Growth at Risk: Concept and Application in IMF Country Surveillance

IMF Working Papers, February 21, 2019

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Canonical URL: Growth at Risk: Concept and Application in IMF Country Surveillance

Authors: Ananthakrishnan Prasad, Selim A Elekdag, Phakawa Jeasakul, Romain Lafarguette, Adrian Alter, Alan Xiaochen Feng, Changchun Wang
Published: February 21, 2019
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9781484397015.001

The growth-at-risk (GaR) framework links current macrofinancial conditions to the distribution of future GDP growth.
Main strengths:
- Assesses the entire distribution of future GDP growth (in contrast to point forecasts).
- Quantifies macrofinancial risks in terms of growth.
- Monitors the evolution of risks to economic activity over time.
Policy relevance:
- By using GaR analysis, policymakers can quantify the likelihood of risk scenarios to serve as a basis for preemptive action.
Practical content:
- Offers practical guidance on how to conduct GaR analysis.
- Draws lessons from country case studies.
- Discusses an Excel-based GaR tool developed to support the IMF’s bilateral surveillance efforts.

GaR’s distinct contributions:
- Focus on distributional outcomes of GDP growth rather than single-point forecasts.
- Translation of macrofinancial conditions into growth-risk metrics.
- Enables monitoring of risk evolution over time for surveillance and policy use.
Use cases highlighted:
- Country case studies provide empirical lessons (details within full paper).
- An Excel-based GaR tool intended to support bilateral surveillance.

Policymakers can:
- Quantify likelihoods of adverse growth scenarios using GaR outputs.
- Use quantified scenario probabilities as a basis for preemptive policy action.
Surveillance application:
- GaR can be integrated into IMF country surveillance to better capture macrofinancial risks to growth.

Subject: Asset prices, Credit aggregates, Financial sector policy and analysis, Financial statements, Growth-at-risk assessment, Housing prices, Money, Prices, Public financial management (PFM)
Keywords: accommodative financial conditions, asset price, Asset prices, Credit aggregates, financial conditions partition, Financial statements, GaR analysis, GaR approach, GaR concept, GaR framework, GaR tool, GDP growth, Global, growth distribution, Growth-at-risk assessment, house price growth, Housing prices, price of risk, scenario analysis, term premium, WP