Transcript Of A Conference Call On The Publication Of The 2013 Pilot External Sector Report And Spillover Report

Washington, D.C.
Thursday, August 1, 2013

SPEAKERS:

David Robinson, Deputy Director, African Department, IMF; Lead Coordinator, 2013 Pilot External Sector Report

Isabelle Mateos y Lago, Assistant Director, Asia and Pacific Department, IMF; Lead Coordinator, 2013 Spillover Report

Gian Maria Milesi-Ferretti, Deputy Director, Western Hemisphere Department, IMF; Mission Chief, United States

Jerald Schiff, Deputy Director, Asia and Pacific Department, IMF; Mission Chief, Japan

Markus Rodlauer, Deputy Director, Asia and Pacific Department, IMF; Mission Chief, China

Krishna Srinivasan, Assistant Director, European Department, IMF; Mission Chief, United Kingdom

Mahmood Pradhan, Deputy Director, European Department, IMF; Mission Chief, Euro-area

Steven Phillips, Division Chief, Research Department, IMF

Moderated by William Murray,IMF

MR. MURRAY: Hello, and welcome to this press conference call on the 2013 Pilot External Sector Report and our Spillover Report. These are separate reports, though complementary. They're relatively new outputs from the IMF. They reflect an extensive amount of inter-departmental cooperation and coordination. And there's quite a bit of information contained in these reports. We're going to try to cover as much ground as possible this morning, but if you do have any follow-up questions, please send an e-mail to Media Relations at media@imf.org, and we will follow up for you before the embargo on these reports expire.

With that I'm going to turn the table over to first David Robinson and then Isabelle Mateos y Lago for some brief opening remarks.

MR. ROBINSON: Thank you, Bill. Good morning to everyone. Let me begin by making a few remarks to give a little bit of background behind the Pilot External Sector Report, to draw your attention to what is new in this year's report and also to give you a flavor of some of the key findings.

As you may know, this is the second year that we have issued a Pilot External Sector Report. As last year, the report looks at the evolution of external sector positions broadly defined including current accounts, exchange rates, capital accounts, reserves, and external assets and liabilities in the 28 largest economies plus the Euro area.

The basic objective is to ensure that we pull together the information from the Fund’s bilateral and multilateral surveillance, to form a consistent picture across all economies. Naturally, these assessments draw heavily on our recent multilateral outputs, but they also draw heavily on (and are reflected in) the recently conducted Article IV consultations, including those for the largest systemic economies discussed at the IMF Executive Board during July.

In terms of what is new this year, based on the feedback received on last year's report, there are three key innovations. First, we have tried to give additional context to the external assessments by providing a broad overview of significant topical developments -- capital flows both level and volatility, and to a lesser degree trade policies are highlighted in this year's report.

Second, this year for the first time, the assessments of the individual economies are being published in addition to the summary report. This is intended to provide further texture to the discussion -- although given that we assigned one page to each country, they cannot, of course, have the depth of discussion or reflect the authorities' views as in the Article IV Consultations.

Third, we have further developed the methodologies which are used as inputs into the exercise. One of the key inputs is the External Balance Assessment methodology that has been refined over the last couple of years by the Fund's Research Department. This provides model-based estimates for both current account and exchange rates that are multilaterally consistent and that distinguish both fundamental factors, and also the role of policies, including both domestic and foreign influences. This methodology has been refined and enhanced relative to last year's version, and the refinements are summarized in an annex to the main report. Additional information on the models and datasets will be made available shortly, and Mr. Phillips from the Research Department is here and can field any questions you may have on the methodology.

In terms of findings, the backdrop of course to the analysis has been the continued weak global growth environment and a generally high level of uncertainty in the world economy. The policy responses to support growth, such as, but not only, the successive rounds of quantitative easing, combined with shifting risk perceptions have really been key in understanding the evolution that of external sector imbalances in the last year or so.

Beginning with capital flows, the debt-creating components -- portfolio flows -- have been fairly volatile and have posed policy challenges for a variety of economies, not just the emerging markets, but also some of the advanced economies. We have seen that capital flows in the emerging markets did come back to the pre-crisis levels for most countries, at least those outside of emerging Europe, but also were somewhat volatile. Some of the advanced economies, particularly Switzerland and Denmark, have also faced periods of very large inflows, in part a reflection of safe haven effects at times of stress in the Euro area. These periods of pressure triggered specific policy responses, such as the introduction of a floor for the exchange rate in Switzerland, and the use of negative interest rates in the case of Denmark.

Turning to the current account, the basic data on the actual current account divergences -- aggregation of surplus and deficits, they continue to decline from the 2006-2007 peak. Once we adjust the basic headline numbers for output gaps in terms of trade cycles to construct cyclically adjusted divergencies. We also see a narrowing in this component. In addition, we have seen the exchange rates have generally moved in the right direction, that is exchange rates for economies with strong external positions have tended to appreciate and vice versa, with some exceptions in the commodity producers. These basic facts point to the fact that the narrowing we have seen in the current account imbalances goes beyond the purely cyclical components. Now if we translate this high-level data into what is happening underneath these external imbalances, where we look at how out of line current accounts are from where we would expect them to be based on fundamentals and desirable policies, we find that the global imbalances also narrowed slightly in 2012 to around three quarters a percent of global GDP -- this is a little bit lower than last year.

Turning now to some of the larger economies, we see that the imbalances for the U.S. and China both narrowed a little, with the U.S.'s external position remaining moderately weaker than justified by fundamentals and desirable policies, and China moderately stronger.

Within the Euro area while the union level remains broadly in line with fundamentals, there continues to be wide divergences among the economies. Large surpluses in Germany and the Netherlands, while the current accounts in the euro area deficit countries actually shrank as a result of structural and cyclical factors with both further import compression and some export growth.

Japan's external position was particularly difficult to assess for this year's report given the substantial changes that have been made to the macroeconomic policy framework. The yen has depreciated sharply -- about 20 percent against the U.S. dollar from the third quarter of 2012 until June 6, which is the cut-off date for this year's report, but has also been very volatile. Against this backdrop of higher uncertainty than usual, our assessment -- as was noted in the concluding statement of this year's Article IV mission -- is that the external position is currently moderately stronger than implied by medium-term fundamentals and desirable policies. But that if comprehensive fiscal and structural reforms are implemented in a credible manner, then the external position would be expected to move to a position broadly consistent with fundamentals.

Moving now to the analysis of policy gaps, in terms of what is driving the imbalances being highlighted in figure 24 on page 30 of the report for those of you who have it. With many countries running fiscal deficits beyond the desirable levels from a medium or long run perspective, the global fiscal stance is one of the key contributing factors to the global imbalances. Further progress on the fiscal front for the largest economies, would have an important impact elsewhere. Though of course the pace of adjustment needs to be carefully calibrated to ensure we avoid adverse impacts on global growth. And just to reiterate that -- we're not saying that fiscal policy needs to move immediately, and we certainly don't expect current account gaps to close immediately.

Finally, reflecting the general narrowing of current accounts and the shifting nature of capital flows, the pattern of reserve accumulation seen during 2012 was quite different to last year. Most emerging markets saw little or no increase in reserves, whereas some of the smaller, advanced economies and the oil exporters saw very significant increases. And with that I should close.

MR. MURRAY: That's great. Thank you, David. Isabelle, the floor is now yours.

MS. MATEOS Y LAGO: Thank you. Let me turn to the Spillover Report. This is something we've been doing for three years now. It is narrower in its scope in that it focuses on the five largest economies -- China, Japan, Euro-area, U.K., and United States--the "Systemic 5" or "S5". And the way to think of it is as a companion to these countries' Article IV consultations. The purpose of this exercise is to integrate into the policy dialogue with the S5 economies the impact that their policies have on the rest of the world. It is also obviously to help the spillover recipients prepare to deal with the impact of the policies from the S5 countries. And so as part of the preparation for this report, we've sought input from countries from around the world in terms of what they perceive as the most important impact these economies have on them, and have tried to focus our analysis on those themes.

So, what are the key findings that arise from the analysis in this report? Well, the first theme is that these five economies are not doing as well as was hoped a year ago, they're still extensively below potential, and so it would be easy to be negative in terms of their impact on the global economy.

However, one important finding of this paper is that all of them have undertaken policies without which the negative spillovers could have been really considerable, and here let me highlight two in particular. In the Euro-area, a number of policies in particular the OMT program, adoption of the European stability mechanism, resolution of uncertainties about a program with Greece helped stabilize markets and all together boosted global output somewhere between 1.5 and 3 percent, depending on what one assumes would have been the alternative. But what is for sure is that these policies have reduced global stress tremendously and in doing so have boosted global growth.

Another big tail risk that has been avoided was in the U.S. There, there were concerns last year about the fiscal cliff. Again, this has been avoided; not fully: sequestration has remained and implies that fiscal policy is not as supportive as it should be, but nevertheless, we estimate the positive impact altogether on the global economy of avoiding the fiscal cliff to somewhere between half a percent of global GDP to 1¾ percent. So that is not negligible. Beyond these avoided tail risks, all of the S5 have deployed policies that have contributed to better global outcomes. One very obvious line of policies has been further QE in the U.S., expnaded QE in Japan and then continued QE in the United Kingdom, and here I have to admit it's very difficult to come to a very clear and accurate estimate of what have been the global benefits; but at least in the case of the U.S., we find quite strongly suggestive evidence that there has been a positive impact om global output. In the case of the U.K. and Japan, the evidence is more ambiguous, but in the case of the U.S. it is not.

And then all the other S5 have done things that have avoided worse outcomes. There's been the economic stimulus in Japan. There's been lower fiscal consolidation than initially planned in Europe. And China also has undertaken stimulative policies that supported its own growth and global output. So, let's give credit where credit is due. At the same time, it is equally clear that present policy settings are not optimal, and that in fact they themselves are a source of large downside spillover risks. This is for several reasons. The first source of risk is QE itself. That's been very good so far, but there are questions going forward in terms of when to stop and what is the exit strategy, and here as we discuss in the report, there are risks from potentially continuing it for too long. There are also risks from pulling it off too soon; and even if the timing is right, there are some complications that could arise that would imply that the impact on the rest of the world may not be favorable. So this is one issue to look at very carefully.

Another source of adverse spillover risks going forward is growth, with almost all the S5 subject to risks of protracted slump or in the case of China more of a sharp slowdown. But all of these areas, unless they shift their policies, particularly on the structural front, and in Europe the financial sector front, these economies are at risk of falling into a rather serious growth problem, and that would have negative spillovers on the rest of the world. One illustration is the case of the Euro-area. Such a slow growth trap could reduce Euro-area output by five percent after five years, and would have negative spillovers of about one percent of global output -- ie global output would be one percent lower after five years if such a scenario materializes.

And then of course if growth is slower, the risks of fiscal stress are higher, and here the two risks that we highlight in the report are the ones for the two S5 economies that at present do not have very clear medium term consolidation plans, ie Japan and the United States. And here you can see the numbers in the report, but in case of high contagion from fiscal stress in these countries, there could be very material adverse impacts on the rest of the world--several percentage points of global GDP.

So, what is to be done about it? Well, one of the key points of the report is there is a clear path, and that path is to adopt the policies outlined in the Article IV for each of the F5 (phonetic) economies. I'm not going to go into it in detail because you've seen all the reports except the Japan one which will be out soon. The key point here is that if these policies were adopted, the risks of these negative spillovers that I've talked about would be much reduced, and what's more global growth over the long term could be higher by as much as three percent. So, this is significant.

And finally, one last nugget to highlight is that there are clear synergies between these policies so that if they're all done more or less at the same time, the benefits will be even higher because when some of the S5 will be slowing down, others will be growing faster, and also at the same time some will be saving less such as China and Euro-area, others, such as the U.S. or Japan will be saving more, and that again would prevent an adverse impact globally as global interest rates would not rise and dampen world growth.

So these are the key messages, and I think I'll turn it back over to Bill and answer your questions.

MR. MURRAY: All right. Thank you very much, Isabelle. I guess we'll start taking questions.

QUESTION: I just was not quite clear exactly what the main takeaways of the reports are. I can find one or two of my own, but part of that was the language I was wading through. Not to say that there's not excellent analysis in there, it's just way above my head. Can you answer me this though? Why is the pilot report still a pilot? What's the benefit of these reports, and it appears that Japan -- the risk of not following through the structural forms is the biggest risk to the global economy, or have I got the sovereign stress in the U.S. wrong. Is that the biggest risk?

MR. ROBINSON: Let me take that first question, why is the pilot a pilot?

QUESTION: This is the second year. I think it was not supposed to be a pilot this year.

MR. ROBINSON: Yes, this is the second year of the pilot. As you know, this was introduced just a year ago, and the approach is new we are using different kinds of models, different kind of techniques. It's a different approach to external analysis designed to strengthen and ensure that multilateral consistency comes through very clearly. What we have done is that we went out last year to obtain fairly extensive feedback on both the models and the approaches, and also the nature of the report. And I think we tried to adapt the report a little bit this year to reflect that feedback, and certainly there was a lot of work done on refining the models in ways that were suggested from the feedback. In terms of where we go next year, I'm not sure that decision has been made, but as you know it was labeled a pilot because we knew that this was a new methodology, and we were trying to get consensus around it, both in terms of the models and also the understanding of the concepts.

QUESTION: So why do these, particularly the EBA, why does it matter? What does this report do? Why does it matter?

MR. ROBINSON: The report is important because it provides an overall assessment of where we see the external sector positions of all the major economies in the world.

QUESTION: And so if I can go to one, I see the Japan on page 17, and it says the real exchange rate could be undervalued by 20 percent or overvalued by 10 percent. That's a huge variation, so I'm confused about what I'm actually supposed to take away from that, and how I should read whether that's an imbalance or not?

MR. SCHIFF: I think you mentioned two issues about Japan.  On the measurement of the exchange rate, yes, it's true that it's an unusually large range for Japan.  That reflects the fact that on one level that Japan is just in a transition, and things are moving very quickly.  More technically, in a sense, the analysis was conducted on data for 2012, and of course since then there's been a major change in the monetary policy framework, and some other changes are coming online.  And at the same time, there's been a very large movement in the exchange rate itself, so it's been quite complex.  In terms of how to interpret it, our view is that the yen is moderately undervalued, and you can see that by judging the midpoint of the range which points to moderate undervaluation.  So, I think that's sort of the bottom line conclusion on where they are with regard to the exchange rate.  On the spillovers you asked about risks from Japan not following through with its structural reforms.  We certainly agree with that.  We've been very supportive of what's being called Abenomics, but that support is conditional on them actually following through, not just on the structural reforms, but also following through on the medium term plan for fiscal adjustment.  Without all three elements, the outcome for Japan will not be positive, and therefore, spillovers will also be problematic for the global economy. 

MS. MATEOS Y LAGO: If I can just comment at this point, because you asked about the relative ordering of the shocks. Just to make sure, we do not explicitly discuss the likelihood of the different risks, but let me just say, we do not see them as on the same footing in terms of likelihood. And so you're saying, well, are the largest risks from the U.S. fiscal stress? That is certainly the biggest number. And that's because the U.S. is the largest economy, and the financial stress is the one that has the largest spillovers, but we don't see that as a very likely scenario at all.

And so one has to, when looking at these numbers, one needs to also bear in mind that the likelihoods that we assign to these different scenarios differ, and you can get a better sense of that from looking at the Article IV reports themselves.

QUESTION: Hi, thanks for taking my question. And there is a lot today, I thought I would just focus on two specific things you mentioned in the report, one is about Fed exits from quantative easing, and you mentioned kind of a few scenarios in the spillover report. And I was wondering, the scenario where long term interest rates jump up and stay high for a while, that could have more negative impacts on some countries. What can the Fed or anyone else do anything to prevent that, because you don't really describe, in what situation would that happen, I guess. The second question was about coordination, but I can just ask that after the first one.

MS. MATEOS Y LAGO: Okay. So on exit from QE, we wrote all this before, here, before the events of the last few weeks, and in particular what happened after the May 22st announcement of upcoming tapering, et cetera, so this was more of a conceptual framework to think about it. But I think what happened next gives us a, helps us illustrate with concrete data. There's, I mean, there's different reasons why long term rates might go up, one is because people expect short rates to go up, one is because people expect growth to pick up strongly, and then one is simply because people fear greater uncertainty and greater risk overall.

So what we're saying is, if the long term rates rise just because people anticipate higher growth and anticipate some tightening of short term rates, that should be fine, because the resulting tightening of financial conditions would not generally outweigh the benefits from higher growth. If, however, this is more of a panic reaction, then one would have all the negative effects of the tightening without the benefits of higher growth. And what we had anticipated, which, in fact, happened, is that there is a very significant correlation in these long term interest rates between the U.S. and the rest of the world.

And so, unfortunately, there isn't a whole lot that can be done to alleviate that. Although, of course, outside of the U.S., some countries have moved to lower their own interest rate, which could help alleviate the impact on their own economies, or somehow provide more easing in other ways than lowering interest rates, if they can. And, separately from that, the magnitude by which the long term interest rates in the rest of the world also tends to reflect home grown vulnerability and we say this play in the turmoil of the last few weeks, that countries with stronger fundamental generally were less affected than those with weaker fundamentals.

So the lesson here on what can countries do to protect themselves,is that they will have to have strong fundamentals and then they will be in a better condition to deal with whatever fall out there is from the exit from QE.

MR. MURRAY: Gian Maria has some additional comments, thank you.

MR. MILESI FERRETTI: Yes. You were asking what can the Fed do if there is an increase in long term rates that, in a sense, is unwarranted from their point of view. So as Isabelle was correct in spelling out, if you have expectations of faster growth, markets will assume that the Federal Reserve is going to be tightening monetary policy a bit earlier, and this will drive up interest rates, but it's an increase for good reasons. In case you have an increase in interest rates that does not appear to be warranted by the higher growth expectations, there are various things the Fed can do. One is, if markets anticipate the tightening that is earlier than the Fed announced, clearly the communications policy is important.

And I think you can see that over the past few weeks, the Chairman of the Federal Reserve, governors have been very explicit in restating the key message that short term rates are going to be close to the zero bound for a while, and that they don't envisage any tightening of monetary policy, only slowing down the pace of accommodation if the economic recovery and the recovery in employment continues along the lines of their forecast.

In addition to communications policy, of course, the Fed could potentially shift, as they have indicated explicitly, their forward guidance by changing the threshold for which they would begin to consider increasing interest rates. That would be, for example, changing the threshold on unemployment from 6 1/2 percent, or they could modify the pace of their tapering. All these are available tools to try to counter an increase in long term rates that appears unwarranted by the evolution of underlying fundamentals.

QUESTION: A follow-up. You talk about that, basically, if the S5 (inaudible) accord, they may not, since some of the policies may involve slower growth or other negative side effects as they're implemented, and so everything goes smoothly. You say that, without coordination to benefit to cost ratio from each set of reforms might be perceived as sufficiently high. So, basically, they might not want to go through with all these difficult things unless they see that there's going to be some pay off immediately.

So I guess I was wondering if you see that there is room or kind of appetite for cooperation? I mean, what was your sense from G20 or other meetings, do you think that countries actually are able to cooperate when they have all these kind of domestic pressures not to do some of these reforms that you're calling for? Sort of a broader question.

MS. MATEOS Y LAGO: First of all, let me restate a little bit the way to describe the message on coordination. We're not saying, you know, countries should do things that maybe are not in their immediate interest, because if they do it, then others will, too, think that will be good for them. That's not the situation, everything we're recommending for each country is very much in its own interest. So cooperation and coordination, they should do it, if nothing else, for themselves.

But, the point is, if they do it all more or less at the same time, the impact on the rest of the world would be better. So it's a slightly different situation, and if they all follow their own selfinterest, there would be no need for coordination, because it would just happen, if you didn't have political processes, et cetera, that might complicate life in each of these economies. But this is not a situation where there's a tradeoff between, okay, I do something that's a little less good for me if you do that, in a sense, it's simpler. And so, now, in terms of what is the appetite for global cooperation, I don't think it has changed greatly in recent years, this is always something that's difficult.

But, certainly, all of the S5 have told us that they get this thing, and if they all do it, it's better globally. And so, I think I would leave it at that. I mean, they know they have this G20 framework, some of them are keen to try and use it to rekindle these coordination efforts. It's just an open question where that will go, but I think the fundamental point here is everything we're recommending is in the selfinterest of the country, so it's just a matter of gathering the political momentum to get these things done, and then the global results will be better.

QUESTION: Do you see any impact from these spillover reports you've published during the last years on the willingness of countries to work together and to coordinate in the sense you described this, about coordinating the sense that you do something at the same time.

MS. MATEOS Y LAGO: That's a difficult question. I'll tell you what we've seen as the benefit of this type of analysis, and we've heard this directly from a number of different countries in the G20 context or others. They go to these meetings and talk about each other's policies all the time. But more often than not, they don't really have an objective basis for discussing what their policies are doing to each other.

And what we've heard is that they really welcome this type of analysis that brings in a bit of objectivity in these discussions where, quite naturally, different countries tend to look at the same facts and have very different perspectives on them. So it's a helpful input, it's not making it dramatically easier to get global cooperation going, but it helps.

QUESTION: Yes. Isabelle, that was a good summary of these reports, thank you. The two percentage point impact of Japan, a Japan shock on the global economy, can you tell me over what time period that is?

MS. MATEOS Y LAGO: That's the fiscal stress scenario -- 

QUESTION: Yes.

MS. MATEOS Y LAGO: That would be in the year where the shock happens. And let me just stress, this is a scenario that assumes, really, sort of global crisis type contagion from Japan to the rest of the world.

QUESTION: Yeah. So, my understanding of the scenario is the DOJ continues with its QE policy and Abe doesn't deliver on the structural and fiscal arrows.

MS. MATEOS Y LAGO: That's not the way we set  it out; we do not, in this scenario, have a story on how to you get there, we're just saying if you get to a point where market panic about the ability of Japan to carry debt, this is what could happen. But we don't have a specific narrative as to how one would get there.

QUESTION: But why would you pose that scenario if you didn't have some reason for thinking that as a risk?

MS. MATEOS Y LAGO: Oh, there is a general sense that, if Japan, I mean, launches all this fiscal stimulus  this is the point that Jerry was making earlier  if you do all this fiscal stimulus and growth doesn't pick up because you don't do the reforms that will stimulate it, and you don't get on a path to fiscal consolidation when the growth momentum permits it, it can end badly. But what I'm saying is that we do not lay out, in the way we designed the scenario, we do not lay out a specific way in which this happens. But at a broad level, it is something that could happen if abenomics doesn't work.

MR. SCHIFF:  Well, maybe it's just worth adding that the key risk that Japan has posed to the global economy for a while, now, is their very rapid growing debt.  We highlighted that in the previous two spillover reports, so there's nothing new about our concerns about Japan's fiscal problems and their potential impact on the world.  And even in the absence of Abenomics, that would be the key risk that we'd be highlighting. 

       Abenomics, if it's successful, has the potential to reduce the fiscal risk by raising growth on one hand, and if there's a strong fiscal effort, addressing the debt directly.  But, of course, if that element is missing, combined with the continued very rapid monetary expansion of asset purchases by the Bank of Japan, then we could see sort of new routes for the fiscal problem.  But it's not a new problem. 

          QUESTION: Yes, that's helpful. And then, on the EBA, if you could summarize in 20 words or less and in English what you think the widest imbalances and biggest  not just sort of on a percentage level, but also on a volumetric level in terms of the size of the economy. Where do you see the widest imbalances that have the potential to damage the global economy? That's the point of the whole report, right?

Let's look at the global economy in a piecemeal way and see where there are imbalances in economies that are potentially having damaging international effects, and here are the gauges, reserves, effects, current account deficit, et cetera. And so I'm asking you, where are those, the widest volumetric quantative imbalances, can you point me to, you know, the sum of your analysis?

MR. ROBINSON: Sure. Maybe the key chart, if you're only going to look at one chart in the report, is figure 24 on page 30, which breaks out for each of the individual economies, the policy gaps, and also the overall gap. And this is looking at it from the current account. And they are listed, ranked, the countries are listed from those with current accounts that are much stronger to much weaker

QUESTION: Figure 3.1?

MR. ROBINSON: Figure 24 on page 30.

QUESTION: Oh, figure 24, okay.

MR. ROBINSON: The solid black diamond that you see there is the gap, how much we see the current account as being out of line, and then those various colored bars identify the policy gaps, a little bit complicated to read through, but there's a lot of information there. We tried to break out what is underlying those imbalances. At either end, we actually have European countries, with Germany being fairly significantly stronger current account surplus than implied by the longer term fundamentals and desirable policies. At the weaker end is Spain, where again, there are issues with the external position.

But this ranks the current account imbalances of countries , relative to GDP rather than actual dollar types. This really is the summary of where we see things, this is where we see the size of the gaps, and to some degree, what we see as the factors underlying those gaps.

QUESTION: All right. Thank you.

MR. MURRAY: I think we're just going to take a question or two more, and then wrap this conference call up. Any further burning questions that we need to handle collectively right now.

QUESTION: Hi. I'd like to ask you about the Brazilian figures on the individual assessment. And I think, for example, the real exchange rate, they referred to the 2012 period because, in case of Japan and China, you mentioned figures from 2013. The Brazilian case, you only mentioned the 2012.

MR. ROBINSON: The numbers shown in most of the real exchange rate components cover through 2012 except where we see there have been large movements in 2013 that need to be reflected. And Japan, in particular, given the fundamental changes in the macropolicy framework there, we did. 

QUESTION: Because we had some sharp movement, it seems to me, in Brazilian currency. But these numbers in the real exchange rate is referred to, refers to 2012, right?

MR. ROBINSON: The main external sector report does have a summary table of data, which is Appendix I, which includes estimates for the real effective exchange rate both for 2012 as an average change, but then it also has a column giving you the change from December 2012 to May 2013.

QUESTION: Yeah, I know, but then you had an appreciation for the currency to May, and I believe from May to July, we had, surely we have depreciation of the currency. Because, in that column you mentioned, the minus is devaluation and the positive number is appreciation, right?

MR. ROBINSON: Right, that's correct.

QUESTION: Okay. And just one second question about the norm current account. The range is from positive to minus one percent of GDP (inaudible) in the line of what a colleague just said, it's a big range. It's normal  why is that, why such a big range?

MR. ROBINSON: Yes. I guess the ranges that you're looking at are the ones that are shown in figure 22 on page 28, correct?

QUESTION: Yeah.

MR. ROBINSON: Yes. What we did for each country is to have a point estimate of where we see both the current account and also the real exchange rate, but then we include a range around that estimate to reflect the amount of uncertainty, and that does vary from country to country. I think the ranges on Brazil seem more or less in line with many of the other countries . I think the ranges on Brazil seem more or less in line with many of the other countries.

QUESTION: Okay. But the range is (inaudible) to minus one percent, right? It appears on page 7, the Brazilian assessment table, you were mentioning you have only the (inaudible) need to be adjusted.

MR. ROBINSON: We're looking at it. I think, actually, you have found a typo in our report. And the figures shown in figure 22 are correct. I mean, the estimate for the current account is from minus 2 percent of GDP to minus 1 percent of GDP.

QUESTION: Minus 2 to minus 1?

MR. ROBINSON: Yes.

QUESTION: Okay.

MR. ROBINSON: I see we missed the minus sign in the individual economy assessment page.

QUESTION: Okay. Because then it would be 3 percent of a range. So it would be from minus 2 to minus 1?

MR. ROBINSON: Correct.

MR. MURRAY: Okay, if there are no more questions, thanks everyone. Just a reminder, if you have any follow up questions, please send an email to Media@IMF.org, we'll chase some information down for you.



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