Banking systems are largely insulated from inflation, but vulnerabilities at some banks could lead to tradeoffs between containing inflation and protecting financial stability
Growth divergences persist and could widen, while policy shifts may reignite inflation pressures in some countries
Complex global economic challenges, and the careful policy responses that the world needs to foster sustainable growth and financial stability, were the most popular
The increase in debt in the last decade points to the need for lowering deficits, rebuilding space to deal with shocks, and strengthening fiscal rules
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Crime directly costs the region more than 3 percent of GDP and lowers growth. Economic instability, in turn, drives higher rates of crime. Actions can be taken to break this vicious cycle.
New accession candidates will need to undertake equally ambitious reforms to make the next expansion a comparable success
Improving fiscal policy frameworks, fostering education and skills, and supporting the green transition can help ensure strong, sustainable, balanced, and inclusive growth
Increased investor risk-taking could fuel vulnerabilities
Unknowns raise risk of financial market volatility and a sharp decline in economic growth
Currencies have depreciated to varying degrees in emerging market economies as interest rate differentials with the United States narrowed
The decline of inflation could be stalling in some economies
Greater digitalization and heightened geopolitical tensions imply that the risk of a cyberattack with systemic consequences has risen
Rapid growth of this opaque and highly interconnected segment of the financial system could heighten financial vulnerabilities given its limited oversight
Empirical analysis points to low growth prospects as the main driver of this trend in 2023.
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With elevated debt service squeezing the space available to finance much needed investment in many countries, urgent action is needed to boost fiscal space, maintain adequate international support, and reduce debt servicing costs.
Agreements taking shape at a faster pace are reducing uncertainty for countries and investors.
Domestic laws need updating to ensure that public obligations are transparent
AI-driven trading could lead to faster and more efficient markets, but also higher trading volumes and greater volatility in times of stress
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The AI transition will require stronger social safety nets, investment in education, and tax systems that support human workers and mitigate inequality
AI will affect almost 40 percent of jobs around the world, replacing some and complementing others. We need a careful balance of policies to tap its potential
Generative AI has introduced tantalizing new possibilities. Yet the initial excitement surrounding AI has given way to genuine and growing concerns. This issue is an early attempt to understand AI’s implications for growth, jobs, inequality, and finance.