Country Reports
2024
May 15, 2024
Belize: 2024 Article IV Consultation-Press Release; and Staff Report
Description: The 2024 Article IV Consultation with Belize highlights that real gross domestic product growth and inflation moderated in 2023. Belize’s key policy priorities include raising the primary balance with revenue mobilization and expenditure rationalization to lower public debt to a level that provides sufficient buffers, increasing expenditure in priority areas, adopting growth enhancing structural reforms, and building resilience to climate change and related disasters. These policies would boost growth and make it more inclusive. Boosting medium-term growth requires increasing female labor force participation, enhancing access to affordable credit for small and medium size enterprises, reducing crime, improving the business climate, and adopting a disaster resilience strategy that strengthens structural, financial, and post-disaster resilience and is based on a multi-year macro-fiscal framework. Keeping vulnerable financial institutions under enhanced supervision and requesting recapitalization when needed is important to maintain financial stability. Strengthening the currency peg requires increasing international reserves by reducing public debt, implementing structural reforms and limiting government financing by the Central Bank.
May 14, 2024
New Zealand: Selected Issues
Description: This Selected Issues paper investigates why New Zealand’s inflation is higher and further from target than comparator economies considering two main hypotheses: (1) the persistence of pandemic era shocks, and (2) strong migration inflows fuelling demand. The paper finds that, like in many advanced economies, expansionary fiscal and monetary policy, high global commodity prices, exchange rates, and high maritime transport costs all fed into higher inflation. However, unique for New Zealand, the delayed reopening of the economy likely caused a postponed demand shock relative to similar economies. Results show that the impact of these shocks decay rapidly over time, suggesting positive short-term inflation dynamics. With an eye for what lies ahead, the paper finds that large migration waves are associated with short-run increases in inflation, but that these effects are relatively modest and no longer significant after four years. Instead, the long-run dynamics show evidence that migration can lead to significant long-term gains to productivity, output, and capital growth. Countries with tight labor markets exhibit similar patterns to those without, except the inflationary effects of migration dissipate faster.
May 14, 2024
New Zealand: 2024 Article IV Consultation-Press Release; and Staff Report
Description: The New Zealand economy slowed considerably in 2023, following a period of strong growth, and some previous significant imbalances are finally correcting. Tight monetary policy has put inflation on a meaningful downward path but remains high. Some of the overvaluation in housing prices has also reversed. The external balance is slowly improving, though the current account deficit is still large. An ambitious agenda of broad-based reforms is underway by the new coalition government.
May 14, 2024
Republic of Slovenia: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Slovenia
Description: The 2024 Article IV Consultation highlights that Slovenia’s economy recovered well from the pandemic, only to be hit by spillovers from the war in Ukraine, followed by severe flooding in 2023. After a strong recovery in 2021, growth slowed in 2022 because of adverse energy price spillovers from the war in Ukraine and supply chain disruptions. Growth is expected to accelerate, driven by a recovery in domestic demand. Inflation is projected to continue to decline. The outlook remains subject to high uncertainty, with risks stemming from an intensification of regional conflicts, renewed commodity price volatility, and lower trading partners’ demand on the external side and labor shortages and broader capacity constraints on the domestic side. Severe weather events also remain a risk. Given underlying increase in core public spending in recent years, age-related spending pressures, and relatively high public debt, sustained fiscal consolidation and fiscal reforms, including in taxation, the pension, public wage and health systems, are needed to underpin long-term public debt sustainability. Deeper structural reforms would help boost growth and foster income convergence. Longer-term limits on employment growth call for reforms enhancing productivity growth, including improving regulatory quality, building human capital, and deepening the financial sector.
May 14, 2024
Republic of Slovenia: Selected Issues
Description: This Selected Issues paper focuses on boosting productivity in Slovenia. Slovenia’s ageing population sets a constraint on the contribution of labor to gross domestic product in the end. Only achieve sustained increases in income and living standards can, therefore, through investment in physical and human capital and, more importantly, through enhancing productivity, historically the key growth driver. This paper summarizes historical trends in growth and productivity in Slovenia, examines the country’s strengths and weaknesses in terms of key factors affecting productivity identified in the literature. Since the scope for future labor contributions to growth in Slovenia is limited for demographic reasons—apart from further improvements to labor quality—the focus of economic growth policies should be on reinvigorating private investment, which has been low over the past decade, and pursuing labor and product market reforms that boost total factor productivity growth.
May 13, 2024
Japan: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis and Stress Testing
Description: The Japanese financial system has remained resilient through a series of shocks including the COVID-19 pandemic. Japan’s large and globally well-integrated financial system withstood the pandemic shock, aided by strong capital and liquidity buffers and extensive policy support. Credit provision to the private sector has remained robust since the pandemic, supporting a steady economic recovery.
May 13, 2024
Japan: Financial Sector Assessment Program-Financial System Stability Assessment
Description: Japan’s large and globally well-integrated financial system has remained resilient through a series of shocks, including the COVID-19 pandemic, aided by strong policy support and improved policy frameworks since the 2017 Financial Sector Assessment Program (FSAP). The financial system is, however, at a critical juncture amid an evolving macroeconomic environment. After years of deflationary concerns and ultralow interest rates, sustained inflationary pressures have emerged, leading the Bank of Japan to end its negative interest rate policy and yield curve control. Key risks to macrofinancial stability at present stem from the sizable security holdings of financial institutions under mark-to-market accounting, some banks’ notable foreign currency (FX) exposures, and signs of overheating in parts of the real estate markets. These challenges come atop several structural transformations stemming from climate change, rapid digitalization, and an aging population.
May 13, 2024
Japan: Financial Sector Assessment Program-Detailed Assessment of Observance on Insurance Core Principles
Description: This assessment of insurance supervision and regulation in Japan was carried out as part of the 2024 Financial Sector Assessment Program (FSAP). This assessment has been made against the Insurance Core Principles (ICPs) issued by the International Association of Insurance Supervisors (IAIS) in November 2019. The assessment includes the standards of the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). It is based on the laws, regulations and other supervisory requirements, and practices that were in place at the time of the assessment in September and October 2023.
May 13, 2024
Japan: Financial Sector Assessment Program-Technical Note on Banking Supervision and Regulation Selected Issues
Description: The Financial Sector Assessment Program (FSAP) carried out a targeted evaluation of issues relating to the effectiveness of banking supervision and regulation in Japan. The scope of the work focused on the key findings from the 2017 Basel Core Principles (BCP) Detailed Assessment Report (DAR) and the transformation of the supervisory approach by the Financial Services Agency (FSA) undertaken since the last FSAP. The overall conclusion of the 2017 DAR was that the supervisory framework was generally sound, but some key priority areas were identified as needing to be addressed. This note reviews progress made in these areas as well as examining the fundamental shift to a more risk-focused, principles-based supervisory approach than before.