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World Economic Outlook
Global Development Conference
Delhi, India
January 2004
3
Global Growth
(percent)
2004
2002
2001
2003
Advanced economies
Developing economies
World
Source IMF staff estimates.
1
4
Equity Price Busts and GDP Growth
(GDP percent change from a year earlier, constant
prices)
Upper quartile
Median
Lower quartile
Quarters before and after an equity price bust
(Peaking in the level of real equity prices)
Source IMF staff estimates.
2
5
The Recent Equity Price Bust in Perspective
Private Investment in Machinery and Equipment
(percent change from a year earlier constant
prices x-axis in quarters)
United Kingdom
Median
Germany
United States
Source IMF staff estimates.
3
6
The Recent Equity Price Bust in Perspective
Private Consumption
(percent change from a year earlier constant
prices x-axis in quarters)
United Kingdom
Germany
Median
United States
Source IMF staff estimates.
4
7
Global Industrial Production
(3-month moving average quarterly percent
change at annual rate)
Emerging markets
Industrial countries
World
2001
2000
2002
1999
2003
Nov.
Source Haver Analytics.
5
8
Consumer Confidence
(index)
Japan 1/ (right scale)
United States (left scale)
Euro Area (right scale)
2001
2003
2002
2000
1999
Dec.
Sources Conference Board European Commission
and Cabinet Office (Economic Planning Agency) 1/
Adjusted series.
6
9
Business Confidence
(index)
Japan 1/ (right scale)
Euro Area (right scale)
United States (left scale)
2001
2003
2000
2002
1999
Dec.
Sources National Association of Purchasing
Managers European Commission and Bank of
Japan. 1/ Adjusted series.
7
10
Major Equity Markets
(September 9-14, 2001100 national currency)
Japan (TOPIX)
Euro Area (Euro Stoxx)
United States (Wilshire 5000)
Source Bloomberg Financial Markets, LP.
8
11
Fiscal and Monetary Easing in the Major Advanced
Countries Policy Changes, 2001-03
Tighter
(percent)
Japan
Canada
Germany
Change in real 6-month LIBOR, percent
United States
Euro Area
France
Italy
United Kingdom
Easier
Change in structural fiscal balance (percent of
potential GDP)
Source IMF staff estimates.
9
12
Crude Oil Price Spot and Futures
(U.S. dollars per barrel)
Jan. 16/04
Dec. 16/03
SPOT
Source Bloomberg Financial Markets, LP.
10
13
Emerging Market Spreads
(basis points)
Russia
Brazil
5913 (Oct.98)
EMBI Plus
Mexico
Turkey
2000
2001
2002
1998
1999
2003
2004
Source Bloomberg Financial Markets, LP.
11
14
Global GDP Growth
(percent)
2002
2003
2004
Source IMF staff estimates.
12
15
U.S. Non-Residential Fixed Investment
(percent change from a year earlier)
Last cycle
This cycle
Sources Haver Analytics and IMF staff
calculations.
13
16
Survey of U.S. CEO Economic Outlook
Expected Capital Spending in Next 6-month
(percent of total)
No Change
Lower
Higher
Jul. 2003
Oct. 2003
Dec. 2003
Source The Business Roundtable.
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17
U.S. Housing Market
(index, January 5, 2001100)
(percent per annum)
30-year Fixed 1/ (right scale)
Mortgage Refinancing (left scale)
1/ Average conforming mortgage rate.
Source Bloomberg Financial Markets, LP and IMF
staff estimates.
15
18
U.S. Employment Manufacturing Sector
(percent change from a year earlier)
Typical cycle
This cycle
16
19
U.S. Employment Private Services Sector
(percent change from a year earlier)
Typical cycle
This cycle
17
20
Housing Price Busts and GDP Growth
(GDP percent change from a year earlier, constant
prices)
Upper quartile
Median
Lower quartile
Quarters before and after a housing price
bust (Peaking in the level of real housing prices)
Source IMF staff estimates.
18
21
U.S. Productivity Nonfarm Business Sector
(percent change from a year earlier)
This cycle
Typical cycle
Sources Haver Analytics and IMF staff
calculations.
19
22
U.S. Labor Productivity Growth
(percent)
Actual
Trend
1980
1990
1960
1970
2000
Sources Haver Analytics and IMF staff estimates.
20
23
Euro Area Industrial Production
(percent change from a year earlier three-month
moving average)
Germany
France
Euro Area
Italy
2000
2001
2002
1998
1999
2003
Nov.
Source Haver Analytics.
21
24
Germany Industrial Production and IFO Business
Expectation
(percent change from a year earlier three-month
moving average)
(index 4-month lagged)
Industrial Production (left scale)
IFO Business Expectation (right scale)
22
25
Japan GDP Growth and Contributions
(percent)
Quarterly GDP Growth
2002
2003
23
26
Japan Deflation
(percent change from a year earlier)
CPI
PCE-deflator
GDP deflator
Private fixed investment deflator
Source IMF staff estimates.
24
27
Developing Countries Real GDP Growth
(percent)
2002
2003
2004
Developing countries
Africa
Middle East and Turkey
Latin America
Asia
Source IMF staff estimates.
25
28
World Semiconductor Sales
(US billions three-month moving average)
Americas
Asia Pacific
Japan
Europe
Nov.
26
29
China Industrial Production
(percent change from a year earlier three-month
moving average)
Automobiles (Passenger Cars)
Steel
Cement
Bicycles
Nov.
27
30
Domestic Credit to GDP Ratio
(ratio)
n.a.
n.a.
n.a.
28
31
Current Account Balances
(percent of GDP)
Emerging Asia
Japan
Euro Area 1/
United States
1/ Calculated as the sum of the balance of
individual euro area countries.
Source IMF staff estimates.
29
32
GDP Growth during Current Account Reversals
Sources Haver Analytics and IMF staff estimates.
30
33
Real Effective Exchange Rates
(index, 1995100)
United States
United Kingdom
Japan
Euro Area
Source IMF, Information Notice System.
31
34
Emerging Asia Real Effective Exchange Rates
(index, 1995100)
Hong Kong, SAR
China
India
Philippines
Korea
Source IMF, Information Notice System.
32
35
Official Reserves
(in month of imports of goods)
2000-02
1994-96
Hong Kong, SAR
Source CEIC Data Company Limited.
33
36
Public Debt in Emerging Markets and Industrial
Economies
(percent of GDP)
Industrial countries
Emerging markets
Source IMF staff estimates.
34
37
Overborrowing Ratios
Emerging market economies
Other developing countries
Industrial countries
Source IMF staff estimates.
35
38
Corporate Debt and Investment United States
(percent of GDP)
Fixed Investment (right scale)
Debt (left scale)
2003 Q3
Sources Haver Analytics and IMF staff estimates.
36
39
Corporate Debt and Investment Euro Area
(percent of GDP)
Investment (right scale)
Debt (left scale)
01
02 Est.
Sources European Central Bank and IMF staff
estimates.
37
40
Dont Undercut the Recovery

• Monetary policies in advanced countries need to
  remain accommodative
• Federal Reserve can be patient in removing its
  policy accomodation, despite stronger evidence of
  recovery in the United States.
• In Euro area, monetary policy needs to be
  responsive to indications that activity is not
  picking up as expected or to further appreciation
  of the euro.
• Aggressive measures are required to end deflation
  in Japan.

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Appropriate Fiscal Policies are Finely Balanced

• In the United States, sharp deterioration in
  medium-term fiscal outlook needs to be addressed.
• In Euro area, credible consolidation measures are
  needed in the major economies but automatic
  stabilizers should be allowed to operate to avoid
  undercutting recovery.
• In Japan, down payment on fiscal consolidation
  needed, and credible strategy to restore fiscal
  sustainability also needed.

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42
Address Global Imbalances

• Accelerate labor and product market reforms in
  Europe.
• Aggressive financial and corporate sector reform
  in Japan.
• In Emerging Asia, greater reliance on domestic
  demand, supported by structural reforms and
  additional exchange rate flexibility.
• Restore medium term fiscal balance in the United
  States.

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43
Income Per Capita and Improvements in Institutions
Percent change in real GDP per capita
Sub- Saharan Africa
Middle East and Turkey
Developing Asia
Western Hemisphere
All Countries Average
Institutional Quality
41
Source IMF, World Economic Outlook.
44
Growth and Improvements in Institutions
Average annual growth rate of real GDP per capita
Sub- Saharan Africa
Middle East and Turkey
All Countries Average
Developing Asia
Western Hemisphere
Advanced Economies
Institutional Quality
42
Source IMF, World Economic Outlook.
45
Growth Volatility and Improvements in Institutions
Real GDP per capita growth rate volatility
Sub- Saharan Africa
Middle East and Turkey
All Countries Average
Developing Asia
Western Hemisphere
Advanced Economies
Institutional Quality
43
Source IMF, World Economic Outlook.
46
World Economic Outlook
Global Development Conference
Delhi, India
January 2004
47
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