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World Economic and Financial Surveys

World Economic Outlook (WEO)

Tensions from the Two-Speed Recovery: Unemployment, Commodities, and Capital Flows

April 2011

©2011 International Monetary Fund

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
 

The Recovery Has Solidified, but Unemployment Remains High

Financial Conditions Are Improving

Commodity Prices Are Resurgent

The Recovery Is Expected to Solidify

Risks Are Smaller but Remain to the Downside

Differences in the Pace of Activity Present Short-Term Policy Challenges

Advanced Economies Need to Repair Public and Financial Balance Sheets

Emerging Market Economies Need to Guard against Overheating and Credit Booms

Global Demand Rebalancing Is Not Progressing

Unemployment Needs to Be Reduced

Policies Are Not Yet Suffi ciently Proactive

Appendix 1.1. Financial Conditions Indices

Appendix 1.2. Commodity Market Developments and Prospects

References

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

Recovery Proceeds in the United States

A Gradual and Uneven Recovery Is under Way in Europe

A Moderate Recovery Continues in the Commonwealth of Independent States

Rapid Growth Continues in Asia

Latin America Faces Buoyant External Conditions

Growth Has Returned to Precrisis Rates in Many African Countries

The Recovery in the Middle East and North Africa Region Faces an Uncertain Environment

References

 
Chapter 3. Oil Scarcity, Growth, and Global Imbalances
Full Text  |   Summary  |   Boxes  |   Figures  |   Video
 

What Are the Main Findings?

Has Oil Become a Scarce Resource?

Oil Scarcity and the Global Economy

Implications for the Outlook and Policies

Appendix 3.1. Low-Frequency Filtering for Extracting Business Cycle Trends

Appendix 3.2. The Energy and Oil Empirical Models

References

 
Chapter 4. International Capital Flows: Reliable or Fickle?
Full Text  |   Summary  |   Figures  |   Video
 

What Are the Main Findings?

Trends in Net Capital Flows: Size, Composition, Volatility, and Persistence

Capital Flows and the Global Environment

Does Direct Financial Exposure Affect the Response of Private Capital Flows to Changes in U.S. Monetary Policy?

Policy Implications and Conclusions

Appendix 4.1. Classification of Economies and Data Sources

Appendix 4.2. Composition, Volatility, and Persistence of Net Private Capital Flows across Emerging Market Regions

Appendix 4.3. Global Factor Model

Appendix 4.4. Regression Methodology and Robustness Checks

References

 
  Annex: IMF Executive Board Discussion of the Outlook, March 2011
 
  Statistical Appendix
  Assumptions
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Groups in the World Economic Outlook Classification
  Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2009
  Table B. Advanced Economies by Subgroup
  Table C. European Union
  Table D. Emerging and Developing Economies by Region and Main Source of Export Earnings
  Table E. Emerging and Developing Economies by Region, Net External Position, and Status as Heavily Indebted Poor Countries
  Box A1. Economic Policy Assumptions Underlying the Projections for Selected Economies
 
  List of Tables
  Output (Tables A1–A4)
  Inflation (Tables A5–A7)
  Financial Policies (Table A8)
  Foreign Trade (Table A9)
  Current Account Transactions (Tables A10–A12)
  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)
 
  World Economic Outlook, Selected Topics
 
Boxes
Chart Data
Data
1.1 House Price Busts in Advanced Economies: Repercussions for Global Financial Markets
Chart Data
Data
1.2 World Economic Outlook Downside Scenarios
Chart Data 1.3 International Spillovers and Macroeconomic Policymaking
Chart Data
Data
1.4 Did the Plaza Accord Cause Japan's Lost Decades?
Chart Data
Data
2.1 Unwinding External Imbalances in the European Union Periphery
Chart Data 3.1 Life Cycle Constraints on Global Oil Production
Chart Data
Data
3.2 Unconventional Natural Gas: A Game Changer?
Chart   3.3 Short-Term Effects of Oil Shocks on Economic Activity
  A1. 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 Consumption of Base Metals
1.4 Annual Price Changes for Key Commodities
1.5 Trade Balance Impact of Higher Prices
1.1.1 Cross-Country Financial Market Synchronization
2.1 Selected Advanced Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.2 Selected European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.3 Commonwealth of Independent States: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.4 Selected Asian Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.5 Selected Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.6 Selected Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
2.7 Selected Middle East and North African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
3.1 Oil Demand Price and Income Elasticities
3.2 Oil Demand Price and Income Elasticities, Including Oil-Exporting Countries
3.3 Oil Demand Price and Income Elasticities in the Extended Sample
3.4 Oil Demand Price and Income Short-Term Elasticities: High versus Low Oil Price Environments
3.2.1 Unconventional Natural Gas Resources, 2009
3.2.2 Composition of Wholesale Gas Transactions: United States and Europe, 2007
3.3.1 Annualized Percent Impact of a 10 Percent Oil Price Increase on Real U.S. GDP Growth after One Year
4.1 Economy Groupings
4.2 Data Sources
4.3 Baseline Results
4.4 U.S. Direct Financial Exposure Weight
 
A1. Summary of World Output
A2. Advanced Economies: Real GDP and Total Domestic Demand
A3. Advanced Economies: Components of Real GDP
A4. Emerging and Developing Economies: Real GDP
A5. Summary of Inflation
A6. Advanced Economies: Consumer Prices
A7. Emerging and Developing Economies: Consumer Prices
A8. Major Advanced Economies: General Government Fiscal Balances and Debt
A9. Summary of World Trade Volumes and Prices
A10. Summary of Balances on Current Account
A11. Advanced Economies: Balance on Current Account
A12. Emerging and Developing Economies: Balance on Current Account
A13. Emerging and Developing Economies: Net Financial Flows
A14. Emerging and Developing Economies: Private Financial Flows
A15. Emerging and Developing Economies: Reserves
A16. Summary of Sources and Uses of World Savings
A17. Summary of Word Medium-Term Baseline Scenario
 
Online Tables
B1. Advanced Economies: Unemployment, Employment, and Real per Capita GDP
B2. Emerging and Developing Economies: Real GDP
B3. Advanced Economies: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing
B4. Emerging and Developing Economies: Consumer Prices
B5. Summary of Financial Indicators
B6. Advanced Economies: General and Central Government Net Lending/Borrowing and Excluding Social Security Schemes
B7. Advanced Economies: General Government Structural Balances
B8. Advanced Economies: Exchange Rates
B9. Emerging and Developing Economies: General Government Net Lending/Borrowing and Overall Fiscal Balance
B10. Emerging and Developing Economies: Broad Money Aggregates
B11. Advanced Economies: Export Volumes, Import Volumes, and Terms of Trade in Goods and Services
B12. Emerging and Developing Economies by Region: Total Trade in Goods
B13. Emerging and Developing Economies by Source of Export Earnings: Total Trade in Goods
B14. Advanced Economies: Current Account Transactions
B15. Emerging and Developing Economies: Balances on Current Account
B16. Emerging and Developing Economies by Region: Current Account Transactions
B17. Emerging and Developing Economies by Analytical Criteria: Current Account Transactions
B18. Summary of Balance of Payments, Financial Flows, and External Financing
B19. Emerging and Developing Economies by Region: Balance of Payments and External Financing
B20. Emerging and Developing Economies by Analytical Criteria: Balance of Payments and External Financing
B21. Summary of External Debt and Debt Service
B22. Emerging and Developing Economies by Region: External Debt by Maturity and Type of Creditor
B23. Emerging and Developing Economies by Analytical Criteria: External Debt by Maturity and Type of Creditor
B24. Emerging and Developing Economies: Ratio of External Debt to GDP
B25. Emerging and Developing Economies: Debt-Service Ratios
B26. Emerging and Developing Economies, Medium-Term Baseline Scenario: Selected Economic Indicators
 
Figures
Chart Data 1.1 Global Indicators
Chart Data 1.2 Recent Financial Market Developments
Chart Data 1.3 Emerging Market Conditions
Chart Data 1.4 Developments in Mature Credit Markets
Chart Data 1.5 Current and Forward-Looking Trade Indicators
Chart Data 1.6 Global Outlook
Chart Data 1.7 Current and Forward-Looking Growth Indicators
Chart Data 1.8 Prospects for Near-Term Activity
Chart Data 1.9 Balance Sheets and Saving Rates
Chart Data 1.10 Global Inflation
Chart Data 1.11 Measures of Monetary Policy and Liquidity in Selected Advanced and Emerging Economies
Chart Data 1.12 General Government Fiscal Balances and Public Debt
Chart Data 1.13 Risks to the Global Outlook
Chart Data 1.14 Emerging Tensions
Chart   1.15 Overheating Indicators and Capital Inflows
Chart Data 1.16 Emerging Market Economies with Strong Credit Expansion
Chart Data 1.17 Global Imbalances
Chart Data 1.18 External Developments
Chart Data 1.19 Unemployment
Chart Data 1.20 Financial Conditions Indices
Chart Data 1.21 Commodity Prices
Chart Data 1.22 World Energy Market Developments
Chart Data 1.23 Developments in Base Metal Markets
Chart Data 1.24 Developments in Markets for Major Food Crops
Chart Data 1.25 Changes in International and Domestic Food Prices and Headline Inflation
Chart Data 1.26 First-Round Impact of Commodity Price Changes on the Trade Balances of Selected Emerging and Developing Economies
Chart Data 1.1.1 Financial Disruptions
Chart Data 1.1.2 Effect of Advanced Economy House Price Busts
Chart Data 1.2.1 WEO Downside Scenario 1: Implications of Overestimating Potential Output
Chart Data 1.2.2 WEO Downside Scenario 2: Implications of Overestimating Potential Output with Sticky Inflation
Chart Data 1.3.1 Optimized Exchange Rate Coefficient and Relative Loss as a Function of Home Output Gap Response
Chart Data 1.4.1 Japan: Selected Macroeconomic Indicators
Chart Data 1.4.2 Japan and China: Balance Sheets and Export Content
Chart Data 2.1 Global Average Projected Real GDP Growth during 2011–12
Chart Data 2.2 Output Gaps
Chart Data 2.3 United States and Canada: Average Projected Real GDP Growth during 2011–12
Chart Data 2.4 United States: Gaining Traction
Chart Data 2.5 Europe: Average Projected Real GDP Growth during 2011–12
Chart Data 2.6 Europe: A Gradual and Uneven Recovery Continues
Chart Data 2.7 Commonwealth of Independent States: Average Projected Real GDP Growth during 2011–12
Chart Data 2.8 Commonwealth of Independent States: A Moderate Recovery Is under Way
Chart Data 2.9 Asia: Average Projected Real GDP Growth during 2011–12
Chart Data 2.10 Asia: Still in the Lead
Chart Data 2.11 Latin America and the Caribbean: Average Projected Real GDP Growth during 2011–12
Chart Data 2.12 Latin America and the Caribbean: Icarus or Daedalus?
Chart Data 2.13 Sub-Saharan Africa: Average Projected Real GDP Growth during 2011–12
Chart Data 2.14 Sub-Saharan Africa: Back to Precrisis Growth
Chart Data 2.15 Middle East and North Africa: Average Projected Real GDP Growth during 2011–12
Chart Data 2.16 Middle East and North Africa: The Recovery Continues in an Uncertain Environment
Chart Data 2.1.1 Economic Activity and External Adjustment in the EU Periphery
Chart Data 2.1.2 External Adjustment in the EU Periphery
Chart Data 3.1 Energy Prices and Long-Term Price Trends
Chart Data 3.2 Global Energy Demand, 1980–2008
Chart Data 3.3 Relationship between per Capita Energy Consumption and GDP Growth
Chart Data 3.4 Primary Energy Consumption
Chart Data 3.5 Oil Consumption in China and in Selected Advanced Economies
Chart Data 3.6 The Big Switch: Oil Share in the Electric Power Sector
Chart Data 3.7 Global Oil Market Developments
Chart Data 3.8 Projected Growth in Crude Oil Capacity
Chart Data 3.9 Oil Scarcity and the Global Economy: Benchmark Scenario
Chart Data 3.10 Alternative Scenario 1: Greater Substitution away from Oil
Chart Data 3.11 Alternative Scenario 2: Greater Decline in Oil Production
Chart Data 3.12 Alternative Scenario 3: Greater Economic Role for Oil
Chart Data 3.1.1 Life Cycle of Global Oil Production
Chart Data 3.2.1 U.S. Natural Gas Supply, 1998–2009
Chart Data 3.2.2 U.S. Natural Gas versus Oil Spot Prices
Chart Data 4.1 The Collapse and Recovery of Cross-Border Capital Inflows
Chart Data 4.2 The Evolution of Gross and Net Capital Flows
Chart Data 4.3 The Recovery of Net Private Capital Flows
Chart Data 4.4 The Recovery of Net Capital Flows and Their Composition
Chart Data 4.5 The Size and Composition of Net Private Capital Flows during Waves of Large Capital Flows to Emerging Market Economies
Chart Data 4.6 Regional Variation in Net Private Capital Flows to Emerging Market Economies
Chart Data 4.7 The Relative Importance of Various Types of Flow
Chart Data 4.8 Historical Trends: A Shift away from Debt-Creating Flows
Chart Data 4.9 The Volatility of Net Private Capital Flows
Chart Data 4.10 Correlations between Net Flows of Various Types and the Rest of the Financial Account
Chart Data 4.11 The Persistence of Net Private Capital Flows
Chart Data 4.12 Historical Periods of Easy External Financing and High Growth Differential between Emerging Market and Advanced Economies
Chart Data 4.13 Net Private Capital Flows during Periods of Easy External Financing and High Growth Differential between Emerging Market and Advanced Economies
Chart Data 4.14 Net Private Flows to Emerging Market Economies under Alternative Financing Conditions
Chart Data 4.15 Common Factors Underlying the Variation in Net Private Capital Flows to Advanced and Emerging Market Economies
Chart Data 4.16 Difference in the Response of Net Private Capital Flows to U.S. Monetary Tightening across Economies
Chart Data 4.17 Difference in the Response of Emerging Market Economy Net Private Capital Flows to U.S. Monetary Tightening by Selected Economic Characteristics
Chart Data 4.18 Difference in the Response of Emerging Market Economy Net Private Capital Flows to U.S. Monetary Tightening by Type of Flow
Chart Data 4.19 Difference in the Response of Emerging Market Economy Net Private Capital Flows to U.S. Monetary Tightening under Alternative Global Economic Conditions
Chart Data 4.20 The Relative Importance of Various Types of Flow across Emerging Market Regions
Chart Data 4.21 The Volatility of Net Private Capital Flows across Emerging Market Regions
Chart Data 4.22 The Persistence of Net Private Capital Flows across Emerging Market Regions
Chart Data 4.23 Realized and Unanticipated Changes in U.S. Monetary Policy over Time
Chart Data 4.24 Robustness Checks for the Difference in Response of Net Private Capital Flows to Directly Financially Exposed Emerging Market Economies