World Economic Outlook
Tensions from the Two-Speed Recovery: Unemployment, Commodities, and Capital Flows
April 2011
World Economic and Financial Surveys
©2011 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 |
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Foreword |
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Executive Summary |
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| Chapter 1. Global Prospects and Policies | |||
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| Full Text | Boxes | Figures | |||
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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 |
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| Chapter 2. Country and Regional Perspectives | |||
| Full Text | Boxes | Figures | |||
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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 |
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| Chapter 3. Oil Scarcity, Growth, and Global Imbalances | |||
| Full Text | Summary | Boxes | Figures | Video | |||
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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 |
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| Chapter 4. International Capital Flows: Reliable or Fickle? | |||
| Full Text | Summary | Figures | Video | |||
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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 |
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| 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 |