increasing by $506 billion, or 11.3 percent, according to the IMF’s latest Coordinated Direct Investment Survey. As the Chart of the Week shows, the United States is now the top destination for FDI, but several smaller economies also take prominent positions among the global top 10. The apparent disconnect comes down to the fact that these show cross-border financial flows which can end up as investments in productive activities but can also be purely financial investments with little to no link to the real economy.
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WEEKLY ROUND-UP
An IMF staff paper investigates whether fintech disrupts the remittances market. It finds that instead of disrupting incumbents, fintechs have increasingly been entangled with them. Therefore, not only there is no evidence of disruption, but it is unlikely to occur in the foreseeable future. Even so, the paper argues that fintechs play an important role in the remittances market.
Economic, financial and demographic factors explain the changes in real house prices in emerging Europe, with income growth having the most significant impact, according to an IMF staff paper. Increases in short-term or long-term interest rates dampen prices, indicating that a higher cost of borrowing is associated with lower real house prices. This indicates that the downturn in house prices could deepen with the looming economic recession and soaring interest rates.
An IMF staff paper investigates how the spread of the pandemic and government interventions have affected consumer spending using daily card transaction data in the Baltics. The analysis shows significant effects on the amount and composition of debit and credit card transactions. While public health measures designed to contain the spread of the pandemic have a negative
Central America is one of the regions most vulnerable to extreme climate events. An IMF staff paper finds that a climatic disaster drops monthly economic activity in most countries in the region of around 0.5 to 1 percentage points on impact, with persistent effects on the level of GDP. Remittances increase for most countries in response to an extreme climate event, acting as a shock absorber.
MARK YOUR CALENDAR
The IMF's global debt database will be launched on Dec. 12: please join us! The database is a unique dataset covering private and public debt for virtually the entire world dating back to the 1950s. The discussion will focus on the pandemic impact on sovereign, household, and non-financial corporate indebtedness and challenges ahead.
Please join us on Dec. 13 for a conversation about country experiences with the IMF's Resilience and Sustainability Trust. The Trust helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability.
Submit a proposal by Dec. 21 to stand a chance of participating in a hackathon co-organized by the IMF’s Fiscal Affairs Department, Lesotho’s Ministry of Finance, the Bill & Melinda Gates Foundation, and Geekulcha. Participants in the hackathon will compete to develop a prototype for digital signatures to improve the efficiency and effectiveness of public financial management processes.
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Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar. |
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