{
  "title": "IMF World Economic Outlook (WEO) Update -- Global slowdown and rising inflation, July 2008",
  "publication": "World Economic Outlook, July 15, 2008",
  "sourceUrl": "https://www.imf.org/en/publications/weo/issues/2016/12/31/global-slowdown-and-rising-inflation",
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  "summary": "The global economy is in a tough spot, caught between sharply slowing demand in many advanced economies and rising inflation everywhere, notably in emerging and developing economies...",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The global economy is \"caught between sharply slowing demand in many advanced economies and rising inflation everywhere, notably in emerging and developing economies.\"\n- Global growth is expected to decelerate significantly in the second half of 2008, before recovering gradually in 2009.\n- Top policy priority: head off rising inflationary pressure while keeping sight of risks to growth."
    },
    {
      "heading": "The Growth Slowdown",
      "content": "- Global growth trajectory and projections:\n  - Global growth decelerated to 4½ percent in the first quarter of 2008 (measured over four quarters earlier), down from 5 percent in the third quarter of 2007.\n  - Global growth is projected to moderate from 5 percent in 2007 to 4.1 percent in 2008 and 3.9 percent in 2009.\n  - On a fourth-quarter-on-fourth-quarter (q4/q4) basis: growth would decelerate from 4.8 percent in 2007 to 3.0 percent in 2008, before picking up to 4.3 percent in 2009.\n- Selected country and regional projections and notes:\n  - United States: growth in 2008 would moderate to 1.3 percent on an annual-average basis; the economy is projected to contract moderately during the second half of the year, then gradually recover in 2009.\n  - Emerging and developing economies: growth projected to ease to around 7 percent in 2008-09, from 8 percent in 2007.\n  - China: growth projected to moderate from near 12 percent in 2007 to around 10 percent in 2008-09.\n- Risks to the outlook:\n  - Financial risks remain elevated; rising losses in a global slowdown could add strains on capital and squeeze credit availability.\n  - Inflationary pressures will constrain policy responses to slower growth.\n  - Positive upside: demand might be more resilient than projected, as in Q1 2008."
    },
    {
      "heading": "Inflation: Scope and Drivers",
      "content": "- Current inflationary context:\n  - Headline inflation in advanced economies rose to 3.5 percent in May 2008 (12-month change); core inflation remained at 1.8 percent.\n  - In emerging and developing economies, headline and core inflation have risen to 8.6 percent and 4.2 percent, respectively—the highest rates since around the beginning of the current decade.\n- Main drivers:\n  - Higher food and fuel prices; oil prices substantially above previous real-term records due to supply concerns and limited spare capacity.\n  - Food prices boosted by poor weather conditions and strong demand growth (including biofuels).\n- Forecast adjustments:\n  - Inflation forecasts for emerging and developing economies have been raised by more than 1.5 percentage points in both 2008 and 2009, to 9.1 percent and 7.4 percent, respectively.\n- Policy implications:\n  - Advanced economies: case for monetary tightening less compelling given anchored inflation expectations and labor costs, but inflation needs close monitoring.\n  - Emerging economies: many require tighter monetary policy, greater fiscal restraint, and in some cases more flexible exchange rate management."
    },
    {
      "heading": "Food and Fuel Price Surge: Origins, Prospects, and Risks (Annex summary)",
      "content": "- Origins:\n  - Strong global growth in 2003-07 increased commodity demand, particularly from emerging and developing economies.\n  - Growing supply problems and low short-term responsiveness of demand and supply have underpinned sharp price run-ups.\n- Oil market specifics:\n  - Sluggish supply response against already stretched spare capacity.\n  - Production and distribution capacity slow to build due to soaring investment costs, technological, geological, and policy constraints, and run-down of existing fields.\n  - High oil prices along the futures curve reflect expectations that sustained high prices are needed to spur massive investment.\n- Food market specifics:\n  - Demand growth has generally outstripped supply growth for many food commodities over the past 8-10 years; global inventories declined to low levels last seen in the mid-1970s.\n  - Reinforcing developments since 2006:\n    - Unfavorable weather reduced harvest yields in 2006 and 2007, notably wheat.\n    - Rising biofuel production: rising corn-based ethanol production accounted for about three-fourths of the increase in global corn consumption in 2006-07.\n    - Higher oil and energy prices raised production costs for food (transportation, fertilizer prices have more than tripled since early 2006).\n    - Growing use of export restrictions by food exporters put pressure on world prices (notably rice).\n- Near- and medium-term outlook:\n  - Oil and food prices likely to remain high and volatile; baseline forecasts show only moderate declines.\n  - Oil production expected to remain broadly stagnant; small new capacity likely offset by declines in existing fields.\n  - Food prices may ease more substantially in the medium term if appropriate policy incentives enable supply expansion.\n  - Recent movements: wheat prices down about 30 percent from March 2008 peak on better harvest expectations; corn and soybean prices rose further due to harvest concerns.\n- Policy challenges and responses:\n  - Low- and middle-income countries face difficult trade-offs: feed the hungry without feeding inflation or depleting reserves.\n  - Passing full price increases to consumers would encourage supply response and reduce demand, but temporary and targeted social measures are needed to cushion impacts.\n  - Multilateral efforts needed to address both effects and causes of the crisis—help to finance imports and social spending, assistance in policy design, and actions to promote better supply-demand balance in commodities markets."
    },
    {
      "heading": "Financial Market Turbulence and Downside Risks",
      "content": "- Financial market conditions remain difficult and fragile despite policy responses and progress toward bank recapitalization.\n- Markets remain sensitive to concerns about losses amid slowing economies.\n- Credit extension constrained by the need to repair balance sheets; credit conditions in advanced economies expected to remain tight in coming quarters.\n- Further discussion to appear in the Global Financial Stability Report Market Update (due in late July)."
    },
    {
      "heading": "Macroeconomic Policy Guidance",
      "content": "- Policymakers must balance slowing demand against rising inflation.\n- Many central banks have tightened policy stances; however, interest rates in emerging and developing economies generally remain negative in real terms in several cases.\n- Recommended approaches:\n  - Advanced economies: monitor inflation closely; tightening less clearly warranted given weak growth and anchored expectations, but vigilance required.\n  - Emerging economies operating above trend growth: tighten monetary policy, adopt greater fiscal restraint, and, where appropriate, pursue more flexible exchange rate management to reverse inflation build-up.\n  - Low-income countries: adopt temporary, targeted social measures and seek international assistance where needed."
    },
    {
      "heading": "Key Projections and Statistics (as presented in Table 1)",
      "content": "- World output (Year over Year):\n  - 2006: 5.1\n  - 2007: 5.0\n  - 2008 (Estim.): 4.1\n  - 2009 (Projections): 3.9\n  - Difference from April Projections: 0.4 (2008), 0.1 (2009)\n- Q4 over Q4:\n  - World output: 4.8 (2007), 3.0 (2008), 4.3 (2009)\n- Advanced economies (Year over Year):\n  - 2006: 2.7\n  - 2007: 1.7\n  - 2008: 1.4\n  - 2009: 2.6\n- United States:\n  - 2006: 2.9\n  - 2007: 2.2\n  - 2008: 1.3\n  - 2009: 0.8\n  - Difference from April Projections: 0.2 (2008), 2.5 (Q4/Q4 difference), 0.3 (another difference figure)\n- Emerging and developing economies (Year over Year):\n  - 2006: 7.9\n  - 2007: 8.0\n  - 2008: 6.7\n  - 2009: 8.5\n  - Difference from April Projections: 6.3 (2008), 7.5 (2009)\n- China:\n  - 2006: 11.6\n  - 2007: 11.9\n  - 2008: 9.8\n  - 2009: 11.3\n  - Difference from April Projections: 8.8 (2008), 11.1 (2009)\n- India:\n  - 2006: 9.3\n  - 2007: 8.9\n  - 2008: 7.6\n- Commodity prices (U.S. dollars):\n  - Oil: 2006 change 20.5; 2007 change 10.7; 2008 change 63.8; 2009 change 29.5; Difference from April Projections: 8.3\n  - Note: The average price of oil in U.S. dollars a barrel was $71.13 in 2007; the assumed price based on future markets is $116.50 in 2008 and $125.00 in 2009.\n- Nonfuel (average based on world commodity export weights):\n  - 2006: 23.2\n  - 2007: 14.1\n  - 2008: 14.6\n  - Difference from April Projections: -5.2\n- Consumer prices (Emerging and developing economies): 9.1 (figure shown in table)\n- London interbank offered rate (percent):\n  - On U.S. dollar deposits: 5.3 (six-month rate)\n  - On Japanese yen deposits: 1.1 (six-month rate)\n- Note: Real effective exchange rates assumed constant at levels prevailing during May 21-June 18, 2008.\n\nIMF World Economic Outlook Update — Global slowdown and rising inflation, July 2008\n\n---\n\n Content in this bundle\n\n- 0708a\n  - 0708a (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 0708a (PDF){rel=\"external\" type=\"application/pdf\"}\n- 《世界经济展望最新预测》 - 全球经济减缓及通货膨胀攀升\n  - 《世界经济展望最新预测》 - 全球经济减缓及通货膨胀攀升 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 《世界经济展望最新预测》 - 全球经济减缓及通货膨胀攀升 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 0708f\n  - 0708f (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 0708f (PDF){rel=\"external\" type=\"application/pdf\"}\n- 世界経済見通し（ＷＥＯ） 改訂見通し, 2008年7月: 世界経済の減速とインフレ増大\n  - 世界経済見通し（ＷＥＯ） 改訂見通し, 2008年7月: 世界経済の減速とインフレ増大 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 世界経済見通し（ＷＥＯ） 改訂見通し, 2008年7月: 世界経済の減速とインフレ増大 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses; June 30, 2008\n  - Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses; June 30, 2008 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses; June 30, 2008 (PDF){rel=\"external\" type=\"application/pdf\"}\n- World Economic Outlook\n  - World Economic Outlook (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - World Economic Outlook (PDF){rel=\"external\" type=\"application/pdf\"}\n- Снижение темпов мирового роста и повышение уровней инфляции; 17 июля 2008 года\n  - Снижение темпов мирового роста и повышение уровней инфляции; 17 июля 2008 года (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Снижение темпов мирового роста и повышение уровней инфляции; 17 июля 2008 года (PDF){rel=\"external\" type=\"application/pdf\"}\n- Perspectivas de la economía mundial: Desaceleración mundial e inflación en aumento; July 2008.\n  - Perspectivas de la economía mundial: Desaceleración mundial e inflación en aumento; July 2008. (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Perspectivas de la economía mundial: Desaceleración mundial e inflación en aumento; July 2008. (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- World Economic Outlook\n- Other issues of the World Economic Outlook (WEO)\n- Research at the IMF\n- Discussion Forum\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/publications/weo/issues/2016/12/31/global-slowdown-and-rising-inflation"
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    "Published: July 15, 2008",
    "Series: World Economic Outlook",
    "The global economy is \"caught between sharply slowing demand in many advanced economies and rising inflation everywhere, notably in emerging and developing economies.\"",
    "Global growth is expected to decelerate significantly in the second half of 2008, before recovering gradually in 2009.",
    "Top policy priority: head off rising inflationary pressure while keeping sight of risks to growth.",
    "Global growth trajectory and projections:",
    "Selected country and regional projections and notes:",
    "Risks to the outlook:",
    "Current inflationary context:",
    "Main drivers:",
    "Forecast adjustments:",
    "Policy implications:",
    "Origins:",
    "Oil market specifics:",
    "Food market specifics:",
    "Near- and medium-term outlook:",
    "Policy challenges and responses:",
    "Financial market conditions remain difficult and fragile despite policy responses and progress toward bank recapitalization.",
    "Markets remain sensitive to concerns about losses amid slowing economies.",
    "Credit extension constrained by the need to repair balance sheets; credit conditions in advanced economies expected to remain tight in coming quarters.",
    "Further discussion to appear in the Global Financial Stability Report Market Update (due in late July).",
    "Policymakers must balance slowing demand against rising inflation.",
    "Many central banks have tightened policy stances; however, interest rates in emerging and developing economies generally remain negative in real terms in several cases.",
    "Recommended approaches:",
    "World output (Year over Year):",
    "Q4 over Q4:",
    "Advanced economies (Year over Year):",
    "United States:",
    "Emerging and developing economies (Year over Year):",
    "China:",
    "India:",
    "Commodity prices (U.S. dollars):",
    "Nonfuel (average based on world commodity export weights):",
    "Consumer prices (Emerging and developing economies): 9.1 (figure shown in table)",
    "London interbank offered rate (percent):",
    "Note: Real effective exchange rates assumed constant at levels prevailing during May 21-June 18, 2008.",
    "**0708a**",
    "**《世界经济展望最新预测》 - 全球经济减缓及通货膨胀攀升**",
    "**0708f**",
    "**世界経済見通し（ＷＥＯ） 改訂見通し, 2008年7月: 世界経済の減速とインフレ増大**",
    "**Food and Fuel Prices—Recent Developments, Macroeconomic Impact, and Policy Responses; June 30, 2008**",
    "**World Economic Outlook**",
    "**Снижение темпов мирового роста и повышение уровней инфляции; 17 июля 2008 года**",
    "**Perspectivas de la economía mundial: Desaceleración mundial e inflación en aumento; July 2008.**",
    "[World Economic Outlook](https://www.imf.org/external/pubs/ft/weo/2008/01/index.htm)",
    "[Other issues of the World Economic Outlook (WEO)](https://www.imf.org/external/ns/cs.aspx?id=29)",
    "[Research at the IMF](https://www.imf.org/external/pubs/res/index.htm)",
    "[Discussion Forum](https://www.imf.org/external/pubs/ft/weo/forum/index.htm)"
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