Do Not Over-Heat

The IMF reports that powered by a resurgence in Asia, emerging markets, especially those of China and India are leading the world out of recession. In many emerging and developing economies, output is already above pre-crisis trends, suggesting that recovery is complete and expansion under way. But this brighter outlook is balanced by fears of possible asset bubbles produced by the flood of investment capital into the region.

Data suggest that inflation pressure is broadening. In several of the larger emerging market economies, headline inflation is running close to or above central bank targets. Furthermore, some economies are experiencing a credit boom.

The risk that food and energy price increases will start an inflationary spiral is much greater in emerging and developing economies than in advanced economies. In many such economies, monetary conditions appear very accommodative: real interest rates remain far below pre-crisis levels, and the extent of expected tightening seems limited relative to what is needed.


You may have an interest in also reading…

World Bank Supports Increased Financing for Medium & Small Businesses in Nigeria

The World Bank’s Board of Executive Directors today approved a US$500 million International Bank for Reconstruction and Development (IBRD) credit

George Soros: The Real Economy of the Eurozone is Declining, while Germany is Booming

In this article, the international financier George Soros explains that when the euro was introduced the regulators allowed banks to

Global Wage Report

Global wages remain far below pre-crisis levels, says a new United Nations report, which points to a continuing slowdown in

No comments

Write a comment
No Comments Yet! You can be first to comment this post!

Write a Comment

<

This site uses Akismet to reduce spam. Learn how your comment data is processed.