Read more about the article From Bretton Woods to Braided Path: Navigating MDB Dynamics Amid Global Shifts

From Bretton Woods to Braided Path: Navigating MDB Dynamics Amid Global Shifts

Within an ever-evolving system of multilateral development banks (MDB) currently reshaped by four structural geo-economic trends, the emergence of new MDBs like the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) carries great geopolitical significance. Yet the new MDBs, attuned to institutional and operational realities, have not upended the MDB system. Their relationship with long-established MDBs such as the World Bank currently resembles not a fork in the road, but a braided path–marked by both convergence and divergence, cooperation and manageable competition.

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Read more about the article Growth Implications of a Fractured Trading System

Growth Implications of a Fractured Trading System

- The costs are greater the deeper the trade fragmentation. - Reduced knowledge diffusion due to technological decoupling is a powerful negative amplifier of the trade channel. - Emerging markets and low-income countries are most at risk from trade and technology fragmentation. - Transition costs can be considerable, in some cases even exceeding the final trading impact. - The estimates provided are not the upper bound. The G20 might not address issues of national security directly, but there's much they can do, especially regarding the trade-offs between resilience and efficiency, designing policies to avoid resorting to the least discretionary breadth.

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Read more about the article The Third Plenum and China’s Economic Growth Challenges

The Third Plenum and China’s Economic Growth Challenges

• China's economy grew 4.7% in Q2, with a target set at 5% for 2024. • Challenges include real estate sector exhaustion, local government debt, domestic demand, and external resistance to exports. • The Third Plenum highlights reforms for housing, fiscal policy, and addressing challenges, but lacks focus on stimulating consumption.

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Read more about the article China’s Economic Growth on Target Despite Challenges

China’s Economic Growth on Target Despite Challenges

IMF projects China's economic growth at 4.6% and 4.1% for this year and next. China's official target is 5%. Six challenges to China's economic growth include the real estate sector, local government debt, domestic demand, external resistance to China's exports, change in foreign investor sentiment, and demographic decline. Despite challenges, China's economic growth remained steady in Q1 2024, with exports and manufacturing investment compensating for the drag from the property sector.

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Read more about the article Emerging Markets and Developing Economies in the Global Financial Safety Net

Emerging Markets and Developing Economies in the Global Financial Safety Net

When countries face external financial shocks, they must rely on financial buffers to counter such shocks. The global financial safety net is the set of institutions and arrangements that provide lines of defense for economies against such shocks. From any individual country standpoint, there are three lines of defense in their external financial safety nets: international reserves, pooled resources (swap lines and plurilateral financing arrangements), and the International Monetary Fund. We argue here that there is a need to extend and facilitate access to the ultimate global financial safety net layer: the IMF. We illustrate that by pointing out how Morocco and Mexico have boosted their defensive power by having access to IMF precautionary lines of credit.

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Read more about the article Rising Use of Local Currencies in Cross-Border Payments

Rising Use of Local Currencies in Cross-Border Payments

Pairs of countries have agreed to settle commercial and financial transactions with each other in their local currencies, usually facilitated through bilateral agreements between their central banks. China has been able to use its currency to settle half of its foreign trade and investment transactions. The growing use of local currencies in external payments will be part of what we have already called a “slow and bounded de-dollarization”. A partial fragmentation of the global payments system is underway.

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Read more about the article The global economy faces a lost decade

The global economy faces a lost decade

The economic factors that have propelled global prosperity over the past three decades are losing their grip. The aging and slow growth of the global workforce are highlighted as downward factors, explaining half of the expected slowdown in potential GDP growth through 2030. What should countries do in the face of this prospect of a “lost decade”?

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Read more about the article Will Latin America Return to Mediocre Growth After Shocks?

Will Latin America Return to Mediocre Growth After Shocks?

Latin America's recovery after the perfect storm should not be limited to a simple return to pre-pandemic "mediocre" levels of output growth. Investments in green infrastructure, exploring areas of digital connectivity opened by the pandemic, and improving the business environment and education can lead to more resilient, inclusive, and dynamic growth patterns.

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Read more about the article Whither China’s Economic Growth

Whither China’s Economic Growth

Chinese economic figures released since August’s beginning have shown a slowdown in its growth. New Omicron coronavirus outbreaks in the context of the Covid-zero policy, the housing slump and heat waves have been decelerating the economy’s pace. China’s current growth slowdown is an additional step in the trajectory of gradually declining rates that has accompanied the “great rebalancing” since the beginning of the 2010s. One major difference now is the perception of exhaustion of waves of overinvestment in real estate and infrastructure as a lever, as compared to three previous moments since the beginning of the last decade.

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Read more about the article Emerging markets (video), Inflation in Latin America (podcast), Sustainability (videos), and Slowbalization (video)

Emerging markets (video), Inflation in Latin America (podcast), Sustainability (videos), and Slowbalization (video)

1. Emerging Markets: Economic and Geopolitical Fragmentation 2. LatAm in Focus: How Latin America Is Fighting Inflation 3. Sustainability (Soaring Fertilizer Prices; Brazil's Commitment to Sustainability; UN sustainability goals and developing countries) 4. Slowbalization, Reshoring, Nearshoring, & Friendshoring

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Read more about the article Quantitative Tightening and Capital Flows to Emerging Markets

Quantitative Tightening and Capital Flows to Emerging Markets

In addition to hikes in basic interest rates, liquidity conditions in the US economy will also be affected by the shrinking of the Fed's balance sheet starting this month. The "quantitative easing" (QE) that resumed strongly in March 2020, in response to the financial shock at the beginning of the pandemic, will now give way to a "quantitative tightening". How complementary - or substitute - will be those movements in interest rates and balance sheet downsizing? What are their likely consequences on capital flows to emerging markets?

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Read more about the article The Global Food Price Shock

The Global Food Price Shock

The world food price index collected for the last 60 years by the United Nations Food and Agriculture Organization (FAO) hit its highest record in March, declining gently in April. Pandemic, war and death in Ukraine, and droughts in the last 2 years… Such a combination looks apocalyptical. Now it is adding global hunger risks, because of the food price crisis. The fiscal fragility inherited from the pandemic limits public programs to deal with issues in many developing countries.

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Read more about the article Biggest Commodity Price Shock in Fifty Years

Biggest Commodity Price Shock in Fifty Years

Commodity prices stabilized in April. However, the previous commodity price shock, intensifying trends that have been present since mid-2020, have already led to significantly higher price levels in 2022. The new jumps made the increase in energy prices in the last two years the biggest in the last fifty years, since the oil shock in 1973. The war in Ukraine and the shock of energy commodity prices have not been favorable to the energy transition, as seen in the race for coal.

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