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World Economic Outlook
World Economic Outlook, April 2018<br />Cyclical Upswing, Structural Change
April 2018
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World Economic Outlook
April 2018
[$token_name="PublicationDisclaimer"]
The global economic upswing that began around mid-2016 has become broader and stronger. This new World Economic Outlook report projects that advanced economies as a group will continue to expand above their potential growth rates this year and next before decelerating, while growth in emerging market and developing economies will rise before leveling off. For most countries, current favorable growth rates will not last. Policymakers should seize this opportunity to bolster growth, make it more durable, and equip their governments better to counter the next downturn.
World growth strengthened in 2017 to 3.8 percent, with a notable rebound in global trade. It was driven by an investment recovery in advanced economies, continued strong growth in emerging Asia, a notable upswing in emerging Europe, and signs of recovery in several commodity exporters. Global growth is expected to tick up to 3.9 percent this year and next, supported by strong momentum, favorable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States. The partial recovery in commodity prices should allow conditions in commodity exporters to gradually improve.
Full Text of Chapter 1 Blog| Tables |
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| Chart | Data | 1.1 | Global Activity Indicators |
| Chart | Data | 1.2 | Contributions to the Change in Real GDP Growth, 2016–17 |
| Chart | Data | 1.3 | Global Investment and Trade |
| Chart | Data | 1.4 | Contributions to Trade Growth |
| Chart | Data | 1.5 | Commodity and Oil Prices |
| Chart | Data | 1.6 | Global Inflation |
| Chart | Data | 1.7 | Advanced Economies: Monetary and Financial Market Conditions |
| Chart | Data | 1.8 | Real Effective Exchange Rate Changes, August 2017–March 2018 |
| Chart | Data | 1.9 | Emerging Market Economies: Equity Markets and Credit |
| Chart | Data | 1.10 | Emerging Market Economies: Interest Rates |
| Chart | Data | 1.11 | Emerging Market Economies: Capital Flows |
| Chart | Data | 1.12 | Terms-of-Trade Windfall Gains and Losses |
| Chart | Data | 1.13 | GDP Growth, 1999–2023 |
| Chart | Data | 1.14 | Per Capita Real GDP Growth |
| Chart | Data | 1.15 | Fiscal Indicators |
| Chart | Data | 1.16 | Global Current Account Balance |
| Chart | Data | 1.17 | Real Exchange Rates and Current Account Balances in Relation to Economic Fundamentals |
| Chart | Data | 1.18 | Net International Investment Positions |
| Chart | Data | 1.19 | Growth for Creditors and Debtors |
| Chart | Data | 1.20 | Geopolitical Risk Index |
| Chart | Data | 1.21 | Risks to the Global Outlook |
| Chart | Data | 1.22 | Recession and Deflation Risks |
| Chart | Data | Scen. Fig. 1 | Inflation Surprise and Term Premium Shocks in the United States |
| Chart | Data | 1.1.1 | Global Sales of Personal Computers and Smartphones |
| Chart | Data | 1.1.2 | Global iPhone Sales |
| Chart | Data | 1.1.3 | China: Smartphone Export Cycle |
| Chart | Data | 1.2.1 | Advanced Economy Core Consumer Price Inflation |
| Chart | Data | 1.2.2 | Advanced Economy Core Goods and Core Services Consumer Price Inflation |
| Chart | Data | 1.2.3 | Cross-Country Distribution of Changes in Core Goods and Core Services Inflation, 2011-17 versus 2002-08 |
| Chart | Data | 1.2.4 | Changes in Sectoral Inflation, 2011-17 versus 2002-08 |
| Chart | Data | 1.3.1 | Different Measures of Growth |
| Chart | Data | 1.3.2 | Production Function Decomposition: Selected Large Advanced Economies |
| Chart | Data | 1.3.3 | Investment in Selected Advanced Economies |
| Chart | Data | 1.3.4 | Total Factor Productivity Growth |
| Chart | Data | 1.4.1 | Difference Between ICT Price Indices and General Non-ICT Price Index, Selected OECD Countries |
| Chart | Data | 1.5.1 | Impact of a Temporary Increase in the Investment Expense Allowance and a Temporary Decrease in the Corporate Income Tax Rate |
| Chart | Data | 1.6.1 | Selected Trade Policy Indicators: Example with Group of Twenty Member Countries |
| Chart | Data | 1.6.2 | Free Trade Normalization: Alternative Normalization |
| Chart | Data | 1.SF.1 | Commodity Market Developments |
| Chart | Data | 1.SF.2 | Detrended IMF Crude Oil Index and Economic and Market Conditions |
| Chart | Data | 1.SF.1.1 | Hundred Years of Cobalt Mining |
Despite the acceleration in population aging in almost all advanced economies over the past decade, aggregate labor force participation rates show divergent trajectories. Headline numbers also hide strikingly different shifts in the labor force attachment of different groups of workers: participation has increased among prime-age women and, more recently, older workers, but it has fallen among the young and among prime-age men. This chapter finds that aging and the drag from the global financial crisis can explain a significant share of the decline in the participation of men during the past decade. However, the rising participation of women underscores the importance of other factors in shaping participation decisions. The analysis suggests that labor market policies and institutions, together with structural changes and gains in educational attainment, account for the bulk of the dramatic increase in the labor force attachment of prime-age women and older workers in the past three decades. At the same time, technological advances such as automation, while beneficial for the economy as a whole, have weighed moderately on participation rates.
Full Text of Chapter 2 Blog| Figures | |||
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| Chart | Data | 2.1 | Demographic Transition: Recent Trends and Projections |
| Chart | Data | 2.2 | Change in Labor Force Participation Rates, 2008–16 |
| Chart | Data | 2.3 | Labor Force Participation Rates by Gender and Age |
| Chart | Data | 2.4 | Labor Force Participation and School Enrollment of the Young |
| Chart | Data | 2.5 | Labor Force Participation Rates of Prime-Age Men and Women by Demographic Characteristics, 2000 and 2016 |
| Chart | Data | 2.6 | Subgroups of the Inactive, 2000 and 2016 |
| Chart | Data | 2.7 | The Role of Exposure to Routinization |
| Chart | Data | 2.8 | Average Annual Changes in Labor Force Participation Rates |
| Chart | Data | 2.9 | Decomposition of Labor Market Shifts |
| Chart | Data | 2.10 | Changes in Participation Rates, 2008–16 |
| Chart | Data | 2.11 | Drivers of Participation Rates: Policies |
| Chart | Data | 2.12 | Drivers of Participation Rates: Additional Policies |
| Chart | Data | 2.13 | Changes in Participation Rates, Actual Versus Predicted, 1995–2011 |
| Chart | Data | 2.14 | Average Contributions to Changes in Participation Rates, 1995–2011 |
| Chart | Data | 2.15 | Change in the Odds of Being Active |
| Chart | Data | 2.16 | Policies and the Effect of Routine Exposure on Labor Force Participation |
| Chart | Data | 2.17 | Age and Cohort Effects of Labor Force Participation |
| Chart | Data | 2.18 | Projected Changes in Participation Rates under Alternative Scenarios |
| Chart | Data | 2.1.1 | Labor Force Participation by Age Group |
| Chart | Data | 2.1.2 | Median Secondary Enrollment by Geographic Region |
| Chart | Data | 2.1.3 | Youth Labor Force Participation by Gender |
| Chart | Data | 2.1.4 | Implied 10-Year Improvement in Country Gender Gaps for Youth |
| Chart | Data | 2.2.1 | Labor Force Participation and Change in Labor Force Participation by State |
| Chart | Data | 2.2.2 | Change in Labor Force Participation Rate by Metropolitan Area |
| Chart | Data | 2.2.3 | Decomposition of Labor Market Changes in Metropolitan Areas |
| Chart | Data | 2.2.4 | Routine and Offshoring Exposure by State |
| Chart | Data | 2.3.1 | Change in Labor Force Participation by Region, 2000–16 |
| Chart | Data | 2.3.2 | Change in Labor Force Participation Rate by Region |
| Chart | Data | 2.3.3 | Decomposition of Labor Market Changes |
| Chart | Data | 2.3.4 | Initial Routine Exposure by Region, 2000 |
| Chart | Data | 2.3.5 | Initial Offshoring Exposure by Region, 2000 |
| Chart | Data | 2.4.1 | Contributions of Natural Population Growth and Net Migration to Total Population Growth |
| Chart | Data | 2.4.2 | Projected Evolution of Labor Force Participation Rates |
| Chart | Data | 2.4.3 | Labor Force Participation Rates of Prime-Age Natives and Migrants, 2000–16 |
| Chart | Data | 2.4.4 | Change in the Odds of Being Active |
| Chart | Data | Annex 2.2.1 | Changes in Labor Force Participation Rates, 1985–2016 |
| Chart | Data | Annex 2.2.2 | Share of Households by Employment Composition, 2000–16 |
| Chart | Data | Annex 2.2.3 | Changes in Labor Force Participation Rates of Prime-Age Men and Women, 1985–2016 |
| Chart | Data | Annex 2.2.4 | Average Annual Changes in Labor Force Participation Rates |
| Chart | Data | Annex 2.2.5 | Flows into Employment, Unemployment, and Inactivity |
The declining share of manufacturing jobs in overall employment has been a concern for policymakers and the broader public alike in both advanced economies and some developing economies. This concern stems from the widely held belief that manufacturing plays a unique role as a catalyst for productivity growth and income convergence and a source of well-paid jobs for less-skilled workers. Against that backdrop, this chapter aims to provide new evidence on the role of manufacturing in the dynamics of output per worker and in the level and distribution of labor earnings. The two main takeaways from the analysis are that (1) a shift in employment from manufacturing to services need not hinder economy-wide productivity growth and the prospects for developing economies to gain ground toward advanced-economy income levels, and (2) while the displacement of workers from manufacturing to services in advanced economies has coincided with a rise in labor income inequality, this increase was mainly driven by larger disparities in earnings across all sectors.
Full Text of Chapter 3 Blog| Figures | |||
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| Chart | Data | 3.1 | Share of Manufacturing in Aggregate Employment |
| Chart | Data | 3.2 | Sectoral Employment Shares |
| Chart | Data | 3.3 | Change in Manufacturing Employment Share and Inequality, 1980–2010 |
| Chart | Data | 3.4 | Share of Manufacturing in Aggregate Employment and Output |
| Chart | Data | 3.5 | Estimated Trends in Manufacturing Employment and Output Shares, 1960–2015 |
| Chart | Data | 3.6 | Cross-Country Distribution of Estimated Trends in Manufacturing Shares, 1970–2015 |
| Chart | Data | 3.7 | Peak of Manufacturing Employment Share |
| Chart | Data | 3.8 | Share of Manufacturing in Final Consumption versus Income per Capita, 1980–2011 |
| Chart | Data | 3.9 | Relative Price of Manufacturing, 1970–2015 |
| Chart | Data | 3.10 | Estimated Change in Manufacturing Shares and Relative Prices, 1960–2015 |
| Chart | Data | 3.11 | Manufacturing Gross Output and Final Expenditure on Manufacturing Goods, 1995–2011 |
| Chart | Data | 3.12 | Change in Services Employment Share, 1970–2015 |
| Chart | Data | 3.13 | Difference in Labor Productivity Growth between Manufacturing and Services before and after 2000 |
| Chart | Data | 3.14 | Distribution of Labor Productivity Growth of Individual Industries |
| Chart | Data | 3.15 | Sectoral Labor Productivity, 2005 |
| Chart | Data | 3.16 | Structural Transformation and Aggregate Labor Productivity Growth, 2000–10 |
| Chart | Data | 3.17 | Estimation Results, Beta-Convergence |
| Chart | Data | 3.18 | Sigma-Convergence |
| Chart | Data | 3.19 | Productivity Gap in 2005 |
| Chart | Data | 3.20 | Average Gross Wages in Industry and Services in the 2000s |
| Chart | Data | 3.21 | Labor Income Inequality in the 2000s |
| Chart | Data | 3.22 | Contribution to Change in Overall Labor Income Inequality between the 1980s and 2000s |
| Chart | Data | 3.1.1 | Nonmanufacturing Value-Added Content in Gross Manufacturing Output, 1995–2011 |
| Chart | Data | 3.1.2 | Services Value-Added Content in Gross Manufacturing Output, 1995 and 2011 |
| Chart | Data | 3.1.3 | Change in Services Value-Added Content in Manufacturing Gross Output, 1995–2011 |
| Chart | Data | 3.1.4 | Change in Services Nominal and Real Value-Added Content in Manufacturing Gross Output, 1995–2009 |
| Chart | Data | 3.2.1 | Exports of Services |
| Chart | Data | 3.2.2 | Increase in Service Trade, 1980–2014 |
| Chart | Data | 3.2.3 | Services Exports by Industry, 1990–2014 |
| Chart | Data | 3.3.1 | Sectoral Employment Shares and Wage Inequality |
| Chart | Data | 3.3.2 | Wage Gap between Manufacturing and Services |
| Chart | Data | 3.3.3 | Wages of Workers Switching to Manufacturing Jobs |
| Chart | Data | 3.3.4 | Inequality in Manufacturing and Services |
| Chart | Data | Annex 3.3.1 | Distribution of Total Factor Productivity Growth of Individual Industries |
| Chart | Data | Annex 3.3.2 | Sectoral Labor Productivity Growth, 2000–10 |
| Chart | Data | Annex 3.3.3 | Skill Composition of Workers by Sector, 2000–07 |
| Chart | Data | Annex 3.3.4 | Sectoral Labor Productivity, 2010 |
| Chart | Data | Annex 3.3.5 | Sigma-Convergence |
Technology is a key driver of improvements in income and standard of living. Historically, technological developments have been concentrated in a few large industrialized economies. Therefore, the way technology diffuses across countries is central to how global growth is generated and shared across countries. Globalization has likely changed the diffusion process, with a large body of literature highlighting the importance of trade and foreign direct investment. Against this background, this chapter takes a closer look at the process of international technology diffusion. It examines whether globalization means that knowledge from technology leaders is spreading faster than it used to, and how this impacts the capacity of other economies to innovate and be more productive.
Full Text of Chapter 4 Blog| Figures | |||
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| Chart | Data | 4.1 | International Patent Families by Publication Year |
| Chart | -- | 4.2 | Technology Diffusion |
| Chart | Data | 4.3 | Patenting and Research and Development at the Frontier |
| Chart | Data | 4.4 | Countries at the Technology Frontier |
| Chart | Data | 4.5 | Slowing Patenting and Productivity |
| Chart | -- | 4.6 | The Evolution of Cross-Patent Citations within and across Regions |
| Chart | Data | 4.7 | Knowledge Diffusion across Barriers over Time |
| Chart | Data | 4.8 | Contribution of Foreign Knowledge to Labor Productivity Growth |
| Chart | Data | 4.9 | The Dynamics of Technology Diffusion |
| Chart | Data | 4.10 | Patenting and Global Value Chain Participation |
| Chart | Data | 4.11 | The Effects of Global Value Chain Participation and Policy Variables |
| Chart | Data | 4.12 | International Competition and Global Concentration |
| Chart | Data | 4.13 | The Effect of Competition on Innovation and Technology Diffusion |
| Chart | Data | 4.2.1 | Innovation Intensity |
| Chart | Data | 4.2.2 | Foreign Patents by Source Country, 2013 |
| Chart | Data | 4.3.1 | Sub-Saharan Africa: Net Foreign Direct Investment and Aid Inflows |
| Chart | Data | 4.3.2 | Official Development Assistance Commitment by Sector |
| Chart | Data | 4.3.3 | Aid Commitment to Energy Generation |
| Chart | Data | Annex 4.2.1 | Diffusion of Knowledge from G–5 with Expanded Emerging Market Economy Sample |
| Chart | Data | Annex 4.2.2 | Reduction of Knowledge Flow with Additional Barriers: Including Cross-Sectoral Citations |
| Chart | Data | Annex 4.2.3 | Reduction of Knowledge Flow with Additional Barriers: Unrestricted Cited Sample |
| Chart | Data | Annex 4.2.4 | Reduction of Knowledge Flow with Additional Barriers: Excluding China from Baseline |
| List of Tables - Part A (Download PDF) |
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| List of Tables Part B (Download PDF Online only) |
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