Publications

International economy

From this page you can access thematically grouped Analytical Articles published in the Economic Bulletin from 1999, ordered by date of dissemination within each year.

All documents are available in PDF format PDF File. Opens in a new window

  • 21/11/2018
    The International Monetary Fund and its Role as a Guarantor of Global Financial Stability (639 KB) Sonsoles Gallego, Pilar L´Hotellerie-Fallois and Fernando López-Vicente

    Given the growing real and financial integration of economies worldwide, there is a need for the presence of supranational mechanisms to address crisis situations. The International Monetary Fund (IMF) is the multilateral institution at the core of the global financial safety net (GFSN). The swift development of other elements of this net since the last global financial crisis, such as the regional financing arrangements, has made the system sounder but also poses fresh challenges. The broad membership of the IMF, the volume of its resources and its accumulated global experience in crisis management make the organisation key to shoring up global monetary and financial stability. However, the IMF is subject to recurrent discussions about its governance and lending policies, including the size and composition of its resources, and the distribution of power within the organisation. The IMF is currently immersed in the Fifteenth General Review of Quotas. The backdrop to this negotiation is the risk that, in the absence of a satisfactory agreement on the size and distribution of its resources, the IMF’s financial sufficiency and its degree of representativeness among its members may be diminished in the coming years. This might significantly undermine the stabilising capacity of the GFSN.

  • 06/11/2018
    Argentina: economic challenges in an adverse international setting (748 KB) Xavier Serra, Jacopo Timini, Enrique Martínez Casillas and Julia Estefanía

    The Argentine economy is in a complicated transition phase. To correct the major fiscal and inflationary imbalances built up in the previous decade, the new government that took office in December 2015 opted for a gradual fiscal adjustment, supported by a situation of abundant international liquidity. In parallel, the Argentine central bank assumed ambitious inflation-reducing objectives. However, in 2018 the lack of progress on the inflation front, the tightening of international financial conditions and a severe drought placed Argentina under the market’s gaze and prevented it from pursuing the financing of this gradual adjustment; accordingly, the government decided to apply for IMF financial assistance. The agreement with the Fund, approved in June and amended in October 2018, plans for a rapid fiscal and monetary adjustment that will provide for a reduction in its twin deficits (fiscal and external alike) and an effective decline in inflation, moving the economy onto a stable growth path. The success of the programme, to which the Argentine authorities have made a clear commitment, is nonetheless subject to internal and external risks, and poses a significant challenge for the country.

  • 06/11/2018
    Report on the Latin American economy. Second half of 2018 (1 MB)

    This article reviews, as usual, the recent performance of the main Latin American economies, in a setting where the emerging economies have faced a series of adverse shocks. There has been a considerable downward revision of the growth forecast for the region in 2018, driven mainly by idiosyncratic factors: the severe recession in Argentina and a slower-than-expected recovery in Brazil. Furthermore, the risks remain predominantly on the downside. One of these risks – a tightening of the pace of monetary policy normalisation in the United States – is analysed in more detail in the article.

  • 06/09/2018
    Creditor countries and debtor countries: some asymmetries in the dynamics of external wealth accumulation (540 KB) Ángel Estrada and Francesca Viani

    Following the global financial crisis, the external imbalances in terms of countries’ current
    account balances have been reduced to a large extent. However, the imbalances measured
    in terms of net external wealth (or net international investment position, NIIP) have continued to increase. The empirical analysis presented in this article suggests that there is asymmetry between net debtor countries (negative NIIP) and net creditor countries (positive NIIP), with potential implications for global trade and growth. In the case of debtors, their negative NIIP contributes to reducing current account deficits and is therefore a stabilising factor. Conversely, in the case of the creditors, the NIIP contributes to increasing current account surpluses which, in turn, strengthens the dynamics of wealth accumulation in these countries, compared with the rest of the world.

  • 29/06/2018
    Trade patterns of China and India (685 KB) Elena Vidal

    China and India are playing an increasingly significant role in global trade. In 2016, their joint share of the global trade in goods reached around 14%, while their share of services came to 7.5%. They have very different trade profiles, however, also reflecting very different internationalisation strategies. Since opening up in the 1980s, China has taken on a global trade hub role, thanks to its growing integration into global production chains for manufactured goods. More recently, China has undergone a shift in trade specialisation towards a pattern characterised by the export of products with higher domestic value added (i.e. it has moved up the global value chain). India’s integration into global value chains has been much more limited and, since the early stages of its economic liberalisation, services have accounted for a substantial share of its exports. Although India’s export profile has remained fairly stable in recent decades, a growing weight of manufacturing exports with a greater import content has recently become discernible. Against this background, the estimation of goods export demand equations shows how, in the long run, external demand is the factor that wields most influence on developments in both countries’ exports, albeit more powerfully so in China, while price-competitiveness has a greater influence on Indian exports.

  • 31/05/2018
    The IMF’s concessional lending policy: situation and outlook (649 KB) Xavier Serra Stecher

    The International Monetary Fund (IMF, or the Fund) has been uninterruptedly providing
    concessional financing to low-income countries since 1976. This financing has been
    channelled practically in its entirety under the same financial instrument, namely a voluntary
    participation trust fund that is separate from IMF finances, but managed by the latter. The
    programmes financed with these resources have progressively focused on macroeconomic
    stabilisation, the signalling of reforms and attracting other aid, as part of a poverty-reduction
    strategy that should be led by the borrower country. In 2009, the IMF overhauled its
    concessional financing policy: it incorporated new credit facilities, with a similar design to
    that of its ordinary facilities; it boosted the blending of concessional and ordinary resources
    for those countries with access to both types of financing; and it staggered the cost of the
    financing against a background of very low interest rates. Throughout 2018, the IMF will
    again review the concessional financing toolkit available to low-income countries, based on
    the experience built up in recent years. This article provides a framework for assessing the
    ongoing review.

  • 17/05/2018
    An analysis of the trade exposure of Spanish firms to the United Kingdom (749 KB) Eduardo Gutiérrez Chacón and César Martín Machuca

    The trade exposure of Spanish firms to the United Kingdom is significant, albeit lower than that to the main euro area countries. In 2017 the growth in Spanish firms’ goods exports to the UK market that dated back to 2012 came to an end, against a background of sterling depreciation against the euro. The potential vulnerability of Spanish firms with a presence in the UK market to Brexit is somewhat limited by their distinctive characteristics; these companies are on average larger, more productive and more geographically diversified than those that export to the main euro area countries. In any event, the ultimate impact of this process on Spanish firms with a presence in the United Kingdom or with the potential to gain access to this market will largely depend on the terms eventually established for trade relations between the United Kingdom and the European Union.

  • 27/04/2018
    Report on the Latin American economy. First half of 2018 (1 MB)

    Against a favourable external backdrop, the Latin American economies continued their recovery in the second half of 2017, although at a somewhat slower momentum. The most notable features of that period were more strongly performing investment and a more negative contribution to growth by the external sector. However, the improved terms of trade allowed the current account deficits to be reduced. Inflation moderated more than expected, allowing the central banks of Brazil, Colombia and Peru to continue cutting their official interest rates. However, prices moved unexpectedly upwards in Mexico and Argentina, prompting a tighter monetary policy. In the budgetary arena, most countries failed to make significant headway in the recovery of fiscal space, an issue which is analysed in the first thematic section of this Report along with the effects on the macroeconomic scenario that would result from the fiscal consolidation needed to make public debt sustainable. Financial conditions, as analysed in the other thematic section of this Report, which calculates financial conditions indices for the economies of the region, remained slack in the period analysed, since the international financial market turmoil had little impact and commodity prices (a key determinant of financial conditions in these economies) recovered. The forecasts are for the dynamism of activity to continue in 2018 and 2019, at a pace near the potential growth rate of these economies, although the balance of external risks (change in macroeconomic policies in the United States which may finally feed through to a tightening of financial conditions worldwide, and a possible widespread increase in barriers to international trade) and internal risks (uncertainties as to what economic policies will be implemented following the elections to be held in the coming months) is tilted to the downside. The Report also includes a box which analyses, as far as the available data allow, the economic situation in Venezuela after its partial default on its external public debt.

  • 05/04/2018
    Global economic situation and outlook at the start of 2018 (3 MB)

    After two consecutive years of slowing global activity, there was a rise in world GDP growth in 2017 which was widespread across advanced and emerging market economies and was higher than expected at the start of the year. Inflation rose moderately in 2017, largely due to increases in commodity prices, but core inflation remained more stable and far from central bank targets. The outlook for 2018 indicates that these global trends will continue. Some of the factors that will influence these developments are analysed in detail in this article. First, several factors (the cyclical recovery, progress in deleveraging, fiscal changes and higher wages) indicate that the momentum of investment recorded in advanced economies in 2017 will continue in the short term, however, over a longer time frame, whether this strength is maintained will hinge on real interest rate developments, technological factors and resistance to the threat of protectionism. Second, the expected change in the macroeconomic policy mix in the United States and other advanced economies towards a more expansionary fiscal policy and a less loose monetary policy may raise short-term growth but, if they are not gauged properly, bouts of instability in international financial markets could ensue. Lastly, global financial conditions remain favourable. However, the turmoil on US equity markets early in 2018 which spread swiftly and vigorously to other stock markets seems to indicate less favourable global financial conditions in the future and, at the same time, warns against the risks associated with a sharp adjustment in international financial markets.

  • 13/03/2018
    Global funding trends in capital markets in 2017 (1 MB) Alberto Fuertes, Luis Molina, Luna Romo and Emilio Muñoz de la Peña

    The total volume of bond issuance in 2017 remained similar to that in previous years, edging down slightly as a result of the drop in public-sector issuance. As usual, there were significant
    differences between the regions and quarters analysed. By quarters, the year got off to a good start, with strong growth in the volume of issuance in the first quarter, followed by a slight deceleration. This pattern possibly reflects some issuers seeking to bring forward their placements in anticipation of worsening financial conditions, given the context of progressive monetary policy tightening. By region, the drop in issuance by the United States stands out, alongside the strong performance of the emerging markets. There was also a marked increase in the volume of placements in higher-risk segments, such as corporate and high-yield bonds, and in emerging markets, which reached record levels.

  • 09/03/2018
    The flattening of the yield curve in the United States (863 KB) Juan Carlos Berganza and Alberto Fuertes

    The yield curve for US government debt securities has flattened significantly since late 2016 and its slope, while positive, has fallen to levels not observed since before the global financial crisis. The inversion of the yield curve slope is considered, on occasions, as a leading indicator of future recessions. And this, given moreover that the current expansionary phase is proving more durable than previous upturns, has prompted debate on the implications of the recent flattening of the curve. However, as illustrated in this article, unlike previous episodes, in which the flattening of the curve was explained by the behaviour of the interest rates expected at different terms, at this current juncture it is warranted substantially by the compression of term premia. Against this background, the historical relationship between the yield curve and predicted recessions in the US economy might have altered.

  • 11/01/2018
    Labour market participation rate in the euro area: performance and outlook, a long-term view (678 KB) Cristina Fernández and David Martínez Turégano

    This article analyses the trajectory and the main explanatory factors of changes in the labour market participation rate in the euro area in recent decades. First, these changes are compared with the United States, highlighting the extraordinary convergence that has taken place between the two areas owing to the momentum in the European labour market and the declining secular trend on the other side of the Atlantic. Second, the increase in participation in the euro area was led by females, particularly as a result of the higher probability of new cohorts joining the labour market against a background of significant socio-educational changes. In any event, in view of the demographic ageing in progress and the progressive exhaustion of the above-mentioned changes, the focus is on the need for specific policies aiming to raise labour participation of such population groups where there is still room to do so, i.e. older workers, in general, and women in countries where the gender gap is still large.

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