World Economic Outlook

Spillovers and Cycles in the Global Economy

April 2007

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 Full Text of the WEO (use the free Adobe Acrobat Reader).


Assumptions and Conventions, Preface, Foreword
  Executive Summary
Chapter 1. Global Prospects and Policy Issues
Full Text  |   Video Briefing   |   Boxes  |  Charts
  Global Economic Environment
  Outlook and Short-Term Risks
  Cross-Country Spillovers: Can the Global Economy Decouple from a U.S. Slowdown?
  Medium-Term Challenges: Can the Productivity Boom Be Sustained?
  Policy Challenges
  Appendix 1.1. Recent Developments in Commodity Markets
Chapter 2. Country and Regional Perspectives
Full Text   |   Boxes  |  Charts
  United States and Canada: How Much Will the U.S. Economy Slow?
  Western Europe: Can Recent Vigor Be Sustained?
  Industrial Asia: Japan's Expansion Remains on Track
  Emerging Asia: How Resilient Is the Region to a U.S. Slowdown?
  Latin America: Boosting Productivity Is the Key to Sustaining Growth
  Emerging Europe: Integrating with the European Union
  Commonwealth of Independent States: Strong Growth but More Economic Diversification Needed
  Africa: Sustaining Recent Growth Momentum
  Middle East: Expanding the Benefits of the Oil Boom
Chapter 3. Exchange Rates and the Adjustment of External Imbalances
Full Text   |  Summary   |  Video Briefing   |  Boxes  |  Charts
  Past Episodes of Large External Imbalances: An Event Analysis
  How Responsive Are U.S. Trade Volumes to Exchange Rate Movements?
  Implications for Global Imbalances
  Appendix 3.1. Event Analysis: Methodology and Data
  Appendix 3.2. Econometric Estimates of Trade Models
Chapter 4. Decoupling the Train? Spillovers and Cycles in the Global Economy
Full Text   |   Summary   |   Video Briefing   |   Boxes  |  Charts
  U.S. Economy and International Business Cycle Fluctuations
  Identifying Common Elements in International Business Cycle Fluctuations
  How the United States Affects the Global Economy—A Model-Based Simulation Analysis
  Summary and Conclusions
  Appendix 4.1. Econometric Methodology
  Appendix 4.2. Common Elements in International Business Cycle Fluctuations: Description of the Dynamic Factor Models
Chapter 5. The Globalization of Labor
Full Text   |   Summary   |   Video Briefing   |  Boxes  |  Charts
  How Globalized Is Labor?
  How Has the Globalization of Labor Affected Workers in Advanced Economies?
  Summary and Policy Implications
  Appendix 5.1. Data Sources and Methods
  Annex: IMF Executive Board Discussion of the Outlook, March 2007
Statistical Appendix
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Countries in the World Economic Outlook
  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
1.1 Understanding the Link Between Oil Prices and the World Economy
Chart Data 1.2 Ensuring Fiscal Sustainability in G-7 Countries
Chart Data 1.3 Oil Consumption Across Major Countries: Is the United States Different?
1.4 Hedging Against Oil Price Volatility
Chapter 2 Boxes
Chart Data 2.1 Housing Market Slowdowns
Chart Data 2.2 Lessons from Successful European Labor Market Reformers
2.3 Is China Investing Too Much?
Chapter 3 Boxes
Chart Data 3.1 External Sustainability and Financial Integration
3.2 Large and Persistent Current Account Imbalances
3.3 Exchange Rate Pass-Through to Trade Prices and External Adjustment
Chapter 4 Boxes
Chart Data 4.1 Financial Linkages and Spillovers
4.2 Macroeconomic Conditions in Industrial Countries and Financial Flows to Emerging Markets
Chart Data 4.3 Spillovers and International Business Cycle Synchronization: A Broader Perspective
Chapter 5 Boxes
5.1 Emigration and Trade: How Do They Affect Developing Countries?
Appendix Boxes
    A1. Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies
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 Effects of Petroleum Products on Production of Selected Grains in the United States
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 Summary Statistics of Episodes of Reversals
3.2 Standard Trade Model: Estimates of U.S. Trade Elasticities
3.3 List of Reversal Episodes
3.4 List of Large and Persistent Episodes
3.5 Advanced Economies: Contractionary and Expansionary Deficit Reversals
3.6 Emerging Markets: Contractionary and Expansionary Surplus Reversals
3.7 Variable Definitions
3.8 Standard Empirical Trade Model: Long-Run U.S. Trade Elasticities
3.9 Long-Run U.S. Trade Elasticities and Aggregation Bias
3.10 Long-Run U.S. Import Elasticities and Vertical Integration
3.11 Nonlinearity Tests (p value) and Thresholds for Changes in Relative Import Prices
3.12 Error Correction Model for U.S. Imports, Sample 1973:Q1—2006:Q3
4.1 Role of Large Economies in the Global Economy
4.2 Export Orientation by Region
4.3 External Portfolio Assets and Liabilities by Region
4.4 U.S. Downturns and Global Growth
4.5 Growth and Spillovers (1)
4.6 Growth and Spillovers (2)
4.7 Contributions to Output Fluctuations
4.8 Consumption
4.9 Investment
4.10 Contributions to Business Cycle Fluctuations in G-7 Countries
5.1 Classification of Sectors by Skill Intensity
5.2 Impact of Labor Globalization and Technological Change on Labor Shares
5.3 Impact of Labor Globalization and Technological Change on the Skilled and Unskilled Labor Shares
Chapter 1 Charts
Chart Data 1.1 Global Indicators
Chart Data 1.2 Current and Forward-Looking Indicators
Chart Data 1.3 Global Inflation
Chart Data 1.4 Developments in Mature Financial Markets
Chart Data 1.5 Mature Financial Market Indicators
Chart Data 1.6 Emerging Market Financial Conditions
Chart Data 1.7 External Developments in Major Advanced Economies
Chart Data 1.8 External Developments in Emerging Market Countries
Chart Data 1.9 Global Outlook
Chart Data 1.10 Risks to the Global Outlook
Chart Data 1.11 Productivity and Labor Cost Developments in Selected Advanced Economies
Chart Data 1.12 Measures of the Output Gap and Capacity Pressures
Chart Data 1.13 Current Account Balances and Net Foreign Assets
Chart Data 1.14 Global Productivity Performance
Chart Data 1.15 Global Saving, Investment, and Current Accounts
Chart Data 1.16 Saving and Investment in Emerging Market and Oil-Producing Economies
Chart Data 1.17 Average Petroleum Spot and Futures Prices, and Selected Energy Product Prices
Chart Data 1.18 Demand and Prices of Petroleum Products in Selected Developing and OECD Countries
Chart Data 1.19 Oil Supply, OECD Inventories, and OPEC Spare Capacity
Chart Data 1.20 Actual and Expected Semiannual World Consumption and Non-OPEC Production Growth, and Brent Crude Oil Prices
Chart Data 1.21 Commodity Price Indices and Selected Metals and Food Price Indices
Chart Data 1.22 Semiconductor Market
Chapter 2 Charts
Chart Data 2.1 United States: How Much Will the U.S. Economy Slow?
Chart Data 2.2 United States: Developments in the Residential and Nonresidential Construction Sectors
Chart Data 2.3 Western Europe: Productivity Is Failing to Catch Up
Chart Data 2.4 Western Europe: Need to do More to Raise Labor Utilization
Chart Data 2.5 Japan: Understanding Developments in Domestic Demand
Chart Data 2.6 Emerging Asia: Assessing the Resilience to a Global Slowdown
Chart Data 2.7 Latin America: Productivity Is Lagging
Chart Data 2.8 Emerging Europe: Convergence with the European Union
Chart Data 2.9 Commonwealth of Independent States (CIS): Further Return Needed to Raise Investment Levels
Chart Data 2.10 Sub-Saharan Africa: Can Recent Growth Momentum Be Sustained?
Chart Data 2.11 Middle East: Investment in Non-Oil Sectors Key to Employment Growth
Chapter 3 Charts
Chart Data 3.1 Episodes of Deficit Reversals and Large and Persistent Deficits
Chart Data 3.2 Advanced Economies: Key Indicators During Deficit Reversals
Chart Data 3.3 Deficit Reversals in Advanced Economies: Episode Characteristics by Average Change in GDP Growth
Chart Data 3.4 Advanced Economies: Total Change in Real Effective Exchange Rate and Average Change in GDP Growth During Deficit Reversals
Chart Data 3.5 Episodes of Surplus Reversals and Large and Persistent Surpluses
Chart Data 3.6 Key Indicators During Surplus Reversals
Chart Data 3.7 Surplus Reversals in Emerging Markets: Episode Characteristics by Average Change in GDP Growth
Chart Data 3.8 Oil Exporters: Surplus Reversals
Chart Data 3.9 Thresholds in Relative Trade Prices, Real Effective Exchange Rate, and Flexibility of Markets
Chart Data 3.10 United States: Trade Flows, Real Effective Exchange Rate (REER), and Growth Differential with Trading Partners
Chart Data 3.11 Required Exchange Rate Change for a 1 Percentage Point Reduction in the Ratio of U.S. Trade Deficit to GDP
Chart Data 3.12 Sectoral Price Elasticities of Trade
Chapter 4 Charts
Chart Data 4.1 U.S. Recessions and Real GDP Growth by Region
Chart Data 4.2 Trade Orientation
Chart Data 4.3 United States: Real Imports, Real Effective Exchange Rate, Real Stock Returns, and Interest Rates During Recessions and Slowdowns
Chart Data 4.4 Output Gaps and Structural Characteristics During U.S. Recessions
Chart Data 4.5 Growth Declines and Spillovers: Regional Implications
Chart Data 4.6 Impact of Growth Declines in the United States and Japan
Chart Data 4.7 Global Factor
Chart Data 4.8 Global Implications of a Disturbance to U.S. Private Demand
Chart Data 4.9 Global Growth and Inflation with Correlated Disturbances and Delayed Monetary Policy Response
Chart Data 4.10 Limited In-Sample Persistence of U.S. Growth Shocks
Chart Data 4.11 Impact of U.S. Growth Declines on Growth in Latin America: Effects by Country
Chart Data 4.12 Impact of Euro Area Growth Declines on Growth in Latin America: Effects by Country
Chart Data 4.13 Impact of U.S. Growth Declines on Growth in Emerging Asia: Effects by Country
Chart Data 4.14 Impact of Japanese Growth Declines on Growth in Emerging Asia: Effects by Country
Chapter 5 Charts
Chart Data 5.1 Alternative Measures of Global Labor Supply
Chart Data 5.2 Immigration and Trade
Chart Data 5.3 Share of Developing Countries in Trade
Chart Data 5.4 Developing Countries: Exports of Skilled Manufacturing Goods and Services
Chart Data 5.5 Offshoring by Advanced Economies
Chart Data 5.6 Advanced Economies: Offshoring by Category of Inputs
5.7 Advanced Economies: Labor Income Shares
Chart Data 5.8 Advanced Economies: Labor Compensation and Employment
Chart Data 5.9 Advanced Economies: Labor Compensation and Employment in Skilled and Unskilled Sectors
Chart Data 5.10 Catch-Up by Emerging Markets' Manufacturing Wages
Chart Data 5.11 Information and Communications Technology (ICT) Capital, Patents, and Labor Market Indicators
Chart Data 5.12 Contributions to the Annual Change in Labor Share
Chart Data 5.13 Advanced Economies: Contributions to the Annual Change in the Labor Share by Skill Level
Chart Data 5.14 Effects of Changes in Trade Prices on Labor Share, Output, and Labor Compensation
Chart Data 5.15 Advanced Economies' Labor Income Share, Labor Compensation, and Employment: Robustness to Alternative Skill Classification