## IMF World Economic Outlook (WEO) Update, January 2017: A Shifting Global Economic Landscape

_World Economic Outlook, January 2017_

## Source details

**Canonical URL:** [IMF World Economic Outlook (WEO) Update, January 2017: A Shifting Global Economic Landscape](https://www.imf.org/en/publications/weo/issues/2016/12/27/a-shifting-global-economic-landscape)

## Other formats

- [Markdown version](/en/publications/weo/issues/2016/12/27/a-shifting-global-economic-landscape/index.md)
- [Structured JSON version](/en/publications/weo/issues/2016/12/27/a-shifting-global-economic-landscape/index.json)
- [Bundle manifest](/en/publications/weo/issues/2016/12/27/a-shifting-global-economic-landscape/bundle-manifest.json)

## Bibliographic details
- Published: January 16, 2017

---

### Summary of projections and headline figures
- Global output growth for 2016 is estimated at 3.1 percent.
- Global growth is projected at 3.4 percent for 2017 and 3.6 percent for 2018 (unchanged from the October 2016 WEO).
- Emerging market and developing economies (EMDEs) growth: 4.1 percent in 2016; projected 4.5 percent in 2017 and 4.8 percent in 2018.
- Advanced economies projected to grow by 1.9 percent in 2017 and 2.0 percent in 2018 (0.1 and 0.2 percentage points higher than the October forecast).
- United States projection assumes fiscal stimulus producing growth of 2.3 percent in 2017 and 2.5 percent in 2018, a cumulative increase in GDP of ½ percentage point relative to the October forecast.
- China growth for 2017 revised to 6.5 percent (0.3 percentage point above the October forecast).
- India growth forecasts trimmed: current (2016–17) fiscal year trimmed by one percentage point and next fiscal year by 0.4 percentage point.
- Oil prices: average price in U.S. dollars a barrel was $42.7 in 2016; assumed price based on futures markets (as of December 6, 2016) is $51.2 in 2017 and $53.1 in 2018.
- U.S. dollar: appreciated in real effective terms by over 6 percent since August.
- U.S. 10-year Treasury nominal yields: increased by close to one percentage point since August and 60 basis points since the U.S. election (as of January 3).

### Developments in H2 2016 and near-term drivers
- Advanced economies exhibited a stronger-than-expected pickup, driven by reduced inventory drag and manufacturing recovery; the United States rebounded strongly and is approaching full employment.
- Divergent EMDE performance: China stronger than expected (policy stimulus); weaker-than-expected activity in Argentina, Brazil, Turkey; Russia slightly better reflecting firmer oil prices.
- Commodity prices: oil and base metals strengthened following producer agreement and demand/investment conditions.
- Inflation: headline inflation recovered in advanced economies with commodity bottoming; core inflation generally remained below targets. China’s producer price inflation turned positive.
- Financial conditions: long-term nominal and real interest rates rose substantially since August, particularly in the United Kingdom and United States. Euro area long-term yields rose more moderately (Germany ~35 basis points, Italy ~70 basis points).
- Exchange rates and capital flows: appreciation of some commodity exporters’ currencies; depreciation in several emerging market currencies (notably Turkish lira, Mexican peso); preliminary sharp nonresident portfolio outflows from emerging markets after the U.S. election.

### Forecast revisions by region and notable country changes
- Aggregate 2016–18 projections unchanged from October WEO, but internal composition adjusted:
  - Advanced economies: upward revisions for the United States, Germany, Japan, Spain, and the United Kingdom; downward revisions for Italy and Korea.
  - EMDEs: near-term prospects marginally weaker overall; China revised up for 2017 to 6.5 percent; Nigeria revised up reflecting higher oil production.
  - Downward revisions for 2017: India (current and next fiscal year), Indonesia, Thailand, Argentina, Brazil, Mexico, Saudi Arabia, Venezuela deterioration noted.
- EMDE growth estimated at 4.1 percent in 2016; projected 4.5 percent in 2017 (around 0.1 percentage point weaker than October) and 4.8 percent in 2018.

### Balance of risks and scenarios
- Overall risk assessment: two-sided but skewed to the downside, especially over the medium term.
- Upside scenario:
  - Policy stimulus in the United States and/or China larger than incorporated could accelerate global activity and lift trading partners’ growth (unless offset by protectionism).
  - Higher investment if confidence in global demand recovery strengthens.
- Downside scenarios and notable risks:
  - Shift toward inward-looking policies and protectionism, harming productivity, incomes, and market sentiment.
  - Sharper tightening in global financial conditions interacting with balance sheet weaknesses in parts of the euro area and some EMDEs.
  - High corporate debt, weak bank balance sheets, thin policy buffers in some EMDEs increasing vulnerability to capital flow reversals and sharp depreciations.
  - Geopolitical tensions, civil conflict, refugee crises, terrorism, extended droughts, and epidemics (e.g., Zika) could deepen hardship and depress global confidence.
  - A more severe slowdown in China given reliance on policy stimulus, rapid credit expansion, and persistent corporate debt problems.

### Policy recommendations and priorities
- Advanced economies with negative output gaps and muted wage pressures:
  - Monetary policy should remain accommodative, using unconventional tools as needed.
  - Fiscal support is essential where space exists, calibrated to protect the vulnerable and lift medium-term growth prospects; if fiscal adjustment is necessary, pace and composition should minimize output drag.
- Advanced economies without substantially negative output gaps:
  - Fiscal support should target safety nets and investments that raise longer-term potential (high-quality infrastructure, supply-friendly equitable tax reform).
  - Well-anchored inflation expectations should permit gradual monetary normalization.
- Broad structural agenda:
  - Complement accommodative macro policies with reforms to boost labor force participation, invest in skills, improve labor-market matching, liberalize entry into closed professions, and promote innovation and R&D to counteract waning potential growth.
- Emerging market and developing economies:
  - Enhance financial resilience; adopt stronger risk management; contain balance sheet mismatches where large nonfinancial debt, unhedged foreign liabilities, or heavy reliance on short-term funding are present.
  - Low-income countries: restore fiscal buffers while prioritizing efficient spending on capital and social needs, strengthen debt management, improve domestic revenue mobilization, and implement structural reforms including education.
  - Commodity-dependent countries: allow exchange rate adjustment where feasible, tighten monetary policy to contain inflation rises, and pursue growth-friendly fiscal consolidation; diversify export bases over the longer term.
- Multilateral priorities:
  - Strengthen global safety nets to protect economies with robust fundamentals but vulnerability to cross-border spillovers.
  - Coordinate to share benefits of integration broadly: targeted assistance for those adversely affected by trade opening; crack down on tax evasion and avoidance; continue financial-sector resilience efforts (recapitalization, balance-sheet cleanup, banking resolution frameworks, address nonbank intermediary risks).
  - Multilateral cooperation to meet 2015 Sustainable Development Goals, mitigate climate change, and prevent the spread of global epidemics.

*Source: IMF World Economic Outlook Update, January 2017: A Shifting Global Economic Landscape*

---

## Content in this bundle

- **World Economic Outlook Update, January 2017: A Shifting Global Economic Landscape, January 16, 2017**
  - [World Economic Outlook Update, January 2017: A Shifting Global Economic Landscape, January 16, 2017 (Markdown version)](/-/media/files/publications/weo/2017/january/0117.pdf.md){rel="alternate" type="text/markdown"}
  - [World Economic Outlook Update, January 2017: A Shifting Global Economic Landscape, January 16, 2017 (PDF)](/-/media/files/publications/weo/2017/january/0117.pdf){rel="external" type="application/pdf"}
- **مستجدات آفاق الاقتصاد العالمي: الاقتصاد العالمي في مشهد متحول**
  - [مستجدات آفاق الاقتصاد العالمي: الاقتصاد العالمي في مشهد متحول (Markdown version)](/-/media/files/publications/weo/2017/january/arabic/0117a.pdf.md){rel="alternate" type="text/markdown"}
  - [مستجدات آفاق الاقتصاد العالمي: الاقتصاد العالمي في مشهد متحول (PDF)](/-/media/files/publications/weo/2017/january/arabic/0117a.pdf){rel="external" type="application/pdf"}
- **《世界经济展望》最新预测，2017年1月：转变中的全球经济形势；2017年1月16日**
  - [《世界经济展望》最新预测，2017年1月：转变中的全球经济形势；2017年1月16日 (Markdown version)](/-/media/files/publications/weo/2017/january/chinese/0117c.pdf.md){rel="alternate" type="text/markdown"}
  - [《世界经济展望》最新预测，2017年1月：转变中的全球经济形势；2017年1月16日 (PDF)](/-/media/files/publications/weo/2017/january/chinese/0117c.pdf){rel="external" type="application/pdf"}
- **0117f**
  - [0117f (Markdown version)](/-/media/files/publications/weo/2017/january/french/0117f.pdf.md){rel="alternate" type="text/markdown"}
  - [0117f (PDF)](/-/media/files/publications/weo/2017/january/french/0117f.pdf){rel="external" type="application/pdf"}
- **世界経済見通し改訂見通し（2017年1月) - 移り行く世界経済の展望**
  - [世界経済見通し改訂見通し（2017年1月) - 移り行く世界経済の展望 (Markdown version)](/-/media/files/publications/weo/2017/january/japanese/0117j.pdf.md){rel="alternate" type="text/markdown"}
  - [世界経済見通し改訂見通し（2017年1月) - 移り行く世界経済の展望 (PDF)](/-/media/files/publications/weo/2017/january/japanese/0117j.pdf){rel="external" type="application/pdf"}
- **0117r**
  - [0117r (Markdown version)](/-/media/files/publications/weo/2017/january/russian/0117r.pdf.md){rel="alternate" type="text/markdown"}
  - [0117r (PDF)](/-/media/files/publications/weo/2017/january/russian/0117r.pdf){rel="external" type="application/pdf"}
- **0117s**
  - [0117s (Markdown version)](/-/media/files/publications/weo/2017/january/spanish/0117s.pdf.md){rel="alternate" type="text/markdown"}
  - [0117s (PDF)](/-/media/files/publications/weo/2017/january/spanish/0117s.pdf){rel="external" type="application/pdf"}

---

## References

- [Blog on the Update by IMF Chief Economist Maurice Obstfeld](https://blog-imfdirect.imf.org/2017/01/16/a-shifting-global-economic-landscape-update-to-the-world-economic-outlook/)
- [Transcript of the Press Conference on the World Economic Outlook Update](http://www.imf.org/en/News/Articles/2017/01/16/tr01162017-Press-Briefing-On-Update-Of-The-World-Economic-Outlook)
- [World Economic Outlook Reports](http://www.imf.org/external/ns/cs.aspx?id=29)
- [World Economic Outlook Databases](http://www.imf.org/external/ns/cs.aspx?id=28)
- [https://www.imf.org/en/about/infographics/world-economic-outlook-update-january-2017-infographic](https://www.imf.org/en/about/infographics/world-economic-outlook-update-january-2017-infographic)
- [Buy a print subscription](https://www.bookstore.imf.org/)
- [ORDERING INFORMATION](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44024.0)
- [DISCLAIMER](http://www.imf.org/external/terms.htm)
- [Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website.](https://www.imf.org/en/email-subscription/index)
- [Modify your profile](https://www.imf.org/en/email-subscription/login)

_Source: https://www.imf.org/en/publications/weo/issues/2016/12/27/a-shifting-global-economic-landscape_