IMF World Economic Outlook (WEO) Update -- Gradual Upturn in Global Growth During 2013, January 2013

World Economic Outlook, January 23, 2013

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IMF World Economic Outlook (WEO) Update -- Gradual Upturn in Global Growth During 2013, January 2013

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Bibliographic details

• Published: January 23, 2013
• Series: World Economic Outlook

Executive summary and headline projections

• Global growth is projected to increase during 2013 as the factors underlying soft global activity are expected to subside, but the upturn is projected to be more gradual than in the October 2012 WEO projections.
• Global growth averages 3.5 percent in 2013, up from 3.2 percent in 2012, and is projected to strengthen to 4.1 percent in 2014, but the 2013 projection is 0.1 percentage point lower than in the October 2012 WEO.
• If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected; downside risks remain significant.

Recent developments and near-term activity

• Economic conditions improved modestly in Q3 2012, with global growth increasing to about 3 percent.
• Main sources of the Q3 2012 acceleration: emerging market economies broadly, and the United States (growth surprised on the upside).
• Financial conditions stabilized: bond spreads in the euro area periphery declined; prices for many risky assets, notably equities, rose globally; capital flows to emerging markets remained strong.
• Q4 2012: global financial conditions improved further, but indicators for global industrial production and trade suggest global growth did not strengthen further; the Q3 uptick partly reflected temporary factors, including increased inventory accumulation (mainly in the United States).
• Weakness persisted in some areas: euro area periphery activity softer than expected with spillovers to euro area core; Japan output contracted further in Q3.

Regional and country outlooks

• United States
  • Growth is forecast to average 2 percent in 2013, rising above trend in the second half of the year.
  • Forecasts broadly unchanged from October 2012 WEO.
  • Projections assume the spending sequester will be replaced by back-loaded measures and the pace of fiscal withdrawal (at the general government level) in 2013 will remain at 1¼ percent of GDP.
• Euro area
  • Near-term outlook revised downward: activity is now expected to contract by 0.2 percent in 2013 instead of expanding by 0.2 percent.
  • Revision reflects delays in transmission of lower sovereign spreads and improved bank liquidity to private sector borrowing conditions, and still-high uncertainty about ultimate resolution of the crisis.
  • During 2013, brakes may start easing if planned policy reforms continue to be implemented.
• Japan
  • Near-term growth outlook not downgraded despite renewed recession.
  • Activity is expected to expand by 1.2 percent in 2013, broadly unchanged from October.
  • Recession expected to be short-lived; near-term boost expected from a sizeable fiscal stimulus package and further monetary easing, pickup in external demand, and a weaker yen.
• Emerging market and developing economies
  • Growth is on track to build to 5.5 percent in 2013, but not to rebound to the high rates of 2010–11.
  • Supportive policies have underpinned recent acceleration, but weak advanced-economy demand and assumed lower commodity prices in 2013 weigh on growth.
  • Constraints include diminished space for further policy easing, supply bottlenecks, and policy uncertainty in some economies (for example, Brazil, India).
  • Sub-Saharan Africa expected to remain robust, aided by a rebound from flood-related output disruptions in Nigeria.

Key statistics and selected table highlights (percent change unless noted)

• World Output 1/: 2011 = 3.9; 2012 = 3.2; 2013 = 3.5; 2014 = 4.1.
• Advanced Economies: 2011 = 1.6; 2012 = 1.3; 2013 = 1.4; 2014 = 2.2.
• United States: 2011 = 1.8; 2012 = 2.3; 2013 = 3.0 (Q4 over Q4 estimate = 0.1? as shown in table).
• Euro Area: 2011 = –0.4; 2012 = 1.0; 2013 = –0.3; 2014 = –0.7 (select numbers as presented).
• Emerging Market and Developing Economies 3/: 2011 = 6.3; 2012 = 5.1; 2013 = 5.5; 2014 = 5.9; (additional 6.2 appears in the table as shown).
• Developing Asia: 2011 = 8.0; 2012 = 6.6; 2013 = 7.1; 2014 = 7.5; 2013 = 7.3; 2014 = 7.8 (values presented in table).
• China: 2011 = 9.3; 2012 = 8.2; 2013 = 8.5; 2014 = 8.1; 2013 = 7.9; 2014 = 8.8 (values presented in table).
• India: 2011 = 4.5; 2012 = 6.4; 2013 = 5.4; 2014 = 6.0.
• World Trade Volume (goods and services): Imports 4.6; Exports 5.6 (selected figures as in table).
• Commodity prices (U.S. dollars): Oil — the average price of oil in U.S. dollars a barrel was $105.08 in 2012; the assumed price based on futures markets is $99.71in 2013 and $96.78 in 2014.

Note: Real effective exchange rates assumed constant at levels prevailing during November 12–December 10, 2012. The quarterly estimates and projections account for 90 percent of the world purchasing-power-parity weights; the quarterly estimates and projections account for approximately 80 percent of the emerging market and developing economies.

Risks, scenarios, and conditional outcomes

• Upside conditional: If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected.
• Downside risks (significant):
  • Renewed setbacks in the euro area.
  • Risks of excessive near-term fiscal consolidation in the United States.
  • Prolonged stagnation in the euro area if momentum for reform is not maintained.
  • In emerging markets, external demand weakness and lower commodity prices could further slow growth; domestic bottlenecks and policy uncertainty could also restrain activity.

Policy recommendations and priorities

• General
  • Policy action must urgently address downside risks to secure a fragile global recovery.
  • The policy requirements outlined in the October 2012 WEO remain relevant: steady and sustained fiscal consolidation in advanced economies and continued financial sector reform to decrease financial-system risks.
• Euro area
  • Sustain adjustment efforts in the periphery and support them from the center through full deployment of European firewalls, utilization of the flexibility offered by the Fiscal Compact, and further steps toward full banking union and greater fiscal integration.
• United States
  • Avoid excessive fiscal consolidation in the short term, promptly raise the debt ceiling, and agree on a credible medium-term fiscal consolidation plan focused on entitlement and tax reform.
• Japan
  • Underpin the renewed emphasis on raising growth and inflation with more ambitious monetary policy easing.
  • Adopt a credible medium-term fiscal consolidation plan anchored by the consumption tax increases in 2014–15.
  • Raise potential growth through structural reforms; absent a strong medium-term fiscal strategy, the stimulus package risks a short-lived recovery and a significantly worse debt outlook.
• China and other emerging markets
  • China: continue market-oriented structural reforms and rebalancing toward private consumption.
  • Other EMDEs: rebuild macroeconomic policy space at an appropriate pace balancing external downside risks against risks of rising domestic imbalances; use macroprudential measures to help stem emerging financial excesses.
  • In some economies with large external surpluses and low public debt: pursue a lower, more sustainable pace of credit growth and fiscal measures to support domestic demand.
  • In others: roll back fiscal deficits further while monetary tightening proceeds gradually.
• Middle East and North Africa
  • Many countries will need to maintain macroeconomic stability under difficult internal and external conditions.

IMF World Economic Outlook Update -- Gradual Upturn in Global Growth During 2013, January 2013

Content in this bundle

• Figure 1. Global GDP Growth
  • Figure 1. Global GDP Growth (CSV)
• النمو العالمي يشهد تحسنا تدريجيا في عام 2013 - مستجدات آفاق الاقتصاد العالمي
  • النمو العالمي يشهد تحسنا تدريجيا في عام 2013 - مستجدات آفاق الاقتصاد العالمي (Markdown version)
  • النمو العالمي يشهد تحسنا تدريجيا في عام 2013 - مستجدات آفاق الاقتصاد العالمي (PDF)
• 2013年1月《世界经济展望》更新: 2013 年全球经济增长将缓慢回升, 2013 年1 月23 日
  • 2013年1月《世界经济展望》更新: 2013 年全球经济增长将缓慢回升, 2013 年1 月23 日 (Markdown version)
  • 2013年1月《世界经济展望》更新: 2013 年全球经济增长将缓慢回升, 2013 年1 月23 日 (PDF)
• La croissance mondiale s’accélérera progressivement en 2013
  • La croissance mondiale s’accélérera progressivement en 2013 (Markdown version)
  • La croissance mondiale s’accélérera progressivement en 2013 (PDF)
• 2013年1月世界経済見通し（WEO） 改訂見通し: 2013年、世界経済の成長率は徐々に上昇へ, 2013年1月23日
  • 2013年1月世界経済見通し（WEO） 改訂見通し: 2013年、世界経済の成長率は徐々に上昇へ, 2013年1月23日 (Markdown version)
  • 2013年1月世界経済見通し（WEO） 改訂見通し: 2013年、世界経済の成長率は徐々に上昇へ, 2013年1月23日 (PDF)
• Fig 1.ai
  • Fig 1.ai (Markdown version)
  • Fig 1.ai (PDF)
• Gradual Upturn in Global Growth During 2013
  • Gradual Upturn in Global Growth During 2013 (Markdown version)
  • Gradual Upturn in Global Growth During 2013 (PDF)
• 0113r
  • 0113r (Markdown version)
  • 0113r (PDF)
• Repunte gradual del crecimiento mundial en 2013
  • Repunte gradual del crecimiento mundial en 2013 (Markdown version)
  • Repunte gradual del crecimiento mundial en 2013 (PDF)

References

• Webcast
• Transcript
• Modest Growth Pickup in 2013, Projects IMF
• IMF Projects Modest Pick-up in Economic Growth in 2013
• Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website.
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• https://www.imf.org/en/publications/weo
• Global Economy in Crosscurrents of War and Technology
• https://www.imf.org/en/publications/gfsr
• Global Financial Markets Confront the War in the Middle East and Amplification Risks
• https://www.imf.org/en/publications/fm
• Fiscal Policy under Pressure: High Debt, Rising Risks
• https://www.imf.org/en/publications/reo
• Asia and Pacific
• Europe
• Middle East and Central Asia
• Sub-Saharan Africa
• Western Hemisphere
• https://www.imf.org/en/publications/areb
• Getting to Growth in an Age of Uncertainty
• https://www.imf.org/en/publications/finance-development
• More Publications
• October 2012 World Economic Outlook (WEO)