World Economic Outlook
Advancing Structural Reforms
April 2004
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April 2004
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A Survey by the Staff of the International
Monetary Fund
©2004 International Monetary Fund
Ordering Information
The World Economic Outlook 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.
| Contents | ||
| 86 kb pdf file | Assumptions and Conventions | |
| Preface | ||
| Foreword | ||
| Chapter I. 449 kb pdf file |
Economic Prospects and Policy Issues | |
| North America: Growth in the United States Surges; In Canada It Slows | ||
| Euro Area: Subdued Recovery, With Domestic Demand Still Uneven | ||
| Japan: Is a Sustained Recovery Finally Under Way? | ||
| Latin America: Is There a Tension Between Tackling Social Issues and Reducing High Public Debt? | ||
| Emerging Asia: With Recovery Taking Hold, Scope for Greater Exchange Rate Flexibility | ||
| EU Accession Countries: External Imbalances Need to Be Addressed | ||
| Commonwealth of Independent States: Managing the Challenges of Remonetization | ||
| Middle East: Improved Prospects, but Much Depends on Geopolitical Uncertainties and Security Situation | ||
| Africa: The Struggle to Reduce Poverty | ||
| Appendix 1.1. Commodity Markets | ||
| References | ||
| Chapter II. 242 kb pdf file |
The Global Implications of the U.S. Fiscal Deficit and of China's Growth | |
| How Will the U.S. Budget Deficit Affect the Rest of the World? | ||
| China's Emergence and Its Impact on the Global Economy | ||
| References | ||
| Chapter III. 242 kb pdf file |
Fostering Structural Reforms in Industrial Countries | |
| Two Decades of Structural Reforms in Industrial Countries: An Overview | ||
| Determinants of Structural Reforms | ||
| Cost-Benefit Dynamics of Reforms | ||
| Reform Experience and Implications for Reform Design | ||
| Appendix 3.1 Structural Policy Indicators | ||
| Appendix 3.2 Determinants of Reforms: Econometric Methods | ||
| Appendix 3.3 Cost-Benefit Dynamics of Reforms | ||
| References | ||
| Chapter IV. 137 kb pdf file |
Are Credit Booms in Emerging Markets a Concern? | |
| What Are Credit Booms and How Are They Propagated? | ||
| What Do Credit Booms Look Like? | ||
| Conclusion | ||
| References | ||
| 60 kb pdf file | Annex: Summing Up by the Acting Chair | |
| 396 kb pdf file | Statistical Appendix | |
| Assumptions | ||
| What's New | ||
| Data and Conventions | ||
| Classification of Countries | ||
| List of Tables Output (Tables 1–6) Inflation (Tables 7–11) Financial Policies (Tables 12–19) Foreign Trade (Tables 20–24) Current Account Transactions (Tables 25–31) Balance of Payments and External Financing (Tables 32–36) External Debt and Debt Service (Tables 37–42) Flow of Funds (Table 43) Medium-Term Baseline Scenario (Tables 44–45) |
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| Boxes | ||
| 1.1 | The Effects of a Falling Dollar | |
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1.2 | Housing Markets in Industrial Countries |
| 1.3 | Risks to the Multilateral Trading System | |
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1.4 | Is Emerging Asia Becoming an Engine of World Growth? |
| 1.5 | What Works in Africa | |
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2.1 | How Do U.S. Interest and Exchange Rates Affect Emerging Markets' Balance Sheets? |
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2.2 | The Effects of Tax Cuts in a Global Fiscal Model |
| 2.3 | Can China Sustain Its Rapid Output Growth? | |
| 2.4 | Quantifying the International Impact of China's WTO Accession | |
| 3.1 | Structural Reforms and Economic Growth: New Zealand's Experience | |
| 3.2 | Structural Reforms in the United Kingdom During the 1980s | |
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3.3 | The Netherlands: How the Interaction of Labor Market Reforms and Tax Cuts Led to Strong Employment Growth |
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3.4 | Economic Integration and Structural Reforms: The European Experience |
| 4.1 | Does Financial Sector Development Help Economic Growth and Welfare? | |
| A1 | Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies | |
| Tables | ||
| 1.1 | Overview of the World Economic Outlook Projections | |
| 1.2 | Emerging Market and Developing Countries: Net Capital Flows | |
| 1.3 | Advanced Economies: Real GDP, Consumer Prices, and Unemployment | |
| 1.4 | Major Advanced Economies: General Government Fiscal Balances and Debt | |
| 1.5 | Selected Economies: Current Account Positions | |
| 1.6 | Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.7 | Selected Asian Economies: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.8 | EU Accession Countries: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.9 | Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.10 | Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.11 | Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance | |
| 1.12 | Nonenergy Commodity Prices | |
| 1.13 | Volatility and Correlation of Spot and Futures Prices | |
| 1.14 | Forecast Performance | |
| 2.1 | Cumulative Percentage Point Contributions to Budget Turnaround | |
| 2.2 | Effects of Fiscal Policy on Output (VAR Estimates) | |
| 2.3 | Estimates of Multipliers from Macromodel Simulations | |
| 2.4 | Estimates of Effect of FY2004 Budget Proposals from Small-Scale Models | |
| 2.5 | Selected Studies on the Impact of Deficits on Real Interest Rates | |
| 2.6 | Correlations of G-7 Real Interest Rates (1977–2002) | |
| 2.7 | MULTIMOD Alternative Scenarios | |
| 2.8 | China: Tariffs, 1982-2002 | |
| 2.9 | China: Market Share in Major Export Markets | |
| 2.10 | Trade-Related Impact of Faster Chinese Integration, 2020 | |
| 2.11 | Impact of Faster Chinese Integration on South Asia's Output and Trade Volumes, 2020 | |
| 2.12 | Impact of Faster Chinese Integration on Sectoral Gross Output, 2020 | |
| 2.13 | Impact of Faster Chinese Integration Assuming Structural Rigidities, 2020 | |
| 2.14 | Impact of Faster Chinese Integration Combined with More Rapid Global Trade Liberalization, 2020 | |
| 2.15 | Projected Average Annual Growth Rates of Population, GDP, and Factors of Production Under the Fast Integration Scenario, 2002–20 | |
| 2.16 | Regions and Sectors Identified in the Model | |
| 2.17 | Elasticities of Substitution in Demand for Goods and Factors of Production | |
| 3.1 | Aggregate Structural Policy Indicators and Their Components | |
| 3.2 | Correlation Matrices for Changes in Structural Policy Indicators | |
| 3.3 | Econometric Analysis: Summary of Results | |
| 3.4 | Determinants of Product and Labor Reforms | |
| 3.5 | Determinants of Trade and Tax Reforms | |
| 3.6 | Determinants of Financial Reforms | |
| 3.7 | Determinants of Structural Reforms, Five-Year Average | |
| 3.8 | Impact of Structural Reforms on Log Real Per Capita GDP | |
| 3.9 | Standard Deviations of Cross-Country Distributions of Reform Indicators | |
| 3.10 | Impact of Structural Reforms on Unemployment | |
| 4.1 | Credit, Capital Inflows, and Financial Liberalization | |
| 4.2 | Cyclical Correlations with Real Credit in Emerging Market Economies | |
| 4.3 | Emerging Market Economies, Nontradable Sector | |
| Figures | ||
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1.1 | Global Indicators |
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1.2 | Current and Forward-Looking Indicators |
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1.3 | G-7: The Differing Nature of the Recovery |
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1.4 | Global Exchange Rate Developments |
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1.5 | Developments in Mature Financial Markets |
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1.6 | Emerging Market Financial Conditions |
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1.7 | Fiscal and Monetary Easing in the Major Advanced Countries |
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1.8 | Global Outlook |
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1.9 | United States: Growth, Consumption, and Personal Incomes |
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1.10 | Euro Area: Implications of Persistent Inflation Differentials |
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1.11 | Japan: How Does the Current Recovery Compare With the Past? |
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1.12 | Unemployment, Income Inequality, and Poverty in Latin America |
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1.13 | Emerging Asia: Foreign Reserve Accumulation |
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1.14 | EU Accession Countries: Current Account Balance and Foreign Direct Investment |
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1.15 | Commonwealth of Independent States: Remonetization and Credit Growth |
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1.16 | Middle East: Reduction in Uncertainties Boosts Prospects |
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1.17 | Sub-Saharan Africa: Growth and Poverty |
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1.18 | Oil Prices, Futures, and Production |
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1.19 | Oil Inventories |
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1.20 | Nonenergy Commodities |
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1.21 | Semiconductor Markets |
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1.22 | Spot and Futures Prices |
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2.1 | United States: Fiscal Balance |
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2.2 | United States: Fiscal Risks |
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2.3 | Structural Fiscal Balances of Advanced Countries |
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2.4 | Main Simulation Scenarios Main Simulation Scenarios (concluded) |
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2.5 | GDP in Alternative Scenarios |
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2.6 | Output and Trade During Periods of Rapid Integration |
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2.7 | China's Exports and Imports |
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2.8 | Current and Capital Accounts, and Financial Markets During Periods of Rapid Integration |
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2.9 | Determinants of Growth: Savings, Investment, Human Capital, and Sectoral Reallocation During Periods of Rapid Integration |
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2.10 | Required Structural Adjustment |
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3.1 | Cumulative Reform Efforts Across Sectors |
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3.2 | Regulatory Regimes in 1975 and 2000 Across Countries |
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3.3 | Structural Reforms and Initial Structural
Conditions Structural Reforms and Initial Structural Conditions (concluded) |
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3.4 | Cross-Border Spillovers |
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3.5 | Openness to Trade and Reforms |
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3.6 | More Reforms in Bad Times? |
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3.7 | Fiscal Adjustment and "Difficult" Reforms |
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3.8 | Product and Labor Market Reforms |
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3.9 | Response of Real GDP Per Capita to a One-Standard-Deviation Increase in Reform Indicators |
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3.10 | Response of Unemployment to a One-Standard-Deviation Increase in Reform Indicators |
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3.11 | An Empirical Model of Reforms: Convergence Toward a Target |
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4.1 | Financial Deepening and Development |
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4.2 | Credit Booms Versus Episodes of Rapid Credit Growth |
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4.3 | Emerging Market Credit Booms, 1970-2002 |
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4.4 | Credit Booms in Emerging Markets |
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4.5 | Selected Macroeconomic Variables During Credit Booms |
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4.6 | Selected Financial Variables During Credit Booms |
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4.7 | Selected Microeconomic Variables of the Nontradable Corporate Sector |
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4.8 | Corporate Leverage During a Credit Boom |
