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World Economic and Financial Surveys

World Economic Outlook (WEO)

Recovery, Risk, and Rebalancing

October 2010

©2010 International Monetary Fund
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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.

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Contents


  Assumptions and Conventions
 
Preface
 
Foreword
 
Executive Summary
   
Chapter 1. Global Prospects and Policies
Full Text  |  Boxes  |   Figures
 

Stronger Activity, but Setbacks to Financial Stability

Questions about the Pace of Recovery

More Proactive Policies Are Needed

Appendix 1.1. Commodity Market Developments and Prospects

Appendix 1.2. Indicators for Tracking Growth

References

 
Chapter 2. Country and Regional Perspectives
Full Text  |  Boxes  |   Figures
 

Asia Is Advancing with Resilience

The U.S. Recovery Is Moderating in the Face of Debt and Continued Uncertainty

Europe Is Facing a Gradual and Uneven Recovery

Latin America Is Sustaining Its Growth Momentum

The CIS Region Is Experiencing a Modest Recovery

The Middle East and North Africa Region Is Recovering Strongly

Africa’s Growth Is Accelerating

References

Chapter 3. Will It Hurt? Macroeconomic Effects of Fiscal Consolidation
Full Text  |   Summary  |   Figures  |   Video
 

Looking At History: What Is the Short-Term Impact of Fiscal Consolidation

Additional Insights from Model Simulations

Long-Term Effects of Reducing Government Debt

Lessons for Countries Considering Fiscal Consolidation

Appendix 3.1. Data Sources

Appendix 3.2. Estimation Approach

Appendix 3.3. Identifying Periods of Fiscal Consolidation: The Standard Approach versus the Action-Based Approach

References

 
Chapter 4. Do Financial Crises Have Lasting Effects on Trade?
Full Text  |   Summary  |   Boxes  |   Figures  |   Video
 

Has Trade Recovered?

Trade Dynamics following Previous Crises

What Factors Are Associated with Postcrisis Import Dynamics?

Summary and Implications for the Outlook

Appendix 4.1. Data Sources

Appendix 4.2. Methodology and Robustness Tests

References

 
  Annex: IMF Executive Board Discussion of the Outlook, September 2010
 
  Statistical Appendix
  Assumptions
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Groups in the World Economic Outlook Classification
  Emerging and Developing Economies
 
List of Tables Part A
  Output (Tables A1–A4)
  Inflation (Tables A5–A7)
  Financial Policies (Table A8)
  Foreign Trade (Table A9)
  Current Account Transactions (Tables A10–A12)
Advanced Economies: Balance on Current Account (Table A11, corrected 01/12/11)
  Balance of Payments and External Financing (Tables A13–
    A15)
  Flow of Funds (Table A16)
  Medium–Term Baseline Scenario (Table A17)
 
  List of Tables Part B (available on the web only)
  Output (Tables B1–B2)
  Inflation (Tables B3–B4)
  Financial Policies (Tables B5–B10)
  Foreign Trade (Tables B11–B13)
  Current Account Transactions (Tables B14–B17)
  Balance of Payments and External Financing (Tables B18–B20)
  External Debt and Debt Service (Tables B21–B25)
  Medium-Term Baseline Scenario (Table B26)
 
 
Boxes
Chart
Chart
Data
Data
1.1 Does Slow Growth in Advanced Economies Necessarily Imply Slow Growth in Emerging Economies?
Chart
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Data
Data
Data
Data
Data
Data
1.2 Dismal Prospects for the Real Estate Sector
Chart
Chart
Chart
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Data
Data
Data
Data
1.3 Inferring Potential Output from Noisy Data: The Global Projection Model View
Chart Data 1.4 Uncoordinated Rebalancing
Chart
Chart
Data
Data
1.5 Have Metals Become More Scarce, and What Does Scarcity Mean for Prices?
Chart Data 2.1 Emerging Asia: Responding to Capital Inflows
Chart Data 2.2 Latin America-5: Riding Another Wave of Capital Inflows
Chart
Chart
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Data
Data
Data
4.1 The Role of the Composition Effect and Intermediate Goods in the Great Trade Collapse
Chart
Chart
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Data
Data
Data
4.2 Protectionism in the Recent Crisis
    A.1 Economic Policy Assumptions Underlying the Projections for Selected Economies
 
 
Tables
1.1 Overview of the World Economic Outlook Projections
1.2 Global Oil Demand and Production by Region
1.3 Data Summary and Model Evaluation
2.1 Selected Asian Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.2 Selected Advanced Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.3 Selected European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.4 Selected Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.5 Commonwealth of Independent States: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.6 Selected Middle East and North African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment (corrected 01/12/11)
2.7 Selected Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
3.1 Long-Term Effects of a Permanent 10 Percentage Point Decrease in the G3 Government-Debt-to-GDP Ratio: Global Integrated Monetary and Fiscal Model Simulations
3.2 Data Sources
3.3 Action-Based Approach: Episodes of Small Fiscal Contraction
3.4 Action-Based Approach: Episodes of Large Fiscal Contraction
3.5 Large Fiscal Contraction Episodes Identified by Alesina and Ardagna (2010)
4.1 Baseline Regressions and Implied Changes in the Levels of Imports and Exports
4.2 Estimated Elasticity of Imports
4.3 Systemic Banking Crises, 2007–09
4.4 Data Sources
4.5 Country Groupings
4.6 Unconditional Import Losses: Estimated Impulse Response Functions Using Alternative Methodologies
4.7 Estimated Elasticity of Imports to Output: Panel Regression with Country and Time Dummies
4.8 Conditional Import Losses: Robustness of Estimated Impulse Response Functions
4.9 Import Losses and Composition Effects
 
Figures
Chart Data 1.1 Current and Forward-Looking Indicators
Chart Data 1.2 Global Indicators
Chart Data 1.3 Recent Financial Market Developments
Chart Data 1.4 Developments in Mature Credit Markets
Chart Data 1.5 Emerging Market Conditions
Chart Data 1.6 Public Sector Financing
Chart Data 1.7 External Developments
Chart Data 1.8 Prospects for Near-Term Activity
Chart Data 1.9 Recovery Dynamics
Chart Data 1.10 Balance Sheets and Saving Rates
Chart Data 1.11 Measures of Monetary Policy and Liquidity in Selected Advanced Economies
Chart Data 1.12 General Government Fiscal Balances and Public Debt
Chart Data 1.13 Global Outlook
Chart Data 1.14 Global Inflation
Chart Data 1.15 Risks to the Global Outlook
Chart Data 1.16 Inflation, Deflation Risk, and Unemployment
Chart Data 1.17 Global Imbalances
Chart Data 1.18 Medium-Term Fiscal Policies
Chart Data 1.19 Commodity and Petroleum Prices
Chart Data 1.20 World Energy Market Developments
Chart Data 1.21 Developments in Base Metal Markets
Chart Data 1.22 Recent Developments in Markets for Major Food Crops
Chart Data 1.23 Growth Tracker
Chart Data 1.24 Stylized Example Illustrating Heat Map Colors
Chart Data 2.1 Average Projected Real GDP Growth during 2010–11
Chart Data 2.2 Asia: Average Projected Real GDP Growth during 2010–11
Chart Data 2.3 Asia: Leading the Global Recovery
Chart Data 2.4 United States and Canada: Differing Fortunes
Chart Data 2.5 United States and Canada: Average Projected Real GDP Growth during 2010–11
Chart Data 2.6 Europe: Average Projected Real GDP Growth during 2010–11
Chart Data 2.7 Europe: A Gradual and Uneven Recovery
Chart Data 2.8 Latin America and the Caribbean: Average Projected Real GDP Growth during 2010–11
Chart Data 2.9 Latin America and the Caribbean (LAC): Advancing with Strength
Chart Data 2.10 Commonwealth of Independent States: Average Projected Real GDP Growth during 2010–11
Chart Data 2.11 Commonwealth of Independent States (CIS): A Modest Recovery
Chart Data 2.12 Middle East and North Africa: Average Projected Real GDP Growth during 2010–11
Chart Data 2.13 Middle East and North Africa (MENA): Recovering Strongly
Chart Data 2.14 Sub-Saharan Africa: Average Projected Real GDP Growth during 2010–11
Chart Data 2.15 Sub-Saharan Africa (SSA): Growth is Accelerating
Chart Data 3.1 Action-Based Fiscal Consolidation
Chart Data 3.2 Impact of a 1 Percent of GDP Fiscal Consolidation on GDP and Unemployment
Chart Data 3.3 Response of Monetary Conditions to a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.4 Impact of a 1 Percent of GDP Fiscal Consolidation of GDP Components
Chart Data 3.5 Impact of a 1 Percent of GDP Fiscal Consolidation: Taxes versus Spending
Chart Data 3.6 Composition and Monetary Conditions: Impact of a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.7 Composition and Monetary Conditions: Impact of a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.8 Impact on GDP of a 1 Percent of GDP Spending-Based Consolidation
Chart Data 3.9 Estimated Impact on GDP of a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.10 Impact of Large Fiscal Consolidation on GDP and Unemployment: Action-Based Approach versus Standard Approach
Chart Data 3.11 Impact of a 1 Percent of GDP Fiscal Consolidation: GIMF Simulations
Chart Data 3.12 Impact of a 1 Percent of GDP Fiscal Consolidation: GIMF Simulations
Chart Data 3.13 Robustness: Impact on GDP of a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.14 Robustness: Impact on GDP of a 1 Percent of GDP Fiscal Consolidation
Chart Data 3.15 Size of Fiscal Consolidation: Action-Based Approach versus Standard Approach
Chart Data 4.1 The Great Trade Collapse
Chart Data 4.2 The Recovery in Trade
Chart Data 4.3 Trade Dynamics in Different Product Groups
Chart Data 4.4 Import and Export Losses, Not Controlling for Output
Chart Data 4.5 Import and Export Losses, Controlling for Output
Chart Data 4.6 Import Losses in Different Product Groups, Controlling for Output
Chart Data 4.7 Import Losses and Production Linkages, Controlling for Output
Chart Data 4.8 Trade Losses during Global Downturn
Chart Data 4.9 Precrisis Characteristics and Import Losses, Controlling for Output
Chart Data 4.10 The Postcrisis Evolution of Various Mechanisms
Chart Data 4.11 Decomposition of Import Losses
Chart Data 4.12 Import Losses and Composition Effects
Chart
Chart
Data
Data
4.13 Postcrisis Characteristics and Import Losses, Controlling for Output
Chart Data 4.14 Import Losses, Not Controlling for Output: Alternative Methodologies
Chart Data 4.15 Import Losses, Controlling for Output: Robustness
Chart Data 4.16 The Postcrisis Evolution of Various Components of GDP