White Papers
Physical AI is changing manufacturing - here's what the era of intelligent robotics looks like
September 9, 2025-Physical AI is driving a new phase of industrial automation, offering a powerful solution to manufacturing challenges like rising costs, labour shortages,and shifting customer demands.
A new World Economic Forum white paper examines how breakthroughs in AI, sensors, and hardware are creating a new breed of smarter, more agile industrial robots.
Early adopters like Amazon and Foxconn are already seeing significant benefits, including improved efficiency, faster delivery times, and the creation of new skilled jobs.
Automation helped shape the First Industrial Revolution – and it continues to evolve in today's Fourth. While automation has long been part of the manufacturing landscape, recent advances in artificial intelligence, vision systems and robotics hardware are enabling a new generation of more intelligent and adaptable machines.
A new white paper from the World Economic Forum, Physical AI: Powering the New Age of Industrial Operations, explores how these developments are expanding the role of robotics - not just to boost efficiency, but to support greater flexibility and resilience on the factory floor.
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Source: World Economic Forum
Economic development, carbon emissions and climate policies
September 8, 2025-If economic activity is considered the primary driver of climate change through emissions of carbon dioxide, then supporting economic growth and fighting emissions would appear to be at odds. However, the process of economic development may itself foster complementarity between GDP growth and emissions reductions.
Such complementary in the relationship between economic development and emissions reduction might reflect changes in the industrial composition of economic activity, technological advancements or environmental consciousness.This view is in line with the Environmental Kuznets Curve (EKC) hypothesis: that per-capita income growth is associated with increases in carbon emissions up to a certain threshold of economic development, but beyond that threshold, higher per-capita incomes are associated with lower emissions per capita. The EKC hypothesis, suggests that economic development is actually a pathway to environmental improvements.
We test the EKC hypothesis for 191 countries over 1989-2022, enabling us to study the overall validity of the EKC hypothesis at global level.
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Source: bruegel.org
IMF Working Paper-Interest Rate Sensitivity Scenarios to Guide Monetary Policy
May 30, 2025--Summary
This paper examines the challenges of formulating monetary policy in the face of heightened uncertainty. We develop a framework to assess the optimal monetary policy path under uncertainty, focusing on four key dimensions: the expectation formation process, inflation persistence, the measurement of the neutral interest rate, and the slope of the Phillips curve.
Our framework provides a flexible tool for policymakers to address uncertainty and enhance decision-making in pursuit of economic stability. This framework is helpful to improve the risk management approach to monetary policy by showing how scenarios can quantify different sources of uncertainty faced by the ECB and give market participants an idea of how the ECB would react if those scenarios materialize.
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Source: IMF.org
IMF Working Paper-The Rise and Retreat of US Inflation: An Update
May 16, 2025--Summary
Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos.
This paper finds that the same framework explains the retreat in inflation since our earlier work.
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Source: IMF.org
IMF Working Paper-Growth, Interrupted: How Crises delay Global Convergence
June 13, 2025--Summary
During a major crisis, the transitional dynamics of conditional convergence are unlikely to apply. In this paper, we introduce a Markov chain approach which integrates the study of crises and convergence. We allow upwards and downwards mobility to change when a country enters a crisis regime. .
We find that conflict and debt crises help to explain the persistence of low relative income, and that the convergence process has changed over time. Faster global convergence in the early 2000s can be attributed partly to fewer and shorter crises, so the multiple shocks after 2020 are likely to have slowed income convergence.
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Source: IMF.org
IMF Working Paper-Lifting Binding Constraints on Growth in Europe: Actionable Priorities to Deepen the Single Market
June 13, 2025--Summary
Focusing on a cross-border perspective, this paper identifies four key binding constraints that hinder firms' ability to innovate and scale up within the EU single market-fragmented regulations, inefficient financial intermediation, limited labor mobility, and fragmented energy market.
To address these constraints and facilitate firms' cross border scale up, investment and innovation, the paper proposes key action areas for deepening the integration of the single market, including lowering regulatory fragmentation, advancing the capital markets union, enhancing labor mobility within the EU, and integrating the EU energy market.
Through illustrative scenarios, the paper highlights that a few actionable steps along these dimensions could lead off the process of deeper integration and deliver a meaningful initial payoff by increasing the EU GDP level relative to baseline by around 3 percent over 10 years-a sizable improvement considering that the EU potential growth is projected to be just above 1 percent annually over this horizon.
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Source: IMF.org
Assessing Thailand's Debt Ceiling-Room for Recalibration?
May 9, 2025--Summary
The pandemic responses and subsequent fiscal stimulus measures have eroded Thailand's fiscal space, pushing its public debt close to the ceiling of 70 percent of GDP. While this situation generally calls for fiscal prudence to reduce debt levels, it also raises questions about the adequacy of the current debt ceiling.
This paper uses various approaches to assess Thailand's public debt threshold, beyond which debt could become unsustainable or negatively impact growth. Stochastic simulations are used to account for potential impact of macroeconomic and fiscal shocks in calibrating an appropriate debt ceiling for Thailand.
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Source: IMF.org
The Energy Origins of the Global Inflation Surge
May 9, 2025--Summary
This paper investigates the relationship between energy prices and inflation dynamics in the context of the global inflation surge during the COVID-19 pandemic. Using a comprehensive sector-level dataset covering over 30 countries and a local projections empirical strategy, we extend previous studies that primarily focused on single-country analyses or aggregate inflation measures.
Our findings indicate that while the energy shocks of 2021-2022 were remarkable, the degree of inflation passthrough of energy shocks appears to be relatively stable over time. Moreover, we show that energy price shocks significantly influence inflation through stable sectoral channels, with structural characteristics such as energy dependence and price flexibility playing critical roles in the passthrough mechanism. These results underscore the necessity of a sectoral perspective in understanding inflationary pressures and highlight the importance of detailed data on price-setting mechanisms and intersectoral connectivity in understanding the energy-inflation passthrough.
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Source: IMF.org
Missing Home-Buyers and Rent Inflation: The Role of Interest Rates and Mortgage Underwriting Standards
May 9, 2025--Summary
Alessia De Stefani has studied how monetary policy interacts with mortgage underwriting standards in shaping tenure decisions and rental market equilibria. Using property-level data from the American Housing Survey, I show that the increase in mortgage rates between 2021 and 2023 pushed many potential first-time home-buyers above FHA mortgage payment-to-income limits, restricting their access to home-ownership.
Our findings indicate that while the energy shocks of 2021-2022 were remarkable, the degree of inflation passthrough of energy shocks appears to be relatively stable over time. Moreover, we show that energy price shocks significantly influence inflation through stable sectoral channels, with structural characteristics such as energy dependence and price flexibility playing critical roles in the passthrough mechanism. These results underscore the necessity of a sectoral perspective in understanding inflationary pressures and highlight the importance of detailed data on price-setting mechanisms and intersectoral connectivity in understanding the energy-inflation passthrough.
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Source: IMF.org
Hong Kong SAR's Economy in the Face of Climate Change: Risks and Prospects
May 6, 2025--Hong Kong SAR is facing ongoing challenges from climate change, with projections indicating that these issues will remain prevalent or even intensify in the future. In response, Hong Kong SAR has embraced a comprehensive three-pronged climate strategy-the Climate Action Plan 2050--that focuses on mitigation, adaptation, and building resilience, and sets ambitious goals of reducing carbon emissions by 50 percent before 2035 and achieving carbon neutrality before 2050.
Simultaneously, there is a concerted effort to bolster infrastructure and community resilience against natural disasters. Although significant strides have been made towards decarbonizing the economy and building resilience in the last few years, sustained action is pivotal to reach carbon neutrality, including by reducing emissions in hard-to-abate sectors and improving energy efficiency across industries. It would also be crucial to continue strengthening resilience against extreme weather events, further integrate climate into systemic risk analysis, and foster a green finance ecosystem.
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Source: IMF.org
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