Nonperforming loans are unfortunate consequences of an economic crisis, but their severity varies depending on the nature of the crisis and remedial responses. In Europe, as recovery kicks in, speculation abounds regarding the intensity of the inevitable NPL aftershock. Will it be a tsunami or a wave? What can be done to lessen its force?
The United States has been devastated by COVID-19, enduring more deaths from the virus than any other country. Domestic markets have suffered sporadically, but surprisingly, not all of them. After a brief pause in early spring 2020, the real-estate market has soared and broken 15-year sales records. The main factors propelling these high home prices are low interest rates and short supply, creating a sellers’ market even during a pandemic.
Effective monetary policy undergirds price stability, and the complex synergy of many moving parts in today’s crisis-prone world presents new challenges to innovate as traditional instruments reach their limits. The European Central Bank has responded by introducing new tools to its toolbox, chief amongst them being policy rates, quantitative easing and targeted longer-term refinancing operations, which have pushed the boundaries, but the interaction between the policy instruments could be unpredictable.
After slipping precariously in the early days of the pandemic, commodity prices rebounded in the latter months of 2020, in some cases reaching record highs. Continuing the upward climb throughout 2021 depends on a number of factors such as US dollar weakness, economic recovery, supply and demand, monetary policy, fiscal stimulus, weather events and the type of commodity, with oil, base/precious metals and some agricultural products likely leading the charge.
For the world’s economy, 2021 hasn’t yet brought a break from 2020; COVID-19 remains dominant. Although all banking systems are vulnerable to upheaval, the situations for those in emerging markets are more tenuous for several reasons. S&P Global Ratings examined the three major risks facing a sample of 15 EM countries, including likely deterioration in asset quality, geopolitical and domestic policy uncertainty and vulnerability to abrupt changes in investor sentiment.
During its policy meeting on Thursday, September 10, the European Central Bank (ECB) decided to keep its main refinancing benchmark rate unchanged at 0 percent, along with leaving its rates on the marginal lending facility and deposit facility the same at 0.25 percent and -0.50 percent, respectively.
At its most recent monetary-policy meeting in late July, the Federal Open Market Committee (FOMC) discussed implementing a number of monetary-policy tools to allay concerns regarding the economic outlook for the United States. And while the FOMC had already taken numerous emergency measures
The warning not to put all your eggs in one basket may apply to policymakers’ exclusive focus on boosting the demand side of economies. Monetary policies, in particular, are fixated on promoting growth in demand. But is the supply side of the equation being ignored in the process? Is this one-sided approach most likely to prosper the economies that are subjected to it, or is a change of focus needed?
On the surface, the United States is soaring economically when compared to some of its rivals. But turbulence lurks under the nation’s wings. To a large extent, the Federal Reserve is underwriting this growth through monetary and fiscal channels, leading to instability in money markets. What transpires in the world’s largest economy and reserve-currency holder is guaranteed to impact the welfare of economies elsewhere, so what can we expect next?
Thailand, an emerging market economy, is recognized as Southeast Asia’s second-largest economy, with enviable growth over the years—however, its growth has slowed in 2019. Its export-led economy is feeling the pinch from the global economic slowdown, currency appreciation and trade squabbles between the world’s heavyweights. The new government of Thailand is committed to utilizing this captivating nation’s many attributes, keeping it at the forefront of the region’s innovation and investment.