Catch-Up Prospects in Emerging Economies: A Glass One Quarter Empty
IMF Blog, November 6, 2017
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- Authors: The Editors
- Published: November 6, 2017
Summary findings
- Per capita incomes in emerging market and developing economies are expected to grow by about 2 percentage points faster per year than advanced economies between 2017 and 2022.
- The outlook projects per capita income in emerging and developing countries to pick up from 3.2 this year to 3.6 percent in 2022.
- Projections are heavily influenced by growth in China and India, which together account for almost 50 percent of the emerging market and developing economies’ real GDP in purchasing power parity terms, and almost 40 percent of their population.
Regional and country differences
- China and India are expected to post above-average per capita growth rates—about 5.6 percent and 6.3 percent per year, respectively—over the 2017-22 period.
- Emerging Asia is expected to see per capita growth of 5.4 percent.
- Per capita growth in Sub-Saharan Africa, the Middle East and North Africa, and Latin America and the Caribbean is expected to be about one percent.
Fuel exporters versus importers
- An even starker difference emerges in expected income performance between fuel exporters and importers, with China and India classified among importers.
- Average per capita income growth in fuel exporters since 1995 has been lower than in importers, and is expected to diverge even further over the medium term.
- Projections reflect ongoing adjustments to persistently lower oil prices and reforms that are expected to yield dividends only in the medium and long term.
Countries at risk of diverging
- More than a quarter of the countries in this group—43 countries (out of 151) representing 14 percent of the group’s population—are projected to diverge further from income levels in advanced economies.
- Of these 43 economies, 18 are fuel exporters and 10 are “small states” (defined here as countries with less than half a million in population).
Policy recommendations and constraints
- Policy priorities vary across countries but several common themes apply:
- For fuel exporters: adjust to lower oil revenues while taking tangible steps to diversify exports and the sources of growth.
- For many small states: diversification of exports and growth sources is an important goal.
- In a number of countries, better prospects will likely have to wait until domestic political tensions or geopolitical conflicts are resolved.
Source: Catch-Up Prospects in Emerging Economies: A Glass One Quarter Empty
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