Country Reports

July 7, 2016

South Africa: Selected Issues

Description: This paper describes South Africa’s economic development and challenges. South Africa has made considerable economic and social progress over the past two decades, but faces substantial challenges. Global transitions—China’s slowdown and rebalancing, weak commodity prices, and U.S. monetary policy normalization—are taking a heavy toll on South Africa. Growth and employment, which were already low, are faltering and continue to underperform peer countries. Vulnerabilities remain elevated and have increased in the real and fiscal sectors. Boosting growth and job creation, thus reducing extremely high unemployment and inequality, and promoting social transformation remain South Africa’s key challenges.

July 6, 2016

Israel: Technical Assistance Report- Consultations on the Work of the Banking Supervision Department of the Bank of Israel

Description: This paper first takes a historical perspective, studying the implications of the oil boom of the 2000s on industry structure and economy-wide productivity. It then examines progress with the ongoing transition thus far both in the real sector and in the labor market, bearing in mind the short time span that has passed. This paper also explores two possible explanations for lagging productivity—namely, product market regulation and the low level of research and innovation. An extensive data set of mainland Norwegian firms is used to empirically assess the potential productivity gains from product market reforms as well as increasing research and development spending.

July 5, 2016

Norway: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway

Description: The paper examines the nature and scale of spillovers to a number of European countries from monetary policies in the euro area and the United States using three different approaches. The analysis focuses on selected non-euro-area countries in Europe: the Czech Republic, Denmark, Hungary, Poland, and Sweden. Recent developments in these countries’ sovereign bond yields and exchange rates are indicative of potential spillovers. The paper’s most consistent analytical finding is for spillovers to lower domestic bond yields, with the potential for repercussions on credit expansion and asset prices. More recently, the event study uncovered evidence of upward pressure on the exchange rate.

July 5, 2016

Republic of Poland: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Poland

Description: This paper describes mainly the introduction and performance of the Extended Fund Facility program for Pakistan. Since the start of the program in September 2013, economic growth has gradually recovered, inflation has fallen to low single digits, foreign reserve buffers have been rebuilt, social safety nets have been strengthened, and the fiscal deficit has significantly declined (although public debt remains high). Despite setbacks in privatization earlier in the year due to labor unrest and political opposition, the authorities remain committed to returning ailing public sector enterprises to a sound financial position, including through private participation, and to completing energy sector reform.

July 5, 2016

Pakistan: Eleventh Review Under the Extended Arrangement and Request for Modification of Performance Criteria and Extension of the Extended Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Pakistan

Description: This paper assesses El Salvador’s capacity and options for upgrading its fiscal framework and attempts to take a fresh look at the “growth puzzle” from a comparative perspective. The Hausmann’s growth diagnostics approach offers a useful start, but it does not clearly explain El Salvador’s growth gap versus its regional peers. The paper also constructs estimates of potential output growth and the output gap for El Salvador and compares it to those of other Central American countries. It examines potential growth before and after the global financial crisis and its likely medium-term trajectory.

July 5, 2016

Republic of Poland: Selected Issues

Description: This paper discusses key issues related to the economy of Poland. Thanks to its sound policies, close links to the German supply chain, and substantial EU transfers, Poland is the only country in the European Union that avoided an outright recession during the global financial crisis. However, this strong performance has masked enduring regional disparities, which are undermining the quality of growth. Poland faces significant long-term challenges as an aging population weighs on potential growth and public finances. The new government, which took office in November, has approved a Responsible Development Plan, focused on spurring growth through innovation and reducing social and regional disparities.

July 5, 2016

Norway: Selected Issues

Description: This paper discusses the oil economy, outlook, and risk for Norway. Growth has continued to slow in the mainland economy. At the start of this year, oil prices had dropped by roughly 60 percent from their peak in June 2014 to less than US$40 a barrel. The labor market is feeling the sting of the oil price crash. The krone has weakened substantially along with the decline in oil prices. However, a modest recovery should take root next year. Mainland economy growth should be about 1 percent this year and pick up to close to 1¾ percent in 2017.

July 5, 2016

Cross-Country Report on Spillovers: Selected Issues

Description: This paper identifies policies to increase productivity in the East, reduce regional income disparities, and promote overall income convergence. Achieving this objective will require improving educational attainment and reducing skill mismatches in the East, scaling up public infrastructure to attract investment to less productive regions, and facilitating labor mobility. This paper also discusses female labor participation in Poland and the potential impact on bank profitability of the recently implemented bank asset tax. Poland’s population is aging, yet it has an important underused source of qualified labor—its women. For Poland to unleash its full economic potential, it needs to embrace the vital contribution that women can make to its economy.

July 1, 2016

El Salvador: 2016 Article IV Consultation- Press Release; Staff Report; and Statement by the Executive Director for El Salvador

Description: This paper focuses on policies to raise growth; underpin fiscal sustainability while enhancing social safety nets; and strengthen financial sector stability, deepening, and inclusiveness. GDP growth has averaged 2 percent during 2000–14, well below the Central American regional average of 4½ percent. While the underlying causes of the low growth are complex, a key channel through which they are expressed appears to be low investment. Given the need to increase growth, revenue-raising measures should be accompanied by cuts in distortionary taxation. Stress tests suggest that financial buffers are adequate to contain most risks. The financial deepening and advancing financial inclusion could have a meaningful impact on both growth and poverty.

Notes: Also Available in Spanish

July 1, 2016

El Salvador: Selected Issues

Description: This paper focuses on policies to raise growth; underpin fiscal sustainability while enhancing social safety nets; and strengthen financial sector stability, deepening, and inclusiveness. GDP growth averaged 2 percent during 2000–14, well below the Central American regional average of 4½ percent. While the underlying causes of the low growth are complex, a key channel through which they are evident appears to be low investment. Given the need to increase growth, revenue-raising measures should be accompanied by cuts in distortionary taxation. Stress tests suggest that financial buffers are adequate to contain most risks. The financial deepening and advancing financial inclusion could have a meaningful impact on both growth and poverty.