Economic growth and currency stability represent a frequently tested topic in IELTS Writing Task 2. Based on analysis of past exam papers, this theme appears in approximately 15% of economics-related questions, particularly in Task 2 essays focusing on how globalization affects financial markets. Here’s a recent IELTS Task 2 question that exemplifies this topic:
Some people believe that rapid economic growth inevitably leads to currency instability in developing nations. To what extent do you agree or disagree with this statement?
Understanding the Question
- Topic: Relationship between economic growth and currency stability
- Focus: Impact of rapid growth on developing economies’ currencies
- Task: Agree/Disagree essay format
- Key elements to address: Economic growth rate, currency value fluctuations, developing nations’ context
Economic growth and currency stability correlation in developing nations
Band 8.0 Sample Essay
Strong economic growth doesn’t necessarily result in currency instability in developing nations. While rapid expansion can create certain pressures on a country’s currency, the relationship between growth and monetary stability is more complex and depends heavily on impact of central bank policies on national currency value.
First, well-managed economic growth can actually strengthen a currency. When a developing nation experiences sustained growth backed by productivity improvements and export expansion, it often attracts foreign investment and increases demand for its currency. For instance, China’s remarkable growth over several decades has generally supported the yuan’s stability, despite occasional fluctuations.
However, the quality of economic growth matters more than its pace. Growth driven by excessive debt or speculation can indeed threaten currency stability, as seen in the 1997 Asian Financial Crisis. Similarly, how inflation affects disposable income can create domestic pressures that impact currency values.
Furthermore, institutional factors play a crucial role. Countries with robust central banking systems, prudent fiscal policies, and strong financial regulations can maintain currency stability even during periods of rapid growth. Singapore exemplifies this approach, having maintained both impressive growth rates and currency stability through effective monetary management.
In conclusion, while rapid growth presents challenges for currency management, it doesn’t inevitably lead to instability. Success depends on the quality of growth, institutional strength, and policy effectiveness rather than growth rate alone.
(Word count: 273)
Band 6.5 Sample Essay
I partly agree that fast economic growth can cause problems for currencies in developing countries, but I don’t think it always happens. There are different factors that affect this situation.
When countries grow very fast, they sometimes have problems with their money value. For example, some Asian countries had currency problems in the 1990s when their economies were growing quickly. This happened because the impact of a global currency on international trade was not well understood by these nations.
However, some countries manage their growth better. They have good banks and government policies that help keep their money stable. Countries like South Korea showed that it’s possible to grow fast and keep a stable currency if you have good management.
Another important point is that slow growth can also cause currency problems. When an economy isn’t growing enough, people might not trust its currency. This shows that the problem isn’t just about growing too fast.
In conclusion, I think fast growth can cause currency problems, but it depends on how countries manage their economy. Good policies and strong institutions are more important than the speed of growth.
(Word count: 253)
Analysis of Band Scores
Band 8.0 Essay Strengths:
- Sophisticated argument development
- Advanced vocabulary and complex structures
- Clear examples and specific details
- Coherent paragraphing and smooth transitions
- Academic tone throughout
Band 6.5 Essay Limitations:
- Simpler vocabulary and sentence structures
- Less detailed examples
- Basic argument development
- Some informal expressions
- Limited use of complex structures
Key Vocabulary
- currency stability (n.) /ˈkʌrənsi stəˈbɪləti/ – steady value of money
- fiscal policy (n.) /ˈfɪskəl ˈpɒləsi/ – government spending and taxation decisions
- monetary management (n.) /ˈmʌnɪtəri ˈmænɪdʒmənt/ – control of money supply
- institutional factors (n.) /ˌɪnstɪˈtjuːʃənl ˈfæktəz/ – elements related to organizations and systems
- prudent (adj.) /ˈpruːdənt/ – careful and wise in handling financial matters
Consider practicing with these similar topics:
- The role of foreign investment in currency stability
- Impact of trade policies on national currencies
- Relationship between political stability and currency value
Share your practice essays in the comments section for feedback and improvement suggestions.
