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During the global financial crisis of 2007–2009, the importance of the scale and correlation of entities in interconnected financial systems, especially on what have become known as “too big to fail” institutions in the global financial system, was clearly evident and spotlighted. Several proposals have been brought on by regulators in the United States (US), covering insurers, asset management funds, private equity firms, hedge funds, and mutual funds (The Economist 2012). Against this backdrop, it is useful to examine systemic risk of international investment. In this article, we focus on the mutual fund sector, for which net assets under management have totalled almost $30 trillion over the last decade, accounting for more than 50% of global market capitalization (Investment Company Institute 2013). Read more.
By Ganeshan Wignaraja. Posted April 21, 2016
There seems to be a pushback against trade agreements in the post global financial crisis era. The Trans-Pacific Partnership (TPP) was signed in early 2016, but US presidential candidates have spared no effort criticizing it so near-term ratification is highly uncertain. The WTO Doha Round is in the deep freeze after 14 years of negotiations. Unilateral trade liberalization has virtually come to a standstill. Read more.
By Kapil Narula. Posted April 15, 2016
Access to energy sources at low prices will continue to drive the world’s political agenda as energy is a component as well as an object of national power. The world’s primary energy consumption from commercial sources of energy has grown from approximately 8,600 million tons oil equivalent (mtoe) to 13,000 mtoe from 1995 to 2015 and is forecasted to grow approximately by the same amount to 17,300 mtoe by 2035. Read more.
Impact of a possible growth slowdown of the People’s Republic of China on emerging Asia: A general equilibrium analysis
With its rapid economic growth and integration into the global economy over the last 3 decades, the People’s Republic of China (PRC) has emerged as a major economic power and an important source of growth for the world economy. Now it is the second-largest economy at market exchange rates and the largest exporter in the world. In Asia, the PRC’s role as a growth pole is even more prominent. Over the last 10 years, spurred by strong processing exports and domestic demand, the PRC’s imports from Asia in US dollar terms have increased at an average annual rate of 9%. Strong demand from the PRC also supported prices of commodities exported by Asian and other emerging economies. Read more.
The increasing use of the internet in recent years has caught the fancy of consumers and producers, in commodities, services, and leisure activities. The wide prevalence of wireless internet access and the portability of devices such as smartphones and tablets have increased access and diffusion of related services and products as possibly no other technology in history. Read more.
On August 2015, the People’s Bank of China devalued the yuan with the aim of appreciating the currency against the US dollar. On October 2015, the European Central Bank signaled the intention to pump more liquidity into the eurozone economy. On October 2015, the Federal Reserve postponed its intention to conduct tapering on its monetary policy. Over the last 24 months, the dollar has been up nearly 10% against a major currency index of its trading partners. Emerging market economies have been facing disappointing growth, more volatile foreign exchange rates, and low inflation due to the slowdown in economic activities and the sharp decline in commodity prices. Moreover, the growth of debt in emerging countries has increased dramatically compared to advanced economies. Since 2009, the average level of private credit as a proportion of gross domestic product (GDP) has increased from around 75% to 125%. These stylized facts highlight deep uncertainties and downside risks in Asia. Measures of regional financial integration, capital market deepening, and emerging market banking systems must be carefully evaluated. Read more.
New ADBI research (Aizawa and Helble, forthcoming) studies how overweight and obesity have become major threats to public health in Indonesia. The evidence shows that obesity, which was previously a problem among high-income groups in the country, has spread across all income groups. Obesity in the lower-income groups, in particular, has been rising rapidly. Overweight and obesity significantly increase the risk of suffering from a large number of chronic conditions. Lower income groups are particularly ill-prepared to face continuously high health expenditures, as health systems remain weak. Urgent policy action is needed to mitigate the risk of these groups of falling into poverty due to high health expenditures caused by diseases related to obesity. Read more.
By Matthias Helble. Posted March 14, 2016
The Bank of Japan had a difficult start into 2016. The latest data shows that inflation in the last quarter of 2015 was lower than expected. Furthermore, doubts are increasing about the recovery of the economy. At the end of January, BOJ Gov. Haruhiko Kuroda surprised markets by announcing negative interest rates for certain commercial bank deposits at the BOJ. On March 1 Japan started to sell government bonds with a yield below zero. Market observers expect even bolder steps later this year. Read more.
By Jean-Francois Gautrin. Posted March 9, 2016
Despite strong linkages in the past during the colonial period and strong ethnic and traditional ties, South Asian countries have become increasingly more diverse since their independence. While they are geographically closely connected, this does not mean that they are well integrated. Countries in the region have vastly different sizes, populations, and topography, and there are significant differences in their economies and income per capita. The conditions, however, might be ripe for a boost in regional integration. Implementing highly visible and symbolic transport connectivity projects, which have long been considered as dream realizations, would trigger the acceleration of regional integration for the benefit of all. Read more.
Singapore has regularly reported considerable surpluses in its annual fiscal budget. Budget surpluses have been an essential part of the country’s growth strategy (Asher et al. 2015) as they are perceived to provide a signal of sound public sector financial management to foreign investors, key stakeholders in Singapore’s development planning. Budget surpluses also enable the corporate income tax rate to be kept among the lowest in the world, at 17%. Other policies—such as having a relatively large inflow of foreign workers that depresses at the lower end and almost no taxes on most forms of capital gains and domestic interest income—contribute to the high share of capital income in national income at around 55%, with labor’s share at around 40%–42%, in contrast to the pattern in OECD countries. Read more.
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- Measuring the systemic risk contribution of international mutual funds
- RCEP – a life raft for trade liberalization in Asia
- India: The rising star on the world’s energy horizon
- Impact of a possible growth slowdown of the People’s Republic of China on emerging Asia: A general equilibrium analysis
- E-government as a vehicle to reduce white-collar crimes
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