By Min Zhu: (Version in 日本語) There is a group of fast-growing low-income countries that are attracting international investor interest—frontier economies. Understanding who they are, how they are different, and how they have moved themselves to the frontier matters for the global economy because they combine huge potential with big risks. Get to know them The first […]
Oil companies are renowned for going into hostile environments in their relentless search for the world’s seemingly insatiable thirst for “black gold.” That said, there remain a few nations where even the intrepid masters of the universe hesitate to tread. In Central Asia, it is Afghanistan, despite the nation’s purported 1.6 billion barrels of extractable […]
All too often we hear the claim that the programs the IMF supports in low-income countries hurt the most vulnerable by forcing cuts in social spending. This is a misconception. Our study concludes that, contrary to these claims, IMF-supported programs boost education and health spending in low-income countries for as long as countries are engaged […]
The ongoing turmoil is not a new, unexpected crisis. It is the 2008 financial crisis entering its critical stage. With governments unable to foot the bill any longer, the markets are acknowledging the ‘elephant-in-the-room’: the still-unresolved debt-overhang is downgrading global growth. Typically, a non-financial crisis brings about a short recession. If supported by fiscal and […]
On Friday we were in Sao Paulo, Brazil, to release our update to the IMF’s World Economic Outlook. Despite a mild slowdown, the global economic recovery continues but the road to health will be a long one. Downside risks, both old and new, are increasing. Our world forecast is 4.3% growth for 2011, and 4.5% […]
Sub-Saharan Africa’s “frontier markets”—the likes of Ghana, Kenya, Mauritius, and Zambia—were seemingly the destination of choice for an increasing amount of capital flows before the global financial crisis. Improving economic prospects in these countries was a big factor, but frankly, so too was a global economy awash with liquidity. Then the crisis hit. And capital—particularly […]
Cuba obtained independence from Spain in the aftermath of the Spanish American War which came to an end in December of 1898. The loss of Cuba, Puerto Rico, Guam and the Philippines is known in Spanish contemporary history as El Desastre (The Disaster), the event which concluded Spain’s era as a colonial power and inaugurated a time of pessimism and despair personalized by the generations of 1898 and 1914, two generations of Spanish intellectuals who anticipated the clash of social classes, which led to the Spanish Civil War between 1936 and 1939. The Spanish American War was the easiest of the wars ever fought by the United States. The event marked the decadency of a country that never experienced a revolution and experienced a 19th century of civil confrontations and wars, a period of decadency that perhaps took off with the independence of a majority of Latin American nations in 1812.
Spain and Cuba need each other because of their common history, language, culture and tremendous synergies. Spain and Cuba could inaugurate bilateral partnerships between developed and developing nations in the 21st century that go well beyond trade and foreign aid.
The scale of the Japanese cataclysm is so immense that if such an earthquake and the following tsunami and fires had struck the archipelago of Philippines or Indonesia the countries would have collapsed. But Japan—which has experienced similar, bitter disasters previously, although on a considerably smaller scale—a wealthy country and its brave people, will cope with the situation.
Though the recent global crisis started in the advanced economies, most emerging markets came under pressure; it seemed that no country, especially those most interconnected, was immune from tremendous economic strain. Now, as the crisis abates, there is an emerging consensus that something needs to be done. A better safety net is needed to enable countries with good policies to insure against bad outcomes, especially when they are innocent bystanders caught up in a financial turmoil.
Zambia’s economic performance is closely tied to the price of and demand for copper, which accounts for 70% of foreign exchange earnings and exports. This lack of export diversity in the economy leaves Zambia extremely vulnerable to global shocks since foreign investment is correlated to the copper price. While higher copper prices boosted the economy (and made Zambian T-bills a temporary wonder) during the 2007-08 commodity boom, the subsequent correction of commodity prices broke the country’s growth momentum, which was further trammeled by the global slowdown. A combination of industrial destocking, weak industrial production and a weak property sector exacerbated the shift in exports from advanced economies to EMs in general—and China in particular. From 2007-09, Zambian exports to the EU fell by 41%, driven by a reduction in metal exports. Notably, exports to Zambia’s largest trading partners within the EU—the UK and the Netherlands—both declined. (The average annual export growth dropped 23% and 6%, respectively.) Switzerland, Zambia’s main export destination, also significantly reduced its metal imports over the period.