World Economic Outlook
Growth Resuming, Dangers Remain
April 2012
Corrections as of August 15, 2012
The April 2012 edition of the World Economic Outlook assesses the prospects for the global economy, which has gradually strengthened after a major setback during 2011. The threat of a sharp global slowdown eased with improved activity in the United States and better policies in the euro area. Weak recovery will likely resume in the major advanced economies, and activity will remain relatively solid in most emerging and developing economies. However, recent improvements are very fragile. Policymakers must calibrate policies to support growth in the near term and must implement fundamental changes to achieve healthy growth in the medium term. Chapter 3 examines how policies directed at real estate markets can accelerate the improvement of household balance sheets and thus support otherwise anemic consumption. Chapter 4 examines how swings in commodity prices affect commodity exporting economies, many of which have experienced a decade of good growth. With commodity prices unlikely to continue growing at the recent elevated pace, however, these economies may have to adapt their fiscal and other policies to lower potential output growth in the future.
Contents
Front Matter
Chapter 1: Global Prospects and Policies
| Boxes | |||
| Chart | Data | 1.1 | The Labor Share in Europe and the United States during and after the Great Recession |
| Chart Chart Chart |
Data Data |
1.2 | The Global Recovery: Where Do We Stand? |
| Chart Chart Chart Chart Chart |
Data Data Data Data Data |
1.3 | Where Is China’s External Surplus Headed? |
| Tables | |||
| 1.1 | Overview of the World Economic Outlook Projections | ||
| 1.SF.1. | Share of Commodity Price Variance Associated with Static Common Factors | ||
| 1.SF.2. | Global Oil Demand and Production by Region | ||
| 1.SF.3. | Mean and Standard Deviations of Oil Production | ||
| Figures | |||
| Chart | Data | 1.1 | Global Indicators |
| Chart | Data | 1.2 | Recent Financial Market Developments |
| Chart | Data | 1.3 | Current and Forward-Looking Growth Indicators |
| Chart | Data | 1.4 | Emerging Market Conditions |
| Chart | Data | 1.5 | Credit Market Conditions |
| Chart | Data | 1.6 | Euro Area Spillovers |
| Chart | Data | 1.7 | Monetary and Fiscal Policies |
| Chart | Data | 1.8 | Balance Sheets and Saving Rates |
| Chart | Data | 1.9 | Global Inflation |
| Chart | Data | 1.10 | Emerging Market Economies |
| Chart | Data | 1.11 | Global Imbalances |
| Chart | Data | 1.12 | Risks to the Global Outlook |
| Chart | Data | 1.13 | Recession and Deflation Risks |
| Chart | Data | 1.14 | WEO Downside Scenario for Increased Bank and Sovereign Stress in the Euro Area |
| Chart | Data | 1.15 | WEO Downside Scenario for Disruption to the Global Oil Supply |
| Chart | Data | 1.16 | WEO Downside Scenario for Reevaluation of Potential Output Growth in Emerging Market Economies |
| Chart | Data | 1.17 | WEO Upside Scenario |
| Chart | 1.18 | Overheating Indicators for the G20 Countries | |
| Chart | Data | 1.19 | Policy Requirements in Emerging Market Economies |
| Chart | Data | 1.SF.1. | Commodity Prices and the Global Economy |
| Chart | Data | 1.SF.2. | China: Recent Commodity Market Developments |
| Chart | Data | 1.SF.3. | Commodity Supply and Inventory Developments I |
| Chart | Data | 1.SF.4. | Commodity Supply and Inventory Developments II |
Chapter 2: Country and Regional Perspectives
| Boxes | |||
| Chart | Data | 2.1 | East-West Linkages and Spillovers in Europe |
| Tables | |||
| 2.1 | Selected European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.2 | Selected Advanced Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.3 | Selected Asian Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.4 | Selected Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.5 | Commonwealth of Independent States: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.6 | Selected Middle East and North African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| 2.7 | Selected Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment | ||
| Figures | |||
| Chart | Data | 2.1 | Revisions to the 2012 WEO Growth Projections and Trade Linkages with Europe |
| Chart | Data | 2.2 | The Effects of an Intensified Euro Area Crisis on Various Regions |
| Chart | Data | 2.3 | Europe: Revisions to the 2012 WEO Growth Forecasts |
| Chart | Data | 2.4 | Europe: Back in Recession |
| Chart | Data | 2.5 | Trade and Financial Linkages with the Euro Area |
| Chart | Data | 2.6 | United States and Canada: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.7 | United States: Pulling Itself Up by Its Bootstraps |
| Chart | Data | 2.8 | Asia: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.9 | Asia: Growth Is Moderating |
| Chart | Data | 2.10 | Latin America and the Caribbean: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.11 | Latin America: Watch Out for Downdrafts |
| Chart | Data | 2.12 | Commonwealth of Independent States: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.13 | Commonwealth of Independent States: Buoyed by Commodity Prices, Buffeted by Euro Area Headwinds |
| Chart | Data | 2.14 | Middle East and North Africa: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.15 | Middle East and North Africa: A Sea of Troubles |
| Chart | Data | 2.16 | Sub-Saharan Africa: Revisions to 2012 GDP Growth Forecasts |
| Chart | Data | 2.17 | Sub-Saharan Africa: Continued Resilience |
| Chart | Data | 2.SF.1 | Euro Area Bank Participation in Global Lending, September 2011 |
| Chart | Data | 2.SF.2 | Regional Exposure to Banks’ Foreign Claims |
| Chart | Data | 2.SF.3 | Regional Vulnerabilities |
| Chart | Data | 2.SF.4 | Evolution of Banks’ Foreign Claims over Time |
| Chart | Data | 2.SF.5 | Potential Impact of Euro Area Bank Deleveraging on Growth |
Chapter 3: Dealing with Household Debt
Households in many economies are grappling with elevated debt burdens following the fall in asset prices since the Great Recession. This chapter analyzes the effects of household debt in the aftermath of housing busts and how government policies can reduce the economic costs.
| Boxes | |||
| 3.1 | The U.S. Home Owners' Loan Corporation | ||
| 3.2 | Household Debt Restructuring in Iceland | ||
| Tables | |||
| 3.1 | Government-Supported Out-of-Court Debt Restructuring Programs in Selected Case Study Countries | ||
| 3.2 | Real Consumption following Housing Busts: Robustness | ||
| Figures | |||
| Chart | Data | 3.1 | Household Debt, House Prices, and Nonperforming Mortgage Loans, 2002–10 |
| Chart | Data | 3.2 | The Great Recession: Consumption Loss versus Precrisis Rise in Household Debt |
| Chart | Data | 3.3 | Economic Activity during Housing Busts |
| Chart | Data | 3.4 | Housing Wealth and Household Consumption |
| Chart | Data | 3.5 | Household Debt during Housing Busts |
| Chart | Data | 3.6 | Household Consumption |
| Chart | Data | 3.7 | Economic Activity during the Great Recession in the United States |
| Chart | Data | 3.8 | Estimated House Price Misalignment in the United States |
| Chart | Data | 3.9 | Foreclosures and Household Debt during the Great Depression in the United States |
| Chart | Data | 3.10 | Household Balance Sheets during the Great Recession in Iceland |
| Chart | Data | 3.11 | The U.S. Housing Market, 2000–11 |
| Chart | Data | 3.12 | Government Debt in the Scandinavian Countries, 1988–95 |
Chapter 4: Commodity Price Swings and Commodity Exporters
Commodity exporters have benefited from the run-up of commodity prices over the past decade, exhibiting resilience to recent weakness in the global economy. However, since downside risks remain large, the near-term prospects for commodity exporters are a concern. What policies should exporters use if prices plateau or fall?
| Boxes | |||||
| Chart Chart Chart Chart |
Data Data Data Data |
4.1 | Macroeconomic Effects of Commodity Price Shocks on Low-Income Countries | ||
| 4.2 | Volatile Commodity Prices and the Development Challenge in Low-Income Countries | ||||
| Tables | |||||
| 4.1 | Average Economic Performance of Net Commodity Exporters, 1970–2010 | ||||
| 4.2 | Economic Performance of Net Commodity Exporters during the 2000s | ||||
| 4.3 | Relationship between Commodity Price Swings and Banking Crises in Commodity Exporters | ||||
| 4.4 | Dynamic Effects of Global Commodity Market Shocks | ||||
| 4.5 | Domestic Macroeconomic Effects of Global Commodity Market Shocks | ||||
| 4.6 | Comparison of Policy Instruments for Permanent Increases in Oil Royalties | ||||
| 4.7 | Commodity Intensity in Exports | ||||
| 4.8 | Statistical Properties of Real Commodity Prices | ||||
| Figures | |||||
| Chart | Data | 4.1 | World Commodity Prices, 1970–2011 | ||
| Chart | Data | 4.2 | Share of Net Commodity Exports in Total Exports and GDP | ||
| Chart | Data | 4.3 | Macroeconomic Performance of Commodity Exporters during Commodity Price Swings | ||
| Chart | Data | 4.4 | Macroeconomic Performance of Exporters of Four Major Commodities during Commodity Price Swings | ||
| Chart | Data | 4.5 | The Exchange Rate Regime and Exporter Performance during Commodity Price Swings | ||
| Chart | Data | 4.6 | Capital Account Openness and Exporter Performance during Commodity Price Swings | ||
| Chart | Data | 4.7 | Real Output Effects of Commodity Market Shocks | ||
| Chart | Data | 4.8 | Oil Price Drivers, Cycles, and Performance in Net Oil Exporters | ||
| Chart | Data | 4.9 | Dynamic Effects of a Temporary Reduction in Oil Supply in the Rest of the World on a Small, Open Oil Exporter | ||
| Chart | Data | 4.10 | Dynamic Effects of a Temporary Increase in Liquidity in the Rest of the World on a Small, Open Oil Exporter | ||
| Chart | Data | 4.11 | Optimal Fiscal Policy Stance under Alternative Policy Frameworks and Structural Characteristics | ||
| Chart | Data | 4.12 | Duration of Commodity Price Upswings and Downswings | ||
| Chart | Data | 4.13 | Amplitude of Commodity Price Upswings and Downswings | ||
| Chart | Data | 4.14 | Correlation of Global Real GDP Growth and Real Oil Price Forecast Errors | ||
Statistical Appendix
| Text (Download PDF) | |||
| Assumptions | |||
| What's New | |||
| Data and Conventions | |||
| Classification of Countries | |||
| General Features and Composition of Groups in the World Economic Outlook Classification | |||
| Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2011 | |||
| Table B. Advanced Economies by Subgroup | |||
| Table C. European Union | |||
| Table D. Emerging and Developing Economies by Region and Main Source of Export Earnings | |||
| Table E. Emerging and Developing Economies by Region, Net External Position, and Status as Heavily Indebted Poor Countries | |||
| Box A1. Economic Policy Assumptions Underlying the Projections for Selected Economies | |||
| List of Tables Part A (Download PDF) | |||
| 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–A14) | |||
| Flow of Funds (Table A15) | |||
| Medium–Term Baseline Scenario (Table A16) | |||
| List of Tables Part B (Download PDF - available on the web only) | |||
| 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–B26) | |||
| Medium-Term Baseline Scenario (Table B27) | |||