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World Economic Outlook
Hopes, Realities, Risks
April 2013
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| Assumptions and Conventions | |||
| Further Information and Data | |||
| Preface | |||
| Foreword | |||
| Executive Summary |
Global economic prospects have improved again, but the bumpy recovery and skewed macroeconomic policy mix in advanced economies are complicating policymaking in emerging market economies. Chapter 3 examines the prospects for inflation, particularly because inflation was remarkably stable in the wake of the Great Recession and, in fact, has become less responsive to cyclical conditions. Chapter 4 examines whether today’s fast-growing, dynamic low-income countries are likely to maintain their momentum and avoid the reversals that afflicted many such countries in the past.
| Boxes | |||
| Chart Chart Chart Chart Chart Chart |
Data Data Data Data Data Data |
1.1 | The Great Divergence of Policies |
| Chart Chart |
Data Data |
1.2 | Public Debt Overhang and Private Sector Performance |
| Chart Chart Chart |
Data Data Data |
1.3 | The Evolution of Current Account Deficits in the Euro Area |
| Table | |||
| 1.1 | Overview of the World Economic Outlook Projections | ||
| Figures | |||
| Chart | Data | 1.1 | Global Indicators |
| Chart | Data | 1.2 | Current and Forward-Looking Growth Indicators |
| Chart | Data | 1.3 | Financial Market Conditions |
| Chart | Data | 1.4 | Monetary Conditions and Bank Lending |
| Chart | Data | 1.5 | Financial Conditions Index |
| Chart | Data | 1.6 | Monetary Policies and Credit in Emerging Market Economies |
| Chart | Data | 1.7 | Fiscal Policies |
| Chart | Data | 1.8 | GDP Growth |
| Chart | 1.9 | Overheating Indicators for the G20 Economies | |
| Chart | Data | 1.10 | Global Inflation |
| Chart | Data | 1.11 | Global Imbalances |
| Chart | Data | 1.12 | Risks to the Global Outlook |
| Chart | Data | 1.13 | Recession and Deflation Risks |
| Chart | Data | 1.14 | Interest Rate Risk Scenarios |
| Chart | Data | 1.15 | Euro Area Scenarios |
| Chart | Data | 1.16 | Capacity and Credit in Emerging Market Economies |
| Chart | Data | 1.17 | Emerging Market Downside Scenarios |
| Chart | Data | 1.SF.1 | IMF Commodity Price Indices |
| Chart | Data | 1.SF.2 | Equity and Commodity Market Volatility Indices |
| Chart | Data | 1.SF.3 | Commodity Prices and Economic Activity: First Principal Components |
| Chart | Data | 1.SF.4 | Energy Prices |
| Chart | Data | 1.SF.5 | Crude Oil Prices and SVAR Model |
| Chart | Data | 1.SF.6 | Oil Market Prospects |
| Chart | Data | 1.SF.7 | Oil Market Buffers |
| Chart | Data | 1.SF.8 | IMF Food Price Indices |
| Chart | Data | 1.SF.9 | Food Prices and Inventories |
| Chart | Data | 1.SF.10 | Metals: Prices, Demand, and Prospects |
| Chart | Data | 1.SF.11 | Declining Predictive Content of Commodity Futures Prices |
| Tables | |||
| 2.1 | Selected European 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 Asian 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 | Selected Middle East and North African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.6 | Commonwealth of Independent States: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| Figures | |||
| Chart | Data | 2.1 | World: 2013 GDP Growth Forecasts |
| Chart | Data | 2.2 | Europe: 2013 GDP Growth Forecasts |
| Chart | Data | 2.3 | Advanced Europe: Diminished Crisis Risks amid Prolonged Stagnation |
| Chart | Data | 2.4 | Emerging Europe: A Gradual Recovery from 2012 Slowdown |
| Chart | Data | 2.5 | United States and Canada: Slow but Steady Recovery |
| Chart | Data | 2.6 | United States: Fiscal Developments |
| Chart | Data | 2.7 | Asia: 2013 GDP Growth Forecasts |
| Chart | Data | 2.8 | Asia: Stabilization, Recovery, and Accommodative Policies |
| Chart | Data | 2.9 | Latin America and the Caribbean: 2013 GDP Growth Forecasts |
| Chart | Data | 2.10 | Latin America: Growth Supported by Easy Financing Conditions |
| Chart | Data | 2.11 | Middle East, North Africa, Afghanistan, and Pakistan: 2013 GDP Growth Forecasts |
| Chart | Data | 2.12 | Middle East and North Africa: Narrowing Differences in a Two-Speed Region |
| Chart | Data | 2.13 | Commonwealth of Independent States: 2013 GDP Growth Forecasts |
| Chart | Data | 2.14 | Commonwealth of Independent States: An Improving Outlook with Vulnerability to Global Slowdown |
| Chart | Data | 2.15 | Sub-Saharan Africa: 2013 GDP Growth Forecasts |
| Chart | Data | 2.16 | Sub-Saharan Africa: Continued Resilience |
| Chart | Data | 2.SF.1 | Policy Uncertainty in the United States and Europe |
| Chart | Data | 2.SF.2 | General Uncertainty and Confidence in the United States and Europe |
| Chart | Data | 2.SF.3 | Effect of U.S. or European Policy Uncertainty Shock on Real GDP in Other Regions |
| Chart | Data | 2.SF.4 | Growth Impact of U.S. and European Policy Uncertainty Shocks |
| Chart | Data | 2.SF.5 | Effect of a U.S. or European Policy Uncertainty Shock on Real Investment in Other Regions |
| Chart | Data | 2.SF.6 | Peak Effect of U.S. and European Policy Uncertainty Shock on Real GDP, Consumption, and Investment in Other Regions |
This chapter finds that inflation expectations have remained strongly anchored to inflation targets during the Great Recession and the sluggish recovery. Long-term inflation expectations in advanced economies remain close to targets despite wide variation in actual inflation rates. Even in Japan, expectations remain close to the 1 percent target announced in February 2012 despite a prolonged period of deflation. Furthermore, coincident with greater central bank credibility, this anchoring is found to have increased over time.
| Box | |||
| 3.1 | Inflation Targeting Still Makes Sense with a Flatter Phillips Curve? | ||
| Figures | |||
| Chart | Data | 3.1 | The Behavior of Inflation Has Changed |
| Chart | Data | 3.2 | Measures of Current Economic Slack |
| Chart | Data | 3.3 | Current Headline Inflation Compared with Expectations |
| Chart | Data | 3.4 | Rolling Regressions of Inflation Expectations over Actual Inflation |
| Chart | Data | 3.5 | Inflation and Cyclical Unemployment |
| Chart | Data | 3.6 | Changes in the Inflation Process |
| Chart | Data | 3.7 | Robustness to Alternative Estimates of the NAIRU |
| Chart | Data | 3.8 | Actual and Predicted Inflation in the United States |
| Chart | Data | 3.9 | Unemployment and Inflation in Selected Economies |
| Chart | Data | 3.10 | Headline Inflation in the United States and Germany |
The chapter compares this recent wave of dynamic LICs with the previous wave, primarily dynamic LICs in the 1960s and 1970s, and finds: Important similarities: Both achieved stronger investment rates and export growth than LICs that were unable to takeoff. Striking differences: Today’s dynamic LICs sustained growth with much lower economic vulnerabilities than dynamic LICs in the past. This reflects in part greater reliance on foreign direct investment than on debt-financed investment, as well as faster implementation of structural reforms.
| Tables | |||
| 4.1 | Takeoffs in Low-Income Countries, 1990– 2011 | ||
| 4.2 | Takeoffs in Low-Income Countries before 1990 | ||
| 4.3 | Crises and the Ends of Growth Takeoffs in Low-Income Countries, 1970–2011 | ||
| 4.4 | Explaining Growth Takeoffs in Dynamic Developing Economies | ||
| 4.5 | Data Sources | ||
| 4.6 | Economy Groups | ||
| 4.7 | Logistic Regression Robustness to Alternative Specifications and Definition | ||
| 4.8 | Logistic Regression Robustness to Alternative Estimation Methods, Full Sample | ||
| Figures | |||
| Chart | Data | 4.1 | Economic Performance of Low-Income Countries and Others |
| Chart | Data | 4.2 | Frequency of New and Ongoing Takeoffs in Low-Income Countries |
| Chart | Data | 4.3 | The Global Environment behind Low-Income Countries’ Growth Takeoffs |
| Chart | Data | 4.4 | Real Output per Capita after Takeoff in Low-Income Countries |
| Chart | Data | 4.5 | Economic Structure and Real Output per Capita after Takeoff in Low-Income Countries |
| Chart | Data | 4.6 | Investment and Financing in Low-Income Countries |
| Chart | Data | 4.7 | Macroeconomic Conditions in Low-Income Countries |
| Chart | Data | 4.8 | External Competitiveness, Export Growth, and Diversification in Low-Income Countries |
| Chart | Data | 4.9 | Structural Reforms, Infrastructure, and Political Conditions in Low-Income Countries |
| Chart | Data | 4.10 | Investment and Financing across the Spectrum of Today’s Dynamic Low- Income Countries |
| Chart | Data | 4.11 | Contributors to the Changing Likelihood of a Growth Takeoff in Low-Income Countries |
| Chart | Data | 4.12 | Brazil’s and Korea’s Growth Experience during 1960–90 |
| Chart | Data | 4.13 | Indonesia’s Growth Experience since the 1960s |
| Chart | Data | 4.14 | Mozambique’s Growth Experience since the 1990s |
| Chart | Data | 4.15 | Cambodia’s Growth Experience since the 1990s |
| Chart | Data | 4.16 | Macroeconomic Conditions for Non-HIPC-Eligible Low-Income Countries |
| Chart | Data | 4.17 | Aid and FDI Flows to Non-HIPC-Eligible Low-Income Countries |
| Text (Download PDF) | |||
| 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, 2011 | |||
| 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 Part A (Download PDF) | |||
| A1. | Summary of World Output | ||
| A2. | Advanced Economies: Real GDP and Total Domestic Demand | ||
| A3. | Advanced Economies: Components of Real GDP | ||
| A4. | Emerging Market and Developing Economies: Real GDP | ||
| A5. | Summary of Inflation | ||
| A6. | Advanced Economies: Consumer Prices | ||
| A7. | Emerging Market 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 Market and Developing Economies: Balance on Current Account | ||
| A13. | Emerging Market and Developing Economies: Net Financial Flows | ||
| A14. | Emerging Market and Developing Economies: Private Financial Flows | ||
| A15. | Summary of Sources and Uses of World Savings | ||
| A16. | Summary of World Medium-Term Baseline Scenario | ||
| List of Tables Part B (Download PDF - available on the web only) | |||
| B1. | Advanced Economies: Unemployment, Employment, and Real per Capita GDP | ||
| B2. | Emerging Market and Developing Economies: Real GDP | ||
| B3. | Advanced Economies: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing | ||
| B4. | Emerging Market 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. | Emerging Market and Developing Economies: General Government Net Lending/Borrowing and Overall Fiscal Balance | ||
| B9. | Emerging Market and Developing Economies: General Government Net Lending/Borrowing | ||
| B10. | Advanced Economies: Exchange Rates | ||
| B11. | Emerging Market and Developing Economies: Broad Money Aggregates | ||
| B12. | Advanced Economies: Export Volumes, Import Volumes, and Terms of Trade in Goods and Services | ||
| B13. | Emerging Market and Developing Economies by Region: Total Trade in Goods | ||
| B14. | Emerging Market and Developing Economies by Source of Export Earnings: Total Trade in Goods | ||
| B15. | Advanced Economies: Current Account Transactions | ||
| B16. | Emerging Market and Developing Economies: Balances on Current Account | ||
| B17. | Emerging Market and Developing Economies by Region: Current Account Transactions | ||
| B18. | Emerging Market and Developing Economies by Analytical Criteria: Current Account Transactions | ||
| B19. | Summary of Balance of Payments, Financial Flows, and External Financing | ||
| B20. | Emerging Market and Developing Economies by Region: Balance of Payments and External Financing | ||
| B21. | Emerging Market and Developing Economies by Analytical Criteria: Balance of Payments and External Financing | ||
| B22. | Summary of External Debt and Debt Service | ||
| B23. | Emerging Market and Developing Economies by Region: External Debt by Maturity and Type of Creditor | ||
| B24. | Emerging Market and Developing Economies by Analytical Criteria: External Debt, by Maturity and Type of Creditor | ||
| B25. | Emerging Market and Developing Economies: Ratio of External Debt to GDP | ||
| B26. | Emerging Market and Developing Economies: Debt-Service Ratios | ||
| B27. | Emerging Market and Developing Economies, Medium-Term Baseline Scenario: Selected Economic Indicators | ||
| World Economic Outlook, Selected Topics | |||
