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The IMF’s World Economic Outlook, April 2013
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The IMF’s World Economic Outlook, April 2013
Subtitled “Hopes, Realities, Risks” the IMF released its latest World Economic Outlook (WEO) last week, on the occasion of the annual joint meetings of the IMF and the World Bank. In stride with the report’s slogan IMF Managing Director Christine Lagarde couched the conversation in the context of a “three-speed recovery” from the global economic and financial crisis; a notion that was quickly picked up in the mainstream, becoming a concept du jour. Many low income economies have been doing quite well and may continue to do so, relative to other countries at least, if not relative to pre-crisis growth rates. Emerging market and developing countries are showing signs of resilience, yet among advanced economies, while the United States is showing some signs of strength, Japan and the EU continue to struggle. The IMF is promoting its Global Policy Agenda declaring that “Policy makers must, to varying degrees, continue to nurse the recovery, repair systems damaged by the crisis, strengthen defenses against a recurrence, and anticipate new challenges from stronger expansion.”
Policies to promote growth and jobs now take priority over fiscal tightening and debt service. More strident are the urgings now. “Anything that works to create jobs” is on the table, said Lagarde, “starting with growth and a good policy mix which relies on not just one policy but a set of policies that will include fiscal consolidation at the right pace, structural reforms…and monetary policy, which provides the breathing space.” See the IMF summary discussion here.
Briefly, the IMF prescription for recovery varies by stage of economic development and the state of the economy. For advanced economies, the IMF advises an accommodative monetary policy to spur growth, but concedes the need to keep in place plans for fiscal consolidation while promoting progress on financial sector and structural reforms. The lagging euro area must make a determined effort to address the needs of an ailing banking system and reduce “financial fragmentation”. Policies for emerging market and developing countries should be focused on strengthening the financial system. The robust growth of low-income countries provides opportunities to also strengthen the financial system while improving infrastructure and addressing social needs.
And now, here are some WEO numbers. World GDP growth was 3.2 percent in 2012, according to the IMF. This pace will pick up a bit in 2013, to 3.3 percent, and more so in 2014 to 4.0 percent. The advanced economies grew only 1.2 percent in 2012, and will trail the rest of the world in 2013 with 1.2 percent growth again. The pickup in 2014 will be comparatively modest at 2.2 percent. The United States was a leader among the advanced economies in 2012, with 2.2 percent growth, compared to -0.6 percent in the euro area, 2.0 percent in Japan, and 0.2 percent in the UK. Italy and Spain were the main drags on euro area growth, with -2.4 percent and -1.4 percent respectively. Going forward, the pattern is similar, with the US clocking 1.9 percent growth in 2013 and fully 3.0 percent in 2014 according to the IMF. The euro area will continue to contract in 2013, at -0.3 percent, but grow again in 2014, at 1.1 percent. This pattern is in large part determined by Italy and Spain, which will contract by 1.5 percent and 1.6 percent respectively in 2013 before recovering at 0.5 percent and 0.7 percent in 2014. The rate of growth of the German economy, which grew at 0.9 percent in 2012, will remain sluggish at 0.6 percent in 2013 and 1.5 percent in 2014. Similarly, the UK will see slow growth in 2013 (0.7 percent) before picking up a bit in 2014 (1.5 percent). IMF Chief Economist OlivierBlanchard by the way, called on Chancellor of the Exchequer George Osborne to rethink the austerity policies that have hindered UK growth. The IMF predicts slow growth for Japan, at 1.6 percent in 2013 and 1.4 percent in 2014.
In the emerging and developing economies, robust growth will be as it has been. Taken as a whole, this group saw 5.1 percent growth in 2012. In the IMF projections, growth will pick up slightly, to 5.3 percent in 2013 and 5.7 percent in 2014. The leader has been and will be China, with growth of 7.8 percent, 8.0 percent and 8.2 percent in 2012, 2013 and 2014 respectively. These rates are still below the historical patterns, which saw 9.3 percent as recently as 2011. India too dipped from 2011 to 2012, even more so, from 7.7 percent to just 4.0 percent. Prospects are better though, at 5.7 percent in 2013 and 6.2 percent in 2014. The third fastest growing BRIC is the Russian Federation, which will see its 3.4 percent rate of growth during 2012 continue into 2013 and then pick up to 3.8 percent in 2014. This is in contrast to 4.3 percent growth experienced in 2011. Brazil was hit harder by the crisis, which had the effect of slowing growth to 2.7 percent in 2011, and further to just 0.9 percent in 2012. But going forward, Brazil should experience 3.0 percent growth in 2013 and 4.0 percent growth in 2014. Finally, South Africa will return to almost the 2011 rate of 3.5 percent growth, climbing from 2.5 percent in 2012 to 2.8 percent in 2013 and 3.3 percent in 2014.
The projections are based on IMF staff estimates and assumptions, including assumptions with respect to policy considerations. The report includes the caveat that the projections do not necessarily reflect the views of national authorities. See the full IMF World Economic Outlook for April 2013 here.
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In case you missed it: Major Events Last Week
Subscribe to the CMBD News and get full listings of events for major International Organizations for a full 5 weeks in advance.
- G8 Meeting of the G8 Peacekeeping / Peacebuilding Experts Group – April 2013 London 1 Apr – 30 Apr
- ILO Occupational safety and health management in the enterprise (in Spanish) Turin, Italy 15 Apr – 26 Apr
- IMF Fiscal Policy, Equity, and Long-Term Growth in Developing CountriesWashington DC 21 Apr – 22 Apr
- UNEP , Special Day Earth Day 22 Apr
- FAO/UNECE UNECE/FAO/InnovaWood Seminar on Innovation in the Forest-Based Sector Geneva, Switzerland 22 Apr
- ICC 5th ICC Roundtable on Competition Policy Warsaw, Poland 22 Apr
- ICC ICC World Trade Agenda Summit Doha, Qatar 22 Apr
- ICC ICC WCF 8th World Chambers Congress 22 Apr
- WTO, UNCTAD, ECOSOC Special high-level meeting of ECOSOC with the Bretton Woods institution, WTO, and UNCTAD New York 22 Apr
- ESCAP The Asian and Pacific Regional Implementation Meeting on Rio + 20 Outcomes Bangkok, Thailand 22 Apr – 24 Apr
- UN Global Compact Promoting Labour Standards through Corporate Social Responsibility: Instruments and Practices Turin 22 Apr – 26 Apr
- WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore : Twenty-Fourth SessionGeneva 22 Apr – 26 Apr
- WIPO Nice Union – Committee of Experts : Twenty-Third Session Geneva 22 Apr – 26 Apr
- UNFCCC 59th Meeting of the CDM Methodology Panel Bonn, Germany 22 Apr – 26 Apr
- UN , UNESA , UNFPA Commission on Population and Development, 46th Session New York 22 Apr – 26 Apr
- FAO FAO Council (146th Session) Rome 22 Apr – 26 Apr
- IPCC NGGIP – Government/Expert Review on “2013 Revised Supplementary Methods and Good Practice Guidance Arising from the Kyoto Protocol” 22 Apr – 2 Jun
- ECOSOC The Role of Philanthropic Organizations in the Post-2015 setting Special Policy Dialogue of the UN Development Cooperation Forum New York 23 Apr – 24 Apr
- OECD 2013 Forum on Integrity – Improving Integrity in Practice Paris 23 Apr – 24 Apr
- FAO/UNECE 35th Session Joint FAO/UNECE Working Party on Forest Statistics, Economics and Management Geneva, Switzerland 23 Apr – 25 Apr
- WTO Trade Policy Review Body – Switzerland/Liechtenstein Geneva 23 Apr – 25 Apr
- WEF World Economic Forum on Latin America 2013 Lima, Peru 23 Apr – 25 Apr
- ECOSOC Partnering for Innovative Solutions for Sustainable DevelopmentNew York 24 Apr
- WTO Dispute Settlement Body Geneva 24 Apr
- CMBD Webinar on the Post-2015 Development Agenda 24 Apr
- OECD OECD BIAC Workshop: Green Growth in the Agro Food Chain: What role for the private sector? 24 Apr
- UN Global Compact Private Sector Focal Points Meeting and Annual Local Networks Forum Geneva 24 Apr – 26 Apr
- WIPO 3-D Printing – the future of manufacturing? Geneva 25 Apr
- UNFCCC 29th Meeting of the Joint Implementation Accreditation PanelBonn, Germany 25 Apr – 26 Apr
- G20 High-Level Anti-Corruption Conference for G20 Governments and Business Paris, France 25 Apr – 26 Apr
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