{
  "title": "Transcript of a WEO Conference",
  "publication": "IMF News, April 16, 2013",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/54/tr041613",
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  "summary": "The World Economic Outlook (April 2013) theme: shift from a two-speed recovery to a three-speed recovery, with a possible \"three-and-a-half-speed\" characterization due to Japan.",
  "publishDate": "2013-04-16",
  "sections": [
    {
      "heading": "Overview — main theme",
      "content": "- The World Economic Outlook (April 2013) theme: shift from a two-speed recovery to a three-speed recovery, with a possible \"three-and-a-half-speed\" characterization due to Japan.\n- Key concern: strong interconnections mean an uneven recovery is risky — \"the world economy is as weak as its weakest link.\"\n- Policy emphasis: monetary policy is the main short-term lever; fiscal policy should be \"less and better\" now and commit to more consolidation later where appropriate; structural reforms and banking repair remain central."
    },
    {
      "heading": "Global growth forecasts (selected figures cited)",
      "content": "- Emerging market and developing economies: forecast to reach 5.3 percent in 2013, and 5.7 percent in 2014.\n- United States: forecast to be 1.9 percent in 2013, and 3 percent in 2014.\n  - Without fiscal consolidation, U.S. growth could be \"between 1.5 and 2 percent higher\" in 2013 (arithmetically).\n  - First-quarter forecast: 2.4 percent; second quarter forecast: 1.6 percent.\n- Euro area: forecast to be minus .3 percent in 2013, and 1.1 percent in 2014.\n  - Germany: forecast 0.6 percent in 2013.\n  - France: forecast slightly negative in 2013.\n- Japan: forecast 1.6 percent growth for 2013.\n- China: forecast 8 percent in 2013 (forecast made before newest data; staff \"still stick to our 8 percent forecast\").\n- India: forecast 5.7 percent in 2013.\n- Brazil: forecast 3 percent in 2013.\n- Slovenia: revised to a contraction of 2 percent in 2013 (previously penciled in as a contraction by 0.5 percent).\n- Spain: deficit around 10 percent of GDP in 2012 (including financial sector measures); plan implies roughly 6.5 percent in 2013."
    },
    {
      "heading": "Advanced economies — characterization and policy guidance",
      "content": "- United States\n  - Underlying private demand described as \"quite strong\" despite a \"very strong, indeed an overly strong, fiscal consolidation of about 1.8 percent of GDP.\"\n  - Policy recommendation: define the right path of fiscal consolidation — \"both less and better fiscal consolidation now and a commitment to more fiscal consolidation in the future.\"\n- Euro area\n  - Weakness extends beyond the periphery to parts of the core; low core growth harms periphery through trade linkages.\n  - Periphery: \"substantial contractions\" expected in 2013 for countries such as Italy and Spain; internal devaluation progressing slowly.\n  - Financial-fragmentation risk highlighted after Cyprus; tail risks reduced by ECB measures (e.g., OMT), but spreads facing periphery borrowers remain \"too high.\"\n  - Policy recommendations:\n    - Strengthen banks urgently without weakening sovereigns.\n    - Allow automatic stabilizers to operate where scope exists; in countries with fiscal space, \"go even beyond this\" and reconsider the speed of fiscal adjustment.\n    - Increase transparency and speed in banking repair and recapitalization; complete banking union steps expeditiously.\n- United Kingdom\n  - Example cited of a country with scope to reconsider initial fiscal consolidation plans given weak private demand."
    },
    {
      "heading": "Japan — policies and external spillovers",
      "content": "- Policy mix: aggressive quantitative easing, a positive inflation target, fiscal stimulus, and structural reforms.\n- Growth forecast 2013: 1.6 percent.\n- Risk noted: fiscal stimulus without a \"run\" (presumably \"credible\") fiscal consolidation plan risks higher risk premia and debt unsustainability.\n- On exchange rate effects: the yen depreciation is viewed as a logical consequence of monetary policy; expectation that nominal depreciation may be offset by inflation, leaving real exchange rates unaffected."
    },
    {
      "heading": "Emerging markets — performance and challenges",
      "content": "- General: emerging markets \"are still going strong\" and continue to attract capital inflows due to fundamentals and low interest rates in advanced economies.\n- Forecasts reiterated: China 8 percent, India 5.7 percent, Brazil 3 percent for 2013.\n- Challenges:\n  - Managing capital flow volatility while accommodating desirable underlying trends.\n  - Potential for credit booms historically; so far policymakers have \"generally succeeded\" in keeping aggregate demand aligned with potential.\n  - Potential output growth has declined in some emerging markets — \"we shall not see again some of the high growth rates of the past.\"\n- Policy guidance: accommodate beneficial inflows while deploying tools to reduce volatility when flows threaten macro or financial stability."
    },
    {
      "heading": "Regional snapshots and country specifics",
      "content": "- Spain\n  - 2012 deficit ~10 percent of GDP (including financial sector measures); projected ~6.5 percent in 2013.\n  - For 2014, \"new measures will have to be specified\" to continue adjustment; priorities: specify fiscal adjustment measures, pursue structural reforms (labor market, liberalizing services), ensure effective asset management company operation, and accelerate bank restructuring.\n- Italy\n  - Fiscal adjustment significant in 2012 (cyclically adjusted deficit reduction of around 2 to 2.5 percent of GDP); further cyclically adjusted reduction of around 1 percent of GDP expected in 2013 if implemented.\n  - Growth remains weak due to fiscal tightening; outlook should improve by end-2013 if planned adjustments are implemented.\n  - Structural reform progress noted; further reforms (privatization, legal system improvements) and bank balance-sheet strengthening remain needed.\n  - Political uncertainty (lack of new government agreement) is an identified risk.\n- France\n  - Current account deficit \"fairly elevated\"; labor market reform underway. Macro stance \"broadly appropriate\" for the year; additional adjustment will be needed next year.\n- Cyprus\n  - No GDP forecast provided in the document; IMF and European partners are negotiating a program; concern about financial-fragmentation spillovers to the periphery.\n- Slovenia\n  - Growth outlook revised to a contraction of 2 percent in 2013.\n  - General government deficit cited as \"between 3 to 3.5 percent of GDP\"; public debt around \"55 percent of GDP or less.\"\n  - Banking-system problems can be addressed via timely recapitalization and asset management solutions without major sovereign stress given relatively low public debt.\n- United Kingdom\n  - Cited as a case where fiscal consolidation pace may be reconsidered given weak private demand.\n- Brazil and South America\n  - Brazil's slowdown in 2012 significantly affected regional trade spillovers; Brazil expected to recover to about 3 percent in 2013, supporting the region.\n  - Channels of spillover primarily trade linkages; some neighbors (Paraguay, Argentina) are less financially integrated, so trade is the dominant channel.\n- Middle East (oil importers) and Egypt\n  - 2012 was difficult for Egypt and oil-importing economies in the Middle East due to political transition and social unrest; stabilization expected to be gradual with \"relatively moderate improvement in 2013.\"\n- South Sudan\n  - 2012: severe impact from oil production shutdown starting January 2012, reducing GDP \"by almost half.\"\n  - Hope that oil production will resume if agreements reached, which would boost growth and relieve pressures."
    },
    {
      "heading": "Risks, tail risks, and near-term outlook",
      "content": "- Short-term tail risks from a year earlier (U.S. fiscal cliff/debt ceiling and risk of euro breakup) have receded due to policy actions, but \"we're not out of the woods.\"\n- Forecast uncertainty: Mr. Blanchard estimates \"a 50 percent chance\" of disappointment with U.S. growth for 2013.\n- Monetary easing appropriate in many cases but can increase risks of excessive risk-taking and asset-bubble formation; current assessment: not a major macro issue but \"clearly have to watch.\"\n- Gold: viewed as unpredictable and of \"no macroeconomic import\" in this context."
    },
    {
      "heading": "Banking, financial markets, and needed measures",
      "content": "- Persistent adverse feedback loops in the euro area among weak banks, weak sovereigns, low activity, and low confidence.\n- Measures to reduce spreads and boost lending suggested:\n  - Improve bank transparency and accelerate supervision (including ECB role in banking union).\n  - Recapitalization where needed.\n  - Consider securitization or mechanisms to make SME loans more usable as collateral to ease bank funding constraints.\n  - Effective asset management companies to remove bad loans.\n- Cyprus episode raises questions about renewed financial fragmentation; monitoring of deposit flows and fragmentation is emphasized."
    },
    {
      "heading": "Key policy recommendations (concise bullets)",
      "content": "- United States: adopt \"less and better\" fiscal consolidation now, with commitment to more consolidation later; avoid blunt measures like the sequester.\n- Euro area:\n  - Urgent measures to strengthen banks without weakening sovereigns.\n  - Let automatic stabilizers operate where feasible; consider slower fiscal adjustment where fiscal space exists.\n  - Accelerate banking-union and ECB supervision steps to improve transparency and reduce spreads.\n- Japan: pursue monetary easing and structural reforms, but pair fiscal stimulus with a credible consolidation plan to avoid debt-sustainability risks.\n- Emerging markets: manage capital inflows to accommodate desirable rebalancing while limiting volatility via macro- and macroprudential tools.\n- Country-level: press ahead with structural reforms (labor markets, services liberalization, privatization), clean up bank balance sheets, and specify credible fiscal paths for multi-year adjustment.\n\nItalic: Transcript of a WEO Conference (April 16, 2013).\n\n---\n\n\n References\n\n- https://www.imf.org/external/spring/2013/index.htm\n- World Economic Outlook (WEO): Hopes, Realities, and Risks\n- PRESS CENTER\n- Webcast of the Conference\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr041613"
    }
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    "Published: April 16, 2013",
    "The World Economic Outlook (April 2013) theme: shift from a two-speed recovery to a three-speed recovery, with a possible \"three-and-a-half-speed\" characterization due to Japan.",
    "Key concern: strong interconnections mean an uneven recovery is risky — \"the world economy is as weak as its weakest link.\"",
    "Policy emphasis: monetary policy is the main short-term lever; fiscal policy should be \"less and better\" now and commit to more consolidation later where appropriate; structural reforms and banking repair remain central.",
    "Emerging market and developing economies: forecast to reach 5.3 percent in 2013, and 5.7 percent in 2014.",
    "United States: forecast to be 1.9 percent in 2013, and 3 percent in 2014.",
    "Euro area: forecast to be minus .3 percent in 2013, and 1.1 percent in 2014.",
    "Japan: forecast 1.6 percent growth for 2013.",
    "China: forecast 8 percent in 2013 (forecast made before newest data; staff \"still stick to our 8 percent forecast\").",
    "India: forecast 5.7 percent in 2013.",
    "Brazil: forecast 3 percent in 2013.",
    "Slovenia: revised to a contraction of 2 percent in 2013 (previously penciled in as a contraction by 0.5 percent).",
    "Spain: deficit around 10 percent of GDP in 2012 (including financial sector measures); plan implies roughly 6.5 percent in 2013.",
    "United States",
    "Euro area",
    "United Kingdom",
    "Policy mix: aggressive quantitative easing, a positive inflation target, fiscal stimulus, and structural reforms.",
    "Growth forecast 2013: 1.6 percent.",
    "Risk noted: fiscal stimulus without a \"run\" (presumably \"credible\") fiscal consolidation plan risks higher risk premia and debt unsustainability.",
    "On exchange rate effects: the yen depreciation is viewed as a logical consequence of monetary policy; expectation that nominal depreciation may be offset by inflation, leaving real exchange rates unaffected.",
    "General: emerging markets \"are still going strong\" and continue to attract capital inflows due to fundamentals and low interest rates in advanced economies.",
    "Forecasts reiterated: China 8 percent, India 5.7 percent, Brazil 3 percent for 2013.",
    "Challenges:",
    "Policy guidance: accommodate beneficial inflows while deploying tools to reduce volatility when flows threaten macro or financial stability.",
    "Spain",
    "Italy",
    "France",
    "Cyprus",
    "Slovenia",
    "United Kingdom",
    "Brazil and South America",
    "Middle East (oil importers) and Egypt",
    "South Sudan",
    "Short-term tail risks from a year earlier (U.S. fiscal cliff/debt ceiling and risk of euro breakup) have receded due to policy actions, but \"we're not out of the woods.\"",
    "Forecast uncertainty: Mr. Blanchard estimates \"a 50 percent chance\" of disappointment with U.S. growth for 2013.",
    "Monetary easing appropriate in many cases but can increase risks of excessive risk-taking and asset-bubble formation; current assessment: not a major macro issue but \"clearly have to watch.\"",
    "Gold: viewed as unpredictable and of \"no macroeconomic import\" in this context.",
    "Persistent adverse feedback loops in the euro area among weak banks, weak sovereigns, low activity, and low confidence.",
    "Measures to reduce spreads and boost lending suggested:",
    "Cyprus episode raises questions about renewed financial fragmentation; monitoring of deposit flows and fragmentation is emphasized.",
    "United States: adopt \"less and better\" fiscal consolidation now, with commitment to more consolidation later; avoid blunt measures like the sequester.",
    "Euro area:",
    "Japan: pursue monetary easing and structural reforms, but pair fiscal stimulus with a credible consolidation plan to avoid debt-sustainability risks.",
    "Emerging markets: manage capital inflows to accommodate desirable rebalancing while limiting volatility via macro- and macroprudential tools.",
    "Country-level: press ahead with structural reforms (labor markets, services liberalization, privatization), clean up bank balance sheets, and specify credible fiscal paths for multi-year adjustment.",
    "[https://www.imf.org/external/spring/2013/index.htm](https://www.imf.org/external/spring/2013/index.htm)",
    "[World Economic Outlook (WEO): Hopes, Realities, and Risks](https://www.imf.org/external/pubs/ft/weo/2013/01/index.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Webcast of the Conference](https://www.imf.org/external/mmedia/view.aspx?vid=2305217342001)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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