Person:
Sugawara, Naotaka

Prospects Group, The World Bank

Fields of Specialization

International economics, International finance, Fiscal policy, Economic growth, Financial sector development

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Prospects Group, The World Bank

Last updated January 31, 2023

Biography

Naotaka Sugawara is a Senior Economist in the Prospects Group at the World Bank. Previously, he was an economist in the Research Department of the International Monetary Fund and in the World Bank’s Office of the Chief Economist for Europe and Central Asia. He also worked in the Poverty Reduction and Economic Management Unit of Europe and Central Asia Region and in the Development Research Group at the World Bank.

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Now showing 1 - 10 of 19

Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge

(World Bank, Washington, DC, 2013-05) Sugawara, Naotaka ; Zalduendo, Juan

This paper examines why some countries experience economic recoveries without pick-up of bank credit (credit-less) and how different this recovery pattern is from the case where credit is increased as an economy recovers (credit-with). To answer these questions, the paper uses quarterly data covering 96 countries and identifies 272 recovery episodes. It finds that more than 25 percent of all recoveries are credit-less and around 45 percent of all credit-less recoveries occurred in 2009-10. It also finds that output and investment growth tends to be lower in credit-less events but, by eight quarters after the trough date, the gap between credit-less and credit-with episodes is mostly exhausted. Results of the probit estimations show that the size of the downturn and the extent of external adjustment are associated with the likelihood of credit-less recoveries. Moreover, fiscal loosening tends to be related to credit-less events while monetary easing and a country's decision to seek an International Monetary Fund-supported program reduce the probability of credit-less recoveries. Finally, the model suggests that many countries in the Europe and Central Asia region were likely to experience credit-less recoveries following the global financial crisis in 2008/09. What is more worrisome for them is the fact that they are facing another negative external shock.
The Crisis Hits Home : Stress-Testing Households in Europe and Central Asia

(World Bank, 2010) Tiongson, Erwin R. ; Sugawara, Naotaka ; Sulla, Victor ; Taylor, Ashley ; Gueorguieva, Anna I. ; Levin, Victoria ; Subbarao, Kalanidhi

The Europe and Central Asia (ECA) region has been hit by a crisis on multiple fronts. Countries in ECA are facing major, interrelated, external macro-financial shocks. The first is the global growth slowdown leading to falling export market demand. In addition, the prospects for inflows of remittances to low-income countries have been downgraded as economic activity in migrant host countries has declined. The second is the financial deleveraging by major banks and other financial institutions in developed economies, which has markedly reduced the availability, and increased the cost, of external finance across public, corporate, and financial sectors. The third is the recent commodity price changes, which have involved a reversal of much of the commodity price boom of 2007 and 2008. The main objective of the study is to understand the impact of these macroeconomic shocks on household well-being. In particular, it seeks to understand the key macroeconomic shocks confronted by the region and the impact of such shocks on household welfare, including the effect on household income flows, consumption levels, and liabilities. It will also assess possible strategies to cope with the crisis and manage the adverse social impact.
Stress-Testing Croatian Households with Debt : Implications for Financial Stability

( 2011-12-01) Zalduendo, Juan ; Sugawara, Naotaka

The purpose of this paper is to stress test the resilience of Croatian households with debt to economic shocks. The shocks not only impact a household's welfare, but also increase the probability of loan default. As a result, there is a direct link between these stress-testing exercises and financial stability risks. The authors find that very few households are at risk as a result of the shocks experienced over the past few years; new vulnerable households represent about 2 percent of all households, 6 percent of households with debt, and 2-3 percent of aggregate banking system assets. This suggests that household over-indebtedness in Croatia is unlikely to become a drag on aggregate economic activity and that financial stability risks remain manageable. One caveat should be noted. Some 27-31 percent of households with debt, representing 8-9 of banking system assets, are vulnerable even before being subjected to an economic shock. Since NPLs were low before the global financial crisis, it can be argued that banks knew something about some of these households that is not captured by household budget surveys. It follows that the calculations in this paper should primarily focus on the increased vulnerability of households as a result of shocks and are likely to represent an upper bound to the financial stability risks faced by Croatia on account of household indebtedness.
Banking Flows and Financial Crisis : Financial Interconnectedness and Basel III Effects

( 2011-08-01) Ghosh, Swati R. ; Sugawara, Naotaka ; Zalduendo, Juan

This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.
Finding a Balance between Growth and Vulnerability Trade-Offs : Lessons from Emerging Europe and the CIS

( 2011-03-01) Ghosh, Swati ; Sugawara, Naotaka ; Zalduendo, Juan

This paper examines the growth patterns of emerging Europe and the Commonwealth of Independent States (CIS) countries prior to the global financial crisis. The aim is to draw lessons on what policies can best position these countries going forward to enjoy growth without a buildup in macro and financial vulnerability. Cluster analysis is used to classify these countries across the growth and vulnerability dimensions; namely, a classification into low or high growth outcomes, each of which may occur with low or high vulnerability features. The vulnerability indicators used are multifaceted, covering both the domestic and the external dimensions that have been identified in previous studies as being good indicators of likelihood of crisis -- itself understood as multidimensional. Based on multinomial logit regressions, the initial conditions and the economic policies that might affect the probabilities of being in each of the four possible cluster combinations are examined. Many (if not most) of the countries in the sample experienced very large capital inflows relative to their gross domestic product prior to the crisis, which can complicate macroeconomic management and lead to a buildup of vulnerability. These large inflows were partly due to the high liquidity in global markets and, at least for some countries in the country sample, the particular attractiveness of "new Europe and emerging countries in the region" in the eyes of foreign investors. Nonetheless, the analysis finds strong evidence that the macroeconomic and structural policies that over time influence the structure of the economy, can play a significant role in explaining (and, going forward, in influencing) the different growth and vulnerability patterns experienced by the countries covered in this paper.
Informality in Latin America and the Caribbean

(Washington, DC: World Bank, 2009-03-01) Loayza, Norman V. ; Servén, Luis ; Sugawara, Naotaka

This paper studies the causes and consequences of informality and applies the analysis to countries in Latin America and the Caribbean. It starts with a discussion on the definition and measures of informality, as well as on the reasons why widespread informality should be of great concern. The paper analyzes informality's main determinants, arguing that informality is not single-caused but results from the combination of poor public services, a burdensome regulatory regime, and weak monitoring and enforcement capacity by the state. This combination is especially explosive when the country suffers from low educational achievement and features demographic pressures and primary production structures. Using cross-country regression analysis, the paper evaluates the empirical relevance of each determinant of informality. It then applies the estimated relationships to most countries in Latin America and the Caribbean in order to assess the country-specific relevance of each proposed mechanism.
Global Waves of Debt: Causes and Consequences

(Washington, DC: World Bank, 2021-03-02) Kose, M. Ayhan ; Nagle, Peter ; Ohnsorge, Franziska ; Sugawara, Naotaka

The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
Benefits and Costs of Debt: The Dose Makes the Poison

(World Bank, Washington, DC, 2020-02) Kose, M. Ayhan ; Ohnsorge, Franziska ; Sugawara, Naotaka

Government debt has risen substantially in emerging market and developing economies (EMDEs) since the global financial crisis. The current environment of low global interest rates and weak growth may appear to mitigate concerns about elevated debt levels. Considering currently subdued investment, additional government borrowing might also appear to be an attractive option for financing growth-enhancing initiatives such as investment in human and physical capital. However, history suggests caution. Despite low interest rates, debt was on a rising trajectory in half of EMDEs in 2018. In addition, the cost of rolling over debt can increase sharply during periods of financial stress and result in financial crises; elevated debt levels can limit the ability of governments to provide fiscal stimulus during downturns; and high debt can weigh on investment and long-term growth. Hence, EMDEs need to strike a careful balance between taking advantage of low interest rates and avoiding the potentially adverse consequences of excessive debt accumulation.
Global Recessions

(World Bank, Washington, DC, 2020-03) Kose, M. Ayhan ; Sugawara, Naotaka ; Terrones, Marco E.

The world economy has experienced four global recessions over the past seven decades: in 1975, 1982, 1991, and 2009. During each of these episodes, annual real per capita global gross domestic product contracted, and this contraction was accompanied by weakening of other key indicators of global economic activity. The global recessions were highly synchronized internationally, with severe economic and financial disruptions in many countries around the world. The 2009 global recession, set off by the global financial crisis, was by far the deepest and most synchronized of the four recessions. As the epicenter of the crisis, advanced economies felt the brunt of the recession. The subsequent expansion has been the weakest in the post-war period in advanced economies, as many of them have struggled to overcome the legacies of the crisis. In contrast, most emerging market and developing economies weathered the 2009 global recession relatively well and delivered a stronger recovery than after previous global recessions.
A Cross-Country Database of Fiscal Space

(World Bank, Washington, DC, 2017-08) Kose, M. Ayhan ; Kurlat, Sergio ; Ohnsorge, Franziska ; Sugawara, Naotaka

This paper presents a comprehensive cross-country database of fiscal space, broadly defined as the availability of budgetary resources for a government to service its financial obligations. The database covers up to 200 countries over the period 1990-2016, and includes 28 indicators of fiscal space grouped into four categories: debt sustainability, balance sheet vulnerability, external and private sector debt related risks as potential causes of contingent liabilities, and market access. The authors illustrate potential applications of the database by analyzing developments in fiscal space across three time frames: over the past quarter century; during financial crises; and during oil price plunges. The main results are as follows. First, fiscal space had improved in many countries before the global financial crisis. In advanced economies, following severe deteriorations during the crisis, many indicators of fiscal space have virtually returned to levels in the mid-2000s. In contrast, fiscal space has shrunk in many emerging market and developing economies since the crisis. Second, financial crises tend to coincide with deterioration in multiple indicators of fiscal space, but they are often followed by reduced reliance on short-term borrowing. Finally, fiscal space narrows in energy-exporting emerging market and developing economies during oil price plunges but later expands, often because of procyclical fiscal tightening and, in some episodes, a recovery in oil prices.