{
  "title": "IMF Survey : The Global Economy in 2016",
  "publication": "IMF News, January 4, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/soint010416a",
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  "summary": "Maury Obstfeld joined the IMF in September as Economic Counsellor and Director of Research. In an interview, he reviews the major economic developments of the past year and looks ahead to 2016.",
  "publishDate": "2016-01-04",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Interview with Maury Obstfeld, who joined the IMF in September as Economic Counsellor and Director of Research.\n- Review of major economic developments in 2015 and forward-looking issues for 2016.\n- Key institutional milestones in 2015 noted: U.S. Congress passed the 2010 quota reform; China’s currency, the yuan, was added to the IMF’s basket of official currencies.\n- Date on page: January 4, 2016."
    },
    {
      "heading": "Major developments in 2015",
      "content": "- Divergent performance:\n  - U.S. economy: continued solid growth and job creation.\n  - Europe: generally picked up speed.\n  - Japan: described as “a question mark.”\n  - Emerging and developing economies: continued to slow, with some exceptions (such as India), affected by plummeting commodity prices and tighter financial conditions.\n- Geopolitical and political tensions amplified economic challenges in some countries.\n- Institutional change: U.S. Congress approved IMF quota reform originally agreed in 2010, strengthening the IMF’s capacity."
    },
    {
      "heading": "Risks and issues to watch in 2016",
      "content": "- China:\n  - Economy slowing during transition from investment and manufacturing to consumption and services.\n  - Global spillovers through diminished imports and lower commodity demand larger than anticipated.\n  - Remaining challenges: state-owned enterprise balance sheet weaknesses, financial market strains, and resource allocation flexibility.\n  - Risk that growth below official targets could spook global financial markets; alternatively, methods of enforcing growth targets could extend imbalances.\n- Refugee crisis:\n  - Crisis of refugees fleeing Iraq and Syria challenges EU absorptive capacity of labor markets and political systems.\n  - Special strain on Lebanon, Jordan, and Turkey.\n  - EU perimeter policing and free mobility tensions to watch.\n- Climate change:\n  - Slow-moving but critical crisis; COP21 Paris agreement seen as a triumph for international cooperation.\n  - 2016 expected to show national capital reactions and initial effectiveness of the agreement in promoting cooperation.\n- International trade:\n  - Trade growth has slowed relative to GDP growth.\n  - Key questions: whether the Trans-Pacific Partnership (TPP) will pass the U.S. Congress (decision possibly in spring 2016) and whether that could lead to a U.S.–EU deal.\n  - Doha round effectively scrapped in Nairobi; consideration of more limited-scale trade liberalization options."
    },
    {
      "heading": "Emerging markets and financial conditions",
      "content": "- Emerging markets central in 2016 outlook:\n  - Capital inflows are down.\n  - Some reserves have been spent.\n  - Sovereign spreads have widened.\n  - Currencies have weakened.\n  - Growth is slowing sharply in some countries.\n- Currency depreciation has been an important buffer against shocks to date.\n- Sharp further falls in commodity prices, including energy, would worsen conditions for exporters and could trigger sharper depreciations, hidden balance sheet vulnerabilities, or inflation.\n- Global financial market mood: glum and susceptible to increased volatility despite accommodation from the European Central Bank and the Bank of Japan.\n- U.S. Federal Reserve: launched in December what it intends to be a cycle of gradual interest-rate hikes; critical how subsequent increases are managed and communicated.\n- Concluding assessment: global financial conditions are tightening; emerging and developing markets are especially sensitive."
    },
    {
      "heading": "Analytical and research priorities for the IMF",
      "content": "- Need for intensified focus on emerging and developing economies:\n  - Historical PPP shares: during the 1980s emerging and developing economies accounted for around 36 percent of global GDP and some 43 percent of global GDP growth (with PPP weights).\n  - For 2010-2015, the numbers were 56 percent and 79 percent, respectively.\n- Research agenda items:\n  - Classic balance of payments issues: capital flows and their management, foreign exchange intervention, vulnerabilities in external balance sheets, determinants of current account balances, trade patterns, and trade volumes.\n  - Policies and frameworks conducive to higher potential output and its growth.\n  - Investigation of reasons for apparent worldwide declines in potential GDP growth; April 2016 WEO to examine advanced-economy structural reforms in that context.\n  - Trends in inequality: implications for economic productivity and political sustainability of market-friendly policies; how to make growth more inclusive.\n  - Integration of the financial sector into macro-policy frameworks as an urgent priority.\n- Broader remit:\n  - The Fund’s global scope: engages with 188 member countries and draws on 70 years’ experience of multilateral surveillance, Article IV consultations, and technical assistance.\n  - Historical and recent contributions cited: exchange rates and trade, global real interest rates, fiscal policy, capital flows, public infrastructure spending, the investment accelerator.\n  - Emphasis on reassessing doctrines and policies in light of experience and research; intellectual honesty in admitting mistakes and adapting."
    },
    {
      "heading": "Fund’s role on “new” topics (climate change, inequality, labor markets)",
      "content": "- Recognition that IMF resources are not unlimited; selection of areas where IMF has comparative analytical advantage is necessary.\n- IMF has long engaged with macro-critical issues relevant to membership, such as women’s labor-force participation and labor-market institutions.\n- Prior IMF work cited:\n  - April 2008 WEO chapter on global CO2 emissions and macroeconomic effects of carbon pricing.\n  - Fiscal Affairs department’s recent work on energy subsidies and carbon pricing.\n  - Managing Director Christine Lagarde emphasized these topics in lead-up to the Paris agreement.\n- Conclusion: newer topics with significant macroeconomic implications are too important to ignore for a member-focused approach.\n\nIMF Survey: The Global Economy in 2016 — IMF, January 4, 2016\n\n---\n\n Content in this bundle\n\n- Int010416aapdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Survey Interview\n- Maury Obstfeld bio\n- Research at the IMF\n- Economic Outlook: October 2015\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint010416a"
    }
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    "Published: January 4, 2016",
    "Interview with Maury Obstfeld, who joined the IMF in September as Economic Counsellor and Director of Research.",
    "Review of major economic developments in 2015 and forward-looking issues for 2016.",
    "Key institutional milestones in 2015 noted: U.S. Congress passed the 2010 quota reform; China’s currency, the yuan, was added to the IMF’s basket of official currencies.",
    "Date on page: January 4, 2016.",
    "Divergent performance:",
    "Geopolitical and political tensions amplified economic challenges in some countries.",
    "Institutional change: U.S. Congress approved IMF quota reform originally agreed in 2010, strengthening the IMF’s capacity.",
    "China:",
    "Refugee crisis:",
    "Climate change:",
    "International trade:",
    "Emerging markets central in 2016 outlook:",
    "Currency depreciation has been an important buffer against shocks to date.",
    "Sharp further falls in commodity prices, including energy, would worsen conditions for exporters and could trigger sharper depreciations, hidden balance sheet vulnerabilities, or inflation.",
    "Global financial market mood: glum and susceptible to increased volatility despite accommodation from the European Central Bank and the Bank of Japan.",
    "U.S. Federal Reserve: launched in December what it intends to be a cycle of gradual interest-rate hikes; critical how subsequent increases are managed and communicated.",
    "Concluding assessment: global financial conditions are tightening; emerging and developing markets are especially sensitive.",
    "Need for intensified focus on emerging and developing economies:",
    "Research agenda items:",
    "Broader remit:",
    "Recognition that IMF resources are not unlimited; selection of areas where IMF has comparative analytical advantage is necessary.",
    "IMF has long engaged with macro-critical issues relevant to membership, such as women’s labor-force participation and labor-market institutions.",
    "Prior IMF work cited:",
    "Conclusion: newer topics with significant macroeconomic implications are too important to ignore for a member-focused approach.",
    "[Int010416aapdf (PDF)](/-/media/websites/imf/imported/external/arabic/pubs/ft/survey/so/2016/int010416aapdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Survey Interview](https://www.imf.org/en/news/search)",
    "[Maury Obstfeld bio](https://www.imf.org/external/np/bio/eng/mo.htm)",
    "[Research at the IMF](http://www.imf.org/external/research/index.aspx)",
    "[Economic Outlook: October 2015](http://www.imf.org/external/pubs/ft/weo/2015/02/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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