đź“š Weekend Read: Inflation's Complicated Outlook | Automation | Credit Ratings

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IMF Weekend Read

Dear Colleague,

Welcome to the Weekend Read! In today's edition we explore the outlook on inflation, the intersection of automation and policy, a positive credit rating trend in low-income countries, new evidence on intergenerational social mobility in Africa, Nigeria's new digital currency, Panama's economic convergence, and much more.



(Photo: Edwin Tan by Getty Images)

Inflation's Complicated Outlook

From meat to metals, it's hard to turn anywhere these days without seeing the mention of inflation and whether it's a passing trend or here to stay. The threat of the pandemic still hangs over the global economy and mismatches between supply and demand continue.

In most economies, inflation pressures have increased with signs that inflation has become more broad-based. Rising commodity prices are driving headline inflation and weather events have impacted agriculture and added pressure to food prices (see our Chart of the Week below on food prices in Latin America).

"With interruptions of supply chains, inflation has become a more troubling phenomenon. Yet, at this stage, we still see this disconnect between demand and supply as the key reason for inflation, which gives us hope that inflation will likely recede next year," IMF Managing Director Kristalina Georgieva said this week.

A 'sticky' situation: Uncertainty, though, reigns supreme. If supply disruptions continue or inflation expectations become de-anchored, inflation may become more "sticky," Georgieva said. For now, inflation expectations generally remain anchored in most economies.

Falling and rising: In the United States, core inflation accelerated in October after decelerating in July and August. 



"Lot's going on with elevated demand, supply disruptions & pandemic oddities including the strong demand for goods relative to services," IMF Chief Economist Gita Gopinath tweeted recently. "This will be a bumpy ride with complex policy trade-offs."

What role for the IMF? The IMF is encouraging central banks to stay vigilant to inflationary pressures. The Fund is paying close attention, thinking through scenarios of monetary and fiscal policy in advanced economies, and possible spillover impacts on emerging and developing economies.

Additional Reading: Revisit recent IMF research on inflation as part of our latest World Economic Outlook. Or listen to a recent podcast with the IMF's Prachi Mishra where she talks about how we're navigating uncharted territory.



(Image: ELENABS/iStock BY Getty Images)

Sharing the Gains of Automation

The use of robots and more automated work processes can cause inequality. These trends can also increase growth and productivity. In a new blog, the IMF's Nikolay Gueorguiev and Ryota Nakatani dig into recent research explaining how fiscal policy--government spending and taxes--can have positive short- and medium-term effects on growth but may weigh on long-term growth.

One key takeaway: Policymakers should consider both the short- and long-run benefits and costs of policies. What performs best in the short term can turn costly in the long term. This does not automatically invalidate such policies—societal preferences will have the last word—but needs to be taken into account.

Read the Blog

Emerging Markets


(Photo: IMF Photo)

A Positive Credit Rating Trend

For the first time since the start of the pandemic, monthly credit ratings upgrades have outnumbered downgrades in emerging and developing economies in October. The trend, reported recently by the IMF's Rohit Goel and Evan Papageorgiou in the IMF Global Markets Analysis, is attributed to new allocations of Special Drawing Rights, optimism for more financing arrangements, and a reticent economic recovery.

Low-income countries and commodity exporters, such as Angola, CĂ´te d'Ivoire, Benin, Kazakhstan, and Gabon, have net upgrades this year, reflecting financing arrangements and a commodity rally that has improved the outlook on revenues. Still, there remain very significant debt and fiscal sustainability concerns for many economies. Emerging market ratings, on average, have also continued to decline this year.

F&D Magazine


(Photo: IMF Photo)

F&D: Africa's Intergenerational Social Mobility

Information on social mobility in African countries was once relatively scarce, but a new data set paints a continent-wide picture. In a new F&D online exclusive, the IMF's Rasmane Ouedraogo and Nicolas Syrichas describe what they found after studying a data set of 72 million individuals since 1920. The key finding: economic opportunities measured by literacy rates have improved over time.

Read the full article

Read the Full September Finance & Development Issue

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(photo: Andre M. Chang/ZUMAPRESS/Newscom)

Nigeria's Digital Currency

The Central Bank of Nigeria officially launched the “ eNaira”—a central bank digital currency—on October 25, 2021. A new Country Focus looks at the benefits and potential challenges of this new form of digital money for Nigeria's economy.


(photo: Photoservice by Getty Images)

Panama Converging 

Convergence happens when the difference in incomes between richer and poorer economies narrows. In a new Country Focus, we take a look at the experience of Latin America and in particular at Panama, which has shown impressive growth over the past three decades.

Quote of the Week

“We came to Glasgow on a path to disaster. We were following a 2.7 degree Celsius pathway, a place where we haven't been for the past 4 million years. We leave Glasgow on a path to danger--a pathway that if all the pledges are delivered upon ... we could, with a 50 percent probability level, reach a stabilization of 1.9 degrees Celsius.”  

—Johan Rockström, director, Potsdam Institute for Climate Impact Research during his keynote speech at the IMF Statistical Forum.


01. Podcast: Making Economics Better

In the third episode of Women in Economics, distinguished British economist Diane Coyle speaks with journalist Rhoda Metcalfe about how the lack of diversity within the economic profession is holding it back. Coyle is the Bennett Professor of Public Policy at the University of Cambridge and author of several books, some of which challenge conventional economic wisdom such as GDP. In this podcast, Coyle says economists need to start working with other disciplines if they are to live up to the influence they have in public policy and help deliver solutions to the complex challenges the world is now facing.

02. IMF Statistical Forum

The IMF this week held its 9th annual Statistical Forum with a focus on “Measuring Climate Change.” The event built on the IMF Climate Change Indicators Dashboard launched in April. The Forum explored the types of indicators on the economic and financial implications of climate change needed for policymakers and the public. Where there are data gaps, a broad group of stakeholders from the public and private sector discussed statistical strategies to close these gaps over the short and long term. Over the two day conference, sessions focused on the economic, cross-border, and financial dimensions of measuring climate change; country cases from the US, Mexico, and Colombia; and international efforts to close climate data gaps by international organizations and policymakers. The forum culminated with a presentation by the renowned scientist Professor Johan Rockström followed by an inspiring conversation with Managing Director Kristalina Georgieva.   

03. IMF Launches New Fiscal Risk Portal

Comprehensive analysis, disclosure, and management of fiscal risks – factors that can cause fiscal outcomes to differ from expectations – are needed to ensure sound public finances, macroeconomic stability, and fiscal transparency. By visiting the new IMF.org/FiscalRisk portal, you will get access to the IMF’s Fiscal Risk Toolkit, guidance materials, and capacity development work enabling policymakers to better understand fiscal risks and ensure effective risk management.

Mark Your Calendar

01. Richard Goode Lecture

The IMF will hold its seventh annual Richard Goode Lecture on November 30, 2021 at 9:30 am EST. This annual event is hosted by the Fiscal Affairs Department to anticipate and discuss policy issues and debates. The theme of this year’s seminar is “How do people think about the economy?” presented by Professor Stefanie Stantcheva from Harvard University. Her lecture will explore the results of recent large-scale social economics surveys and experiments, and examine what they reveal about our social preferences, attitudes and perceptions when thinking about economic policy, and preferences for redistribution. The event will be livestreamed to the public on IMF.org/live.



In our latest chart of the week, by the IMF's Maximiliano Appendino, we look at  how rapidly inflation is rising. In the first year of the pandemic, average inflation in Brazil, Chile, Colombia, Mexico, and Peru—the LA5—was below the average for other emerging market economies. It’s now higher, averaging 8 percent year-on-year in October and in the case of Brazil, surpassing 10.5 percent.

Soaring food prices are partly driving the surge. They started increasing even before the pandemic and have risen more than 18 percent on average in LA5 countries since January 2020.


Adam Behsudi


IMF Weekend Read


P.S. The Weekend Read will be on hiatus next week for the US Thanksgiving holiday. We'll deliver your next edition on Dec. 3.

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