IMF World Economic Outlook (WEO) -- Financial Systems and Economic Cycles, September 2006


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World Economic and Financial Surveys

World Economic Outlook

Financial Systems and Economic Cycles

September 2006

Ordering Information


The World Economic Outlook (WEO) 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.

View the webcast of the WEO Press Conference

View the Full Text of the WEO and chapter files below (use the free Adobe Acrobat Reader).

Contents

89 kb Assumptions and Conventions
  Preface
  Foreword
  Executive Summary
 
Chapter 1. Global Prospects and Policy Issues
Full Text  |  Boxes  |  Charts
   
  Global Economic Environment
  Outlook and Short-Term Risks
  Unwinding Global Imbalances
  Policy Challenges
  Appendix 1.1. Recent Developments in Commodity Markets
  References
 
Chapter 2. Country and Regional Perspectives
Full Text  |Boxes  |  Charts
   
  United States and Canada: Inflationary Pressures Are Beginning to Rise
  Western Europe: Structural Reforms Remain the Key to Stronger Growth
  Japan: Monetary Policy Adjusts to the End of Deflation
  Emerging Asia: China's Growth Spurt Benefits the Region but Carries Risks
  Latin America: Continuing to Build Resilience
  Emerging Europe: Managing Risks From Heavy Reliance on Foreign Savings
  Commonwealth of Independent States: Managing Large Foreign Currency Inflows
  Africa: Strong Growth Continues Despite High Oil Prices
  Middle East: Living with Booming Oil Exports
  References
 
Chapter 3. Asia Rising: Patterns of Economic Development and Growth
Full Text  |  Summary  |  Video Briefing   |  Boxes  |  Charts
   
  Asia's Economic Success
  Perspiration or Inspiration?
  Sectoral Effects: Cross-Sector Shifts or Within-Sector Growth?
  Policy Determinants of Productivity Growth
  Conclusions
  Appendix 3.1 Asia Rising: Methods and Additional Results
  References
 
Chapter 4. How Do Financial Systems Affect Economic Cycles?
Full Text  |  Summary  |  Video Briefing   |  Boxes  |  Charts
   
  How Have Financial Systems Changed?
  How Do Differences in Financial Systems Affect the Behavior of Households Firms, and Cross-Border Capital Flows?
  Conclusions
  Appendix 4.1 Building the Financial Index
  Appendix 4.2 Econometric Methodology
  References
 
Chapter 5. The Boom in NonFuel Commodity Prices: Can It Last?
Full Text  |  Summary  |  Video Briefing   |  Boxes  |  Charts
   
  Long-Term Trends in Commodity Prices and Volatility
  Assessment of Recent Developments
  Role of Emerging Markets
  Will the Recent Run-Up in Metals Prices Be Sustained?
  Outlook for Food and Other Agricultural Commodities
  Conclusions
  Appendix 5.1 Model of Aluminum and Copper Markets
  Appendix 5.2 Modeling the Relationship Between Speculation and Commodity Prices
  References
 
  Annex: IMF Executive Board Discussion of the Outlook, August 2006
 
Statistical Appendix
  Assumptions
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Countries in the World Economic Outlook
  Classification
 
List of Tables
  Output (Tables 1–6)
  Inflation (Tables 7–11)
  Financial Policies (Tables 12–19)
  Foreign Trade (Tables 20–24)
  Current Account Transactions (Tables 25–31)
  Balance of Payments and External Financing (Tables 32–36)
  External Debt and Debt Service (Tables 37–42)
  Flow of Funds (Table 43)
  Medium-Term Baseline Scenario (Tables 44–45)
 
  World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics
 
Chapter 1 Boxes
Chart
Chart
Data
Data
1.1 Capital Flows to Emerging Market Countries: a Long-Term Perspective
Chart Data 1.2 How emerging Market Countries May Be Affected By External Shocks
Chart
Chart
Data
Data
1.3 How Will Global Imbalances Adjust?
    1.4 International and National Oil Companies in a Changing Oil Sector Environment
       
Chapter 2 Boxes
Chart
Chart
Data
Data
2.1 Improved Emerging Market Fiscal Performance: Cyclical or Structural?
Chart Data 2.2 Commodity Price Shocks, Growth, and Financing in Sub-Saharan Africa
 
Chapter 3 Boxes
Chart
Chart
Data
Data
3.1 Japan's Potential Output and Productivity Growth
Chart
Chart
Data
Data
3.2 The Evolution and Impact of Corporate Governance Quality in Asia
 
Chapter 4 Boxes
    4.1 Financial Leverage and Debt Deflation
 
Chapter 5 Boxes
Chart
Chart
Data
Data
5.1 Has Speculation Contributed to Higher Commodity Prices?
    5.2 Agricultural Trade Liberalization and Commodity Prices
 
Appendix Boxes
    A1. Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies
 
Tables
1.1 Overview of the World Economic Outlook Projections
1.2 Emerging Market and Developing Countries: Net Capital Flows
1.3 Major Advanced Economies: General Government Fiscal Balances and Debt
1.4 Global Oil Demand by Region
1.5 Selected Domestic Fuel Price Changes, January 2005–June 2006
1.6 Nonenergy Commodity Prices
2.1 Advanced Economies: Real GDP, Consumer Prices, and Unemployment
2.2 Advanced Economies: Current Account Positions
2.3 Selected Asian Countries: Real GDP, Consumer Prices, and Current Account Balance
2.4 Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance
2.5 Emerging Europe: Real GDP, Consumer Prices, and Current Account Balance
2.6 Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance
2.7 Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance
2.8 Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance
3.1 Sectoral Shares in Value Added and Employment
3.2 Determinants of Productivity Growth
4.1 Dependent Variable: Private Consumption
4.2 Dependent Variable: _1,i,t
4.3 Dependent Variable: Bilateral Portfolio Investment
5.1 Dependence on Exports of Selected Non-Fuel Commodities
5.2 Decomposition of IMF Non-Fuel Commodities Price Index, 2002–06
5.3 Consumption of Industrial Metals and Oil
5.4 Consumption of Selected Agricultural Commodities
5.5 Cash Costs of Production for Selected Base Metals
5.6 Estimated Elasticities of Demand for Selected Base Metals
5.7 Estimates of Metal Demand
5.8 Estimates of Price Equations
5.9 Equation for Industrial Production
5.10 Consumption of Metals
5.11 Summary of the Results from Rolling Regressions
 
Chapter 1 Charts
Chart Data 1.1 Global Indicators
Chart Data 1.2 Current and Forward-Looking Indicators
Chart Data 1.3 Measures of the Output Gap and Labor Market Pressures
Chart Data 1.4 Global Inflation
Chart Data 1.5 Developments in Mature Financial Markets
Chart Data 1.6 Mature Financial Market Indicators
Chart Data 1.7 External Developments in Major Advanced Economies
Chart Data 1.8 External Developments in Emerging Market Countries
Chart Data 1.9 Emerging Market Financial Conditions
Chart Data 1.10 Global Outlook
Chart Data 1.11 Prospects for World GDP Growth
Chart Data 1.12 Productivity Developments in Selected Advanced Economies
Chart Data 1.13 Impact of Commodity Price Movements on Trade Balances in Emerging Markets and Developing Countries
Chart Data 1.14 Current Account Balances and Net Foreign Assets
Chart Data 1.15 Crude Oil Spot and Futures Prices, Price Volatility, and Consumption-Production Changes
Chart Data 1.16 OPEC Production, OPEC Spare Capacity, and OECD Inventories
Chart Data 1.17 Stock Market Valuations and Real Investment in Oil and Non-Oil Sectors
Chart Data 1.18 Nonenergy Commodities
Chart Data 1.19 Semiconductor Market
 
Chapter 2 Charts
Chart Data 2.1 United States: Are Inflationary Pressures Building
Chart Data 2.2 Western Europe: Boosting Productivity is the Key to Stronger Growth
Chart Data 2.3 Japan: Balancing Inflation and Deflation Risks
Chart Data 2.4 Emerging Asia: The Regional Impact of China's Rapid Growth
Chart Data 2.5 Latin America: Progress Toward Fiscal Sustainability
Chart Data 2.6 Latin America: Mixed Performance in the Hydrocarbons Sector
Chart Data 2.7 Emerging Europe: Rapid Growth and Its Risks
Chart Data 2.8 Commonwealth of Independent States: Strong Foreign Currency Inflows Create Macroeconomic Challenges
Chart Data 2.9 Sub-Saharan Africa: Oil-Importing Countries Record Strong Growth Despite High Oil Prices
Chart Data 2.10 Middle East: Spending Booming Oil Revenue Wisely
 
Chapter 3 Charts
Chart Data 3.1 Output per Capita
Chart Data 3.2 Selected Indicators
Chart Data 3.3 Growth Decompositions
Chart Data 3.4 Information and Communications Technologies (ICT) Investment and Labor Productivity Growth, 1989–2005
Chart Data 3.5 Sectoral Shares of Value Added and Employment for Asia
Chart Data 3.6 Employment and Labor Productivity in the Agricultural Sector Over Time
Chart Data 3.7 Productivity Growth by Sector
Chart Data 3.8 Sectoral Productivity Growth Since Takeoff
Chart Data 3.9 9Contributions to Average Labor Productivity Growth Differential with the United States
Chart Data 3.10 Skill Intensive Manufacturing Sectors: Employment and Value Added Shares
Chart Data 3.11 Contributions to Average Manufacturing Productivity Growth Differential with the United States
Chart Data 3.12 Determinants of Productivity Growth, 1970–2004
Chart Data 3.13 Determinants of Labor Shifts from Agriculture
Chart Data 3.14 Partial Correlations Between Labor Shift From Agriculture and Its Determinants
 
Chapter 4 Charts
Chart Data 4.1 Stock and Bond Market Capitalization and Nonfinancial Sector Liabilities,1995–2004
Chart Data 4.2 Traditional Banking: Index for Selected Advanced Economies
Chart Data 4.3 New Financial Intermediation: Index for Selected Advanced Countries
Chart Data 4.4 Financial Markets: Index for Selected Advanced Economies
Chart Data 4.5 Financial Index Scores for Advanced Economies
Chart Data 4.6 Features of Mortgage Markets
Chart Data 4.7 Total Household Liabilities
Chart Data 4.8 Consumption-Income Correlations and the Financial Index, 1985–2005
Chart Data 4.9 Private Consumption: Response to Equity Busts, 1985–2005
Chart Data 4.10 Private Consumption and Residential Investment: A Response to Housing Busts, 1970–2005
Chart Data 4.11 Depth of Equity and Housing Busts and the Financial Index, 1985–2005
Chart Data 4.12 Investment and Financing by the Corporate Sector
Chart Data 4.13 The Financial Index and Foreign Portfolio Investment
  4.14 The Financial Index
Chart Data 4.15 The Financial Index: Subindices for Selected Advanced Economies
    4.16 Clustering Results
 
Chapter 5 Charts
Chart Data 5.1 Dependence on Exports of Non-Fuel Commodities and Geographical Concentration of Production
Chart Data 5.2 Long-Term Price Trends
Chart Data 5.3 Volatility in Nonfuel Commodities Prices
Chart Data 5.4 Commodity Prices over the Business Cycle
Chart Data 5.5 Recent Developments in Commodity Prices
Chart Data 5.6 Perspective on the Recent Price Developments, 1957–2006
Chart Data 5.7 Consumption of Base Metals and Steel, 1960–2005
Chart Data 5.8 The Importance of Industry at Various Stages of Economic Development, 1965–2004
Chart Data 5.9 Base Metal Prices on Futures Markets
Chart Data 5.10 Model-Based Forecasts of Aluminum and Copper Prices
Chart Data 5.11 Consumption of Base Metals and Industrial Production, 1960–2005
Chart Data 5.12 Crude Oil: Rolling Estimates of the Model's Long-Run Parameters
Chart Data 5.13 Crude Oil: Rolling Estimates of the Model's Short-Run Parameters