Global activity has gained further momentum Global growth picked up - - PowerPoint PPT Presentation

WORLD ECONOMIC OUTLOOK

October 2017

Research Department, International Monetary Fund

Global activity has gained further momentum

• Global growth picked up further in 2017H1; outlook is for higher annual growth in 2017 and 2018

– Advanced Economies (AE): stronger cyclical recovery in near term, subdued potential growth in medium term – Emerging Market and Developing Economies (EMDE): activity in stressed economies bottoming

• ut, commodity importers generally projected to maintain high growth rates
• Inflation remains subdued
• Risks skewed to the downside in the medium term
• Policy priorities: macroeconomic management needs vary; common goal is to boost potential growth

1

Forces shaping the outlook

Advanced economies

• Cyclical rebound; varying degrees of

post-crisis repair

• Demographic headwinds

Emerging market and developing economies

• Rebalancing in China
• Adjustment to lower commodity prices
• Geopolitical and political factors
• Demographic trends

2

• Weak productivity growth

Ongoing forces… …overlaid on…

World Advanced Economies U.S. U.K. Japan Euro Area Germany Canada Other Advanced Asia

2016 3.2 1.7 1.5 1.8 1.0 1.8 1.9 1.5 2.4 2017 3.6 2.2 2.2 1.7 1.5 2.1 2.0 3.0 2.6

Revision from Apr. 2017

0.1 0.2 –0.1 –0.3 0.3 0.4 0.4 1.1 0.1 2018 3.7 2.0 2.3 1.5 0.7 1.9 1.8 2.1 2.7

Revision from Apr. 2017

0.1 0.0 –0.2 0.0 0.1 0.3 0.3 0.1 0.1

Growth projections: Advanced economies

(percent change from a year earlier)

Sources: IMF, World Economic Outlook April 2017 Update; and IMF, World Economic Outlook October 2017.

3

World

Emerging Market and Developing Economies

China India Brazil Russia

Commodity Exporting Economies Low Income Developing Countries

2016 3.2 4.3 6.7 7.1 –3.6 –0.2 1.5 3.6 2017 3.6 4.6 6.8 6.7 0.7 1.8 2.3 4.6

Revision from

• Apr. 2017

0.1 0.1 0.2 –0.5 0.5 0.4 0.1 –0.1 2018 3.7 4.9 6.5 7.4 1.5 1.6 2.9 5.2

Revision from

• Apr. 2017

0.1 0.1 0.3 –0.3 –0.2 0.2 0.0 –0.1

Growth projections: Emerging markets and LIDCs

(percent change from a year earlier)

Sources: IMF, World Economic Outlook April 2017 Update; and IMF, World Economic Outlook October 2017

4

Recovery “falls short” in a few areas

• Underlying inflation remains below target in AE
• Medium term growth projections in AE and commodity-exporting EMDE

fall short of past averages

• In over ¼ of EMDE, real per capita GDP is not projected to converge

toward AE levels over 2017-22

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2 3 4 5 6 7 2013 14 15 16 Core consumer price index inflation

Advanced Economies

(three-month moving average; annualized percent change)

Source: IMF staff calculations.

Headline inflation has softened; core inflation remains subdued

6

Emerging Market and Developing Economies

(three-month moving average; annualized percent change)

• 2
• 1

1 2 3 2013 14 15 16 Jul. 17 Consumer price inflation Jul. 17

Source and notes: IMF staff calculations. Medians are shown by red dots.

Per capita real GDP growth set to remain below past averages in AE and commodity (especially fuel) exporters

7

Emerging Market and Developing Economies, by Region

(percent)

• 6
• 4
• 2

2 4 6 8 10 AEs EMDEs China Fuel Nonfuel excl. China 1995-2005 2006-16 2017-22

• 5
• 3
• 1

1 3 5 7 9 LAC MENAP EMDE Asia excl. China EMDE Europe SSA CIS 1995-2005 2006-16 2017-22

Per Capita Real GDP Growth across Country Groups

(percent)

Risks skewed to the downside over the medium term

• Financial tensions
• Financial stability risks in China
• A potential tightening of global financial conditions
• Risks of capital flow reversals
• Challenges facing euro area banks
• Financial deregulation
• Threats to global economic integration
• Persistently low inflation in advanced economies
• Non-economic factors

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Policy priorities: undertake structural reforms to improve medium-term growth outlook and reduce risks

Advanced economies

• Cyclical support desirable where

demand and inflation are weak

• Boost potential output and strengthen

safety nets

• Credible strategies needed to put debt
• n a sustainable path

Emerging market and developing economies

• Support for rebalancing and tame credit

growth in China

• Adjustment to lower commodity revenues

in exporters

• Contain financial risks in vulnerable EMDEs
• Structural reforms to boost potential output

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