WORLD ECONOMIC AND FINANCIAL SURVEYS World Economic Outlook International Financial Contagion May 1999

A Survey by the Staff of the International Monetary Fund
©1999 International Monetary Fund

The World Economic Outlook presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities.

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Contents
Assumptions and Conventions
The World Economic Outlook Database
Preface
Chapter I.   210k pdf file	World Economic Outlook and Policy Responses
		to the Global Slowdown
	A New Phase in the Global Crisis, and Remaining Risks
	Latin America: Addressing the Brazilian Crisis and
		Meeting Other Adjustment Needs
	Policy Failures in Russia and Effects on Neighboring
		Countries
	Japan: Seeking a Turnaround
	Asia and the Pacific: Toward Recovery
	Africa and the Middle East: Uneven Spillovers from
		Global Slowdown
	North America: How Long Can the United States Remain
		the Main Engine of Global Growth?
	Europe: A New Currency and Other Challenges
	Boxes
	1.1	Policy Assumptions Underlying the Projections for  Selected Advanced Economies
	1.2	Potential Macroeconomic Implications of the Year 2000 Computer Bug
	1.3	Are There Dangers of Increasing Protection?
	Tables
	1.1	Overview of the World Economic Outlook Projections
	1.2	Selected Developing Countries: Real GDP and Consumer Prices
	1.3	Countries in Transition: Real GDP and Consumer Prices
	1.4	Advanced Economies: Real GDP, Consumer Prices, and Unemployment Rates
	1.5	Major Industrial Countries: General Government Fiscal Balances and Debt
	Figures
	1.1	Global Indicators
	1.2	World Industrial Production
	1.3	Financing Conditions for Emerging Markets
	1.4	Selected European Countries, Japan, and the United States: Indicators of Consumer and Business Confidence
Chapter II.   294k pdf file	Global Repercussions of the Crises in Emerging
		Markets and Other Conjunctural Issues
	Brazil's Financial Crisis: Origins and Likely Economic
		Consequences
	Whither Russia?
	Financial Flows in the Wake of the Brazilian Crisis and
		the Sustainability of External Imbalances
	Foreign Exchange and Financial Markets: The Impact of
		Brazil's Devaluation and Other Developments
	Why Are Some Emerging Market Countries Relatively
		Unaffected by the Financial Crisis?
	How Are Commodity Exporters Adjusting to the Crisis?
	What Are the Implications of the U.S. Saving-Investment
		Imbalance?
	Boxes
	2.1	Exchange Rate Crashes and Inflation: Lessons for Brazil
	2.2	Measuring Household Saving in the United States
	Tables
	2.1	Selected Latin American Economies: Macroeconomic Indicators
	2.2	Selected Latin American and Asian Countries: Regional Trade Links in 1997
	2.3	Russian Federation: Recent Macroeconomic Developments and 1999 Baseline Scenario
	2.4	Gross Private Financing to Emerging Market Economies
	2.5	Emerging Market Economies: Net Capital Flows
	2.6	Selected Economies: Current Account Positions
	2.7	Selected Countries: Estimates of Underlying Current Account Balances
	2.8	China, India, and Sub-Saharan Africa: International Trade and Financial Links
	2.9	Selected Asian Economies: Macroeconomic Indicators
	2.10	Africa: Selected Indicators
	2.11	Commodity Exporters and Importers: Impact of Large Commodity Price Swings
	2.12	Oil-Exporting Emerging Market Economies: Impact of Oil Price Decline
	2.13	Alternative Scenario: Simulation Results
	Figures
	2.1	Selected Crisis Countries: Industrial Output Recovery Paths
	2.2	Changes in Current Account Balances
	2.3	Asian-5 Economies: Trade Developments
	2.4	Selected Advanced Economies: Net Foreign Assets
	2.5	Major Industrial Countries: Nominal Interest Rates
	2.6	Advanced Economies: Equity Prices
	2.7	Major Industrial Countries: Effective Exchange Rates
	2.8	Selected Emerging Market Countries: Short-Term Interest Rates
	2.9	Selected Latin America Countries: Brady Bond Spreads
	2.10	Selected Emerging Market Countries: Bilateral U.S. Dollar Exchange Rates
	2.11	Developing Countries: Equity Prices
	2.12	Russia: Exchange Rate and Tradable Debt
	2.13	Developing Countries: External Debt by Maturity and Type of Creditor, 1998
	2.14	Prices of Crude Petroleum and Nonfuel Commodities
	2.15	World Industrial Production and Commodity Prices
	2.16	Selected Advanced Economies: Private, Public, and Foreign Net Saving
	2.17	United States: Household Net Worth
	2.18	United States: Household Debt and Debt-Service Payments
Chapter III.   189k pdf file	International Financial Contagion
	The Changing Nature of Currency Crises
	Assessing the Role of Fundamentals and Contagion in
		Recent Crisis Episodes
	Contagion and Currency Crashes
	Some Policy Implications
	Boxes
	3.1	Recent Experience with Exchange-Rate-Based Stabilizations
	Figures
	3.1	Net Capital Flows to Developing Countries, by Component
	3.2	Incidence of Currency Crises During the 1990s
	3.3	Frequency of Crises by Country Group
	3.4	Selected Countries: Short-Term Interest Rates
	3.5	Selected Countries: Stock Prices
	3.6	Emerging Market Yield Spreads
	3.7	Common Shocks: Interest Rates, Output Growth, Exchange Rates, and Trade Prices
	3.8	Characteristics of Countries Vulnerable to Contagion
	3.9	Countries Vulnerable to Contagion: Characteristics of Composite Indicators
	3.10	Selected Countries: Indicators of Vulnerability
Chapter IV.   211k pdf file	Chronic Unemployment in the Euro Area: Causes
		and Cures
	Underlying Causes
	Cures: An Integrated Approach
	Overcoming Obstacles to Labor Market Reform
	Boxes
	4.1	Labor Market Slack: Concepts and Measurement
	4.2	EMU and European Labor Markets
	4.3	Labor Markets--An Analytical Framework
	4.4	The OECD Jobs Study
	Tables
	4.1	Wage Bargaining Structure in 18 Industrial Countries, 1980–94
	4.2	Evaluation of the Strictness of Labor Market Regulation
	4.3	Comparison of Unemployment Benefit Generosity, 1994–96
	4.4	Overall Tax Wedges, 1994
	4.5	Marginal Effective Tax Rates (METR) in Selected Industrial Countries,1994–95
	4.6	Implementation of OECD Jobs Study Recommendations
	Figures
	4.1	Euro Area, the United States, and Japan: Comparative Labor Market Performance
	4.2	Euro Area, the United States, and Japan: Cyclical and Structural Components of Unemployment, 1997
	4.3	Euro Area and the United States: Productivity Growth, Terms of Trade, and Real Interest Rates
	4.4	Euro Area and the United States: Changes in Real Labor Cost and Employment
	4.5	Euro Area and the United States: Unemployment and Capacity Utilization
	4.6	Euro Area and the United States: Labor Union Density and Coverage of Collective Wage Contracts
	4.7	Euro Area and the United States: Participation and Employment Rates
	4.8	Euro Area and the United States: Size of the Welfare State
Annex. 338k pdf file	Summing Up by the Acting Chairman World Economic Outlook, Executive Board Meeting,
		April 2, 1999
	Statistical Appendix Assumptions
	Data and Conventions
	Classification of Countries
	List of Tables
		Output (Tables 1–7)
		Inflation (Tables 8–13)
		Financial Policies (Tables 14–21)
		Foreign Trade (Tables 22–26)
		Current Account Transactions (Tables 27–32)
		Balance of Payments and External Financing    (Tables 33–37)
		External Debt and Debt Service (Tables 38–43)
		Flow of Funds (Table 44)
		Medium-Term Baseline Scenario (Tables 45–46)
	Selected Topics World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics, 1992–99