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World Economic and Financial Surveys

World Economic Outlook (WEO)

Rebalancing Growth

April 2010

©2010 International Monetary Fund

The World Economic Outlook (WEO) 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.

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Contents


  Assumptions and Conventions
 
Preface
 
Joint Foreword to World Economic Outlook and Global Financial Stability Report
 
Executive Summary
 
Chapter 1. Global Prospects and Policies
Full Text  |  Boxes  |   Figures
 

Recovery Is Stronger than Expected, but Speed Varies

Financial Conditions Are Easing, but Not for All Sectors

Capital Is Again Flowing to Emerging Economies

Policy Support Has Been Essential in Fostering Recovery

Multispeed Recovery to Continue during 2010-11

Inflation Pressures Are Generally Subdued but Diverge

Important Risks Remain amid Sharply Diminished Room for Policy Maneuvers

Policies Need to Sustain and Strengthen Recovery

Global Demand Rebalancing: The Role of Credibility and Policy Coordination

Appendix 1.1. Commodity Market Developments and Prospects

References

 
Chapter 2. Country and Regional Perspectives
Full Text  |   Figures
 

A Stimulus-Driven U.S. Recovery Is under Way

Asia Is Staging a Vigorous and Balanced Recovery

Europe Is Facing an Uneven Recovery and Complex Policy Challenges

The CIS Economies Are Recovering at a Moderate Pace

Latin America and the Caribbean Are Recovering at a Robust Pace

The Middle East and North Africa Region Is Recovering at a Good Pace

Africa Is Coming through the Crisis Well


Chapter 3. Unemployment Dynamics during Recessions and Recoveries: Okun's Law and Beyond
Full Text  |   Summary  |   Figures  |   Video
 

Broad Labor Market Dynamics during the Great Recession

Using Okun's Law as a Framework

Step 1: Okun's Law across Countries and over Time

Step 2: Analyzing Unemployment Rate "Forecast Errors"

The Key Issues: Drivers of Great Recession Dynamics and Recovery Prospects

Conclusions and Implications for the Recovery

Appendix 3.1. Data Sources and Construction

Appendix 3.2. Methodological Details

Appendix 3.3. Analysis on Dynamic Betas Derived from the Employment Version of Okun's Law

Appendix 3.4. Regression Results Using Employment Forecast Errors and a Static Okun's Law Specification

Appendix 3.5. Vector Autoregression Forecasting Methodology

References

 
Chapter 4. Getting the Balance Right: Transitioning out of Sustained Current Account Surpluses
Full Text  |   Summary  |   Boxes  |   Figures  |   Video
 

Surplus Reversals: Definition and Anatomy

Are Policy-Driven Surplus Reversals Detrimental to Growth?

Surplus Reversals: Case Studies

Lessons for Economies Considering a Transition out of External Surpluses

Appendix 4.1. Sample of Countries and Data Sources

Appendix 4.2. Scoring Method Used to Group Economies

References

 
  Annex: IMF Executive Board Discussion of the Outlook, April 2010
 
  Statistical Appendix
  Assumptions
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Groups in the World Economic Outlook Classification
 
List of Tables Part A
  Output (Tables A1–A4)
  Inflation (Tables A5–A7)
  Financial Policies (Table A8)
  Foreign Trade (Table A9)
  Current Account Transactions (Tables A10–A12)
  Balance of Payments and External Financing (Tables A13–
    A15)
  Flow of Funds (Table A16)
  Medium–Term Baseline Scenario (Table A17)
 
  List of Tables Part B
  Output (Tables B1–B2)
  Inflation (Tables B3–B4)
  Financial Policies (Tables B5–B10)
  Foreign Trade (Tables B11–B13)
  Current Account Transactions (Tables B14–B17)
  Balance of Payments and External Financing (Tables B18–B20)
  External Debt and Debt Service (Tables B21–B25)
  Medium-Term Baseline Scenario (Table B26)
 
  World Economic Outlook, Selected Topics
 
Boxes
Chart
Chart
Chart
Data
Data
Data
1.1 Lessons from the Crisis: On the Choice of Exchange Rate Regime
Chart
Chart
Data
Data
1.2 How Unusual Is the Current Commodity Price Recovery?
Chart
Chart
Data
Data
1.3 Commodity Futures Price Curves and Cyclical Market Adjustment
Chart
Chart
Chart
Chart
Data
Data

Data
3.1 The Dualism between Temporary and Permanent Contracts: Measures, Effects, and Policy Issues
Chart
Chart
Chart
Data
Data
Data
3.2 Short-Time Work Programs
Chart
Chart
Data
Data
4.1 Japan after the Plaza Accord
Chart
Chart
Data
Data
4.2 Taiwan Province of China in the Late 1980s
A.1 Economic Policy Assumptions Underlying the Projections for Selected Economies
 
 
Tables
1.1 Overview of the World Economic Outlook Projections
1.2 Commodity Price Developments
1.3 Global Oil Demand and Production by Region
2.1 Selected Advanced Economies: Real GDP, Consumer Prices, and Current Account Balance
2.2 Advanced Economies: Unemployment
2.3 Selected Asian Economies: Real GDP, Consumer Prices, and Current Account Balance
2.4 Selected European Economies: Real GDP, Consumer Prices, and Current Account Balance
2.5 Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance
2.6 Selected Western Hemisphere Economies: Real GDP, Consumer Prices, and Current Account Balance
2.7 Selected Middle East and North African Economies: Real GDP, Consumer Prices, and Current Account Balance
2.8 Selected Sub-Saharan African Economies: Real GDP, Consumer Prices, and Current Account Balance
3.1 Factors Influencing the Responsiveness of Changes in Unemployment to Changes in Output
3.2 Unemployment Forecast Errors during Recessions
3.3 Unemployment Forecast Errors during Recoveries
3.4 Data Sources
3.5 Okun's Law Lag Lengths (Great Recession)
3.6 Factors Influencing the Responsiveness of Changes in Employment to Changes in Output
3.7 Employment Forecast Errors during Recessions
3.8 Employment Forecast Errors during Recoveries
3.9 Regressions using Forecast Errors Based on Static Version of Okun's Law
4.1 Decomposition of Current Account Surplus Reversals
4.2 Exchange Rate Developments during Current Account Surplus Reversals
4.3 Structural Reallocation during Current Account Surplus Reversals
4.4 Estimation Results: Change in Growth after Current Account Surplus Reversals
4.5 Historical Current Account Surplus Reversal Episodes: Relevance for Today's Current Account Surplus Economies
4.6 Case Studies: Policies Used during Current Account Surplus Reversals
4.7 Case Studies: Key Indicators after Current Account Surplus Reversals
4.8 Sample of Analysis and Current Account Surplus Episodes
4.9 Data Sources
 
Figures
Chart Data 1.1 Current and Forward-Looking Indicators
Chart Data 1.2 Global Indicators
Chart Data 1.3 Developments in Mature Credit Markets
Chart Data 1.4 Emerging Market Conditions
Chart Data 1.5 External Developments
Chart Data 1.6 Global Imbalances
Chart Data 1.7 General Government Fiscal Balances and Public Debt
Chart Data 1.8 Measures of Monetary Policy and Liquidity in Selected Advanced Economies
Chart Data 1.9 Prospects for Near-Term Activity
Chart Data 1.10 Emerging Economies: GDP Growth by Recession Episode
Chart Data 1.11 Global Outlook
Chart Data 1.12 Global Inflation
Chart Data 1.13 Inflation, Deflation Risk, and Unemployment
Chart Data 1.14 Risks to the Global Outlook
Chart Data 1.15 Downside Scenario: A Loss of Momentum
Chart Data 1.16 Medium-Term Growth Prospects and Precrisis Currency Valuations
Chart Data 1.17a Fiscal Consolidation Packages Designed to Raise Potential Output under Different Assumptions about Credibility
Chart Data 1.17b Scenarios Designed to Raise Potential Output and Reduce Government Deficits
Chart Data 1.18 Commodity and Petroleum Prices
Chart Data 1.19 World Energy Market Developments
Chart Data 1.20 Developments in Metal Markets
Chart Data 1.21 Recent Developments in Markets for Major Food Crops
Chart Data 2.1 Average Projected Real GDP Growth during 2010-11
Chart Data 2.2 Decomposing the Variation in 2010-11 Growth Projections
Chart Data 2.3 United States: A Stimulus-Supported Recovery
Chart Data 2.4 Asia: Average Projected Real GDP Growth during 2010-11
Chart Data 2.5 Asia: A Vigorous and Balanced Rebound
Chart Data 2.6 Europe: Average Projected Real GDP Growth during 2010-11
Chart Data 2.7 Europe: A Moderate Recovery Held Back by Fiscal and External Imbalances
Chart Data 2.8 Commonwealth of Independent States: Average Projected Real GDP Growth during 2010-11
Chart Data 2.9 Commonwealth of Independent States: A Modest Recovery Ahead
Chart Data 2.10 Latin America and the Caribbean: Average Projected Real GDP Growth during 2010-11
Chart Data 2.11 Latin America and the Caribbean: A Robust Recovery
Chart Data 2.12 Middle East and North Africa: Average Projected Real GDP Growth during 2010-11
Chart Data 2.13 Middle East and North Africa: Growing out of Its Downturn
Chart Data 2.14 Sub-Saharan Africa: Average Projected Real GDP Growth during 2010-11
Chart Data 2.15 Sub-Saharan Africa: Rebounding Strongly
Chart Data 3.1 Change in Unemployment Rates and Output Declines during the Great Recession
Chart Data 3.2 Broad Measures of Unemployment
Chart Data 3.3 Evolution of Employment, Unemployment, and Labor Participation
Chart Data 3.4 Labor Dynamics in the United States, Germany, and Japan
Chart Data 3.5 Relationship between Unemployment and Output over Time
Chart Data 3.6 Output per Capita and Employment Rate Responses during Past Recessions
Chart Data 3.7 Dynamic Betas: The Long-Term Impact of Output Fluctuations on Unemployment Rate Dynamics
Chart Data 3.8 Decomposition of the Actual Change in the Unemployment Rate during the Great Recession
Chart Data 3.9 Decomposition of the Cumulative Change in the Unemployment Rate during the Great Recession
Chart Data 3.10 How Long before Employment Recovers?
Chart Data 3.11 Forecasts of Employment, Unemployment Rate, and GDP for Advanced Economies, Based on Okun's Law
Chart Data 3.12 Dispersion of GDP Consensus Forecasts
Chart Data 3.13 Forecasts of Employment, Unemployment Rate, and GDP for Advanced Economies, Based on Vector Autoregression
Chart Data 4.1 Global Imbalances
Chart Data 4.2 Methodology Example (Korea 1989)
Chart Data 4.3 Output and Employment Growth during Surplus Reversals
Chart Data 4.4 Change in Growth after Surplus Reversals
Chart Data 4.5 Contributions to Growth
Chart
Chart
Data
Data
4.6 Case Studies: Pretransition Initial Conditions
Chart Data 4.7 Case Studies: Posttransition Implications
Chart Data 4.8 Japan at the End of Bretton Woods