INTERNAT|○NALM○ NETARY FUND WORLD ECONOMIC OUTLOOK Growth slowdown Precarious recovery NATI 2019 APR CARY
2019 APR WORLD ECONOMIC OUTLOOK INTERNATIONAL MONETARY FUND Growth Slowdown, Precarious Recovery
International Monet Cover and Design: IMF CSF Creative Solutions Divisio Composition: AGS, An RR Donnelley Company Joint Bank-Fund Library Names: International Monetary Fund. Title: World economic outlook(International Monetary Fund Other titles: WEO Occasional paper(International Monetary Fund) I World economic and Description: Washington, DC International Monetary Fund, 1980- Semiannual I Some issues also have thematic titles. I Began with issue for May 1980. 1 1981-1984: Occasional paper/ International Monetary Fund, 0251-6365 1 1986- World economic and financial rveys,02566877 Identifiers: ISSN 0256-6877(print)I ISSN 1564-5215(online Subjects: LCSH: Economic development--Periodicals. International economic relations- Periodicals. I Debts, External--Periodicals I Balance of payments--Periodicals I International finance---Periodicals I Economic forecasting--Periodicals ISBN978-1-48439-7480( English 978-1-49830610-2( English 978-1-49830-6119 English 978-1498304611-9 English PDF The Word Economic Outlook (WEO)is a survey by the IMF staff published twice a year, in the spring and fall. The WEO is prepared by the IMF staff and has benefited gestions by Executive Directors following their discussion of the report on March 21, 2019. The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMF's Executive Directors Recommended citation: International Monetary Fund. 2018. World Economic Outlook Growth Slowdown, Precarious Recover. Washington, DC, April. Publication orders may be placed online, by fax, or through the mail: International Monetary Fund, Publication Services PO Box 92780, Washington, DC 20090, USA Tel:(202)623-7430Fax:(202)623-7201 E-mail: publications@imfor ww.imfbookstore org www.elibrary.imforg
©2019 International Monetary Fund Cover and Design: IMF CSF Creative Solutions Division Composition: AGS, An RR Donnelley Company Cataloging-in-Publication Data Joint Bank-Fund Library Names: International Monetary Fund. Title: World economic outlook (International Monetary Fund) Other titles: WEO | Occasional paper (International Monetary Fund) | World economic and financial surveys. Description: Washington, DC : International Monetary Fund, 1980- | Semiannual | Some issues also have thematic titles. | Began with issue for May 1980. | 1981-1984: Occasional paper / International Monetary Fund, 0251-6365 | 1986-: World economic and financial surveys, 0256-6877. Identifiers: ISSN 0256-6877 (print) | ISSN 1564-5215 (online) Subjects: LCSH: Economic development—Periodicals. | International economic relations— Periodicals. | Debts, External—Periodicals. | Balance of payments—Periodicals. | International finance—Periodicals. | Economic forecasting—Periodicals. Classification: LCC HC10.W79 HC10.80 ISBN 978-1-48439-748-0 (English Paper) 978-1-49830-610-2 (English ePub) 978-1-49830-611-9 (English Mobi) 978-1-49830-611-9 (English PDF) The World Economic Outlook (WEO) is a survey by the IMF staff published twice a year, in the spring and fall. The WEO is prepared by the IMF staff and has benefited from comments and suggestions by Executive Directors following their discussion of the report on March 21, 2019. The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Directors or their national authorities. Recommended citation: International Monetary Fund. 2018. World Economic Outlook: Growth Slowdown, Precarious Recovery. Washington, DC, April. Publication orders may be placed online, by fax, or through the mail: International Monetary Fund, Publication Services P.O. Box 92780, Washington, DC 20090, USA Tel.: (202) 623-7430 Fax: (202) 623-7201 E-mail: publications@imf.org www.imfbookstore.org www.elibrary.imf.org
CONTENTS Assumptions and Conventions Further Information Preface Foreword Executive Summary Chapter 1. Global Prospects and Policies Recent Developments: Global Expansion Loses Steam The Forecast 7 Risks: skewed to the downside Policy Priorities: Enhance Resilience, Raise Medium-Term Growth Prospects Scenario box 1.a no-Deal brexit Box 1.1. Labor Market Dynamics in Select Advanced Economies Box 1. 2. Global Growth Forecast: Assumptions on Policies, Financial Conditions, and Box 1.3. Worlds Apart? Within-Country Regional Dispari Special Feature: Commodity Market Developments and Forecasts References Special Feature Online Annex Chapter 2. The Rise of Corporate Market Power and its Macroeconomic Effects Introduction The Rise of Corporate Market Power Macroeconomic Implications of Rising Market Power 62 Summary and Policy Implications Box 2.1. The Comovement between Industry Concentration and Corporate Savin Box 2.2. Effects of Mergers and Acquisitions on Market Power References Online Annexes Annex 2. 1. Data Sources and Sample Annex 2. 2. Assessing Corporate Market Power: Methodologies and Further Stylized Facts Annex 23. Assessing the Macroeconomic Implications of Rising Market Power: Methodological Details and results Chapter 3. The Price of Capital Goods: A Driver of Investment under Threat? Introduction The Price of Capital Goods: Key Patterns The Relative Price of Capital Goods: A Simple Framework Drivers of relative Investment Prices
International Monetary Fund | April 2019 iii CONTENTS Assumptions and Conventions ix Further Information x Data xi Preface xii Foreword xiii Executive Summary xv Chapter 1. Global Prospects and Policies 1 Recent Developments: Global Expansion Loses Steam 1 The Forecast 7 Risks: Skewed to the Downside 19 Policy Priorities: Enhance Resilience, Raise Medium-Term Growth Prospects 21 Scenario Box 1. A No-Deal Brexit 28 Box 1.1. Labor Market Dynamics in Select Advanced Economies 32 Box 1.2. Global Growth Forecast: Assumptions on Policies, Financial Conditions, and Commodity Prices 34 Box 1.3. Worlds Apart? Within-Country Regional Disparities 35 Special Feature: Commodity Market Developments and Forecasts 37 References 53 Online Annexes Special Feature Online Annex Chapter 2. The Rise of Corporate Market Power and its Macroeconomic Effects 55 Introduction 55 The Rise of Corporate Market Power 58 Macroeconomic Implications of Rising Market Power 62 Summary and Policy Implications 67 Box 2.1. The Comovement between Industry Concentration and Corporate Saving 70 Box 2.2. Effects of Mergers and Acquisitions on Market Power 72 References 74 Online Annexes Annex 2.1. Data Sources and Sample Annex 2.2. Assessing Corporate Market Power: Methodologies and Further Stylized Facts Annex 2.3. Assessing the Macroeconomic Implications of Rising Market Power: Methodological Details and Results Chapter 3. The Price of Capital Goods: A Driver of Investment under Threat? 77 Introduction 77 The Price of Capital Goods: Key Patterns 80 The Relative Price of Capital Goods: A Simple Framework 83 Drivers of Relative Investment Prices 83
WORLD ECONOMIC OUTLOOK: GROWTH SLOWDOWN, PRECARIOUS RECOVERY Macroeconomic Implications of Shocks to the Price of Capital Goods Summary and Policy Implications Box 3. 1. The Price of Manufactured Low-Carbon Energy Technologies Box 3. 2. Evidence from Big Data: Capital Goods Prices across Countries Box 3.3. On the Underlying Source of Changes in Capital Goods Prices: A Model-Based Analysis Box 3. 4. Capital Goods Tariffs and Investment: Firm-Level Evidence from Colombia 935%80 References Online Annexes Annex 3. 1. Data Sources and Annex 3. 2. Supplementary Stylized Facts Annex 3.3. Using Trade Data to Uncover Differences in Capital Goods Prices across Countries Annex 3.4. Drivers of Relative Investment Prices: Across Countries Annex 3.5. Drivers of Relative Investment Prices: Over Time Annex 3.6. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Country Level Annex 3.7. Empirical Evidence on the Impact of relative Investment Prices on Investment Rates at the Sector Leve Chapter 4. The Drivers of Bilateral Trade and the Spillovers from Tariffs Introduction Stylized Facts 105 Determinants of bilateral trade balances The role of macroeconomic factors A Closer Look at Tariffs and Their Spillovers usion 119 Box 4.1. Gross versus value-Added Trade Box 4.2. Bilateral and Aggregate Trade Balances Box 4.3. Understanding Trade Deficit Adjustments: Does Bilateral Trade Play a Special Role? 123 Box 4.4. The Global Macro and Micro Effects of a US-China Trade Dispute: Insights from Three models Online Annexes Annex 4. 1. Gravity Model, Data, and Estimation Annex 4.2. Derivation of Relation between Bilateral and Aggregate Trade Balances Annex 4.3. Tariff Spillovers: Technical and Data Appendices Statistical Appendi 131 What's new Data and Conventions Classification of countries eneral Features and Composition of Groups in the World Economic Outlook Classification Table A. Classification by Word Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2018 Table B. Advanced Economies by Subgroup Table C. European Union 136 Table D. Emerging Market and Developing Economies by Region and Main Source of Ext International Monetary Fund April 2019
WORLD ECONOMIC OUTLOOK: GROWTH SLOWDOWN, PRECARIOUS RECOVERY iv International Monetary Fund | April 2019 Macroeconomic Implications of Shocks to the Price of Capital Goods 88 Summary and Policy Implications 91 Box 3.1. The Price of Manufactured Low-Carbon Energy Technologies 93 Box 3.2. Evidence from Big Data: Capital Goods Prices across Countries 95 Box 3.3. On the Underlying Source of Changes in Capital Goods Prices: A Model-Based Analysis 96 Box 3.4. Capital Goods Tariffs and Investment: Firm-Level Evidence from Colombia 98 References 100 Online Annexes Annex 3.1. Data Sources and Country Groupings Annex 3.2. Supplementary Stylized Facts Annex 3.3. Using Trade Data to Uncover Differences in Capital Goods Prices across Countries Annex 3.4. Drivers of Relative Investment Prices: Across Countries Annex 3.5. Drivers of Relative Investment Prices: Over Time Annex 3.6. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Country Level Annex 3.7. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Sector Level Chapter 4. The Drivers of Bilateral Trade and the Spillovers from Tariffs 103 Introduction 103 Stylized Facts 105 Determinants of Bilateral Trade Balances 109 The Role of Macroeconomic Factors 113 A Closer Look at Tariffs and Their Spillovers 115 Conclusion 119 Box 4.1. Gross versus Value-Added Trade 120 Box 4.2. Bilateral and Aggregate Trade Balances 122 Box 4.3. Understanding Trade Deficit Adjustments: Does Bilateral Trade Play a Special Role? 123 Box 4.4. The Global Macro and Micro Effects of a US–China Trade Dispute: Insights from Three Models 124 References 128 Online Annexes Annex 4.1. Gravity Model, Data, and Estimation Annex 4.2. Derivation of Relation between Bilateral and Aggregate Trade Balances Annex 4.3. Tariff Spillovers: Technical and Data Appendices Statistical Appendix 131 Assumptions 131 What’s New 132 Data and Conventions 132 Country Notes 133 Classification of Countries 133 General Features and Composition of Groups in the World Economic Outlook Classification 134 Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2018 135 Table B. Advanced Economies by Subgroup 136 Table C. European Union 136 Table D. Emerging Market and Developing Economies by Region and Main Source of Export Earnings 137
CONTENTS Table E Emerging Market and Developing Economies by Region, Net External Position, and Status as Heavily Indebted Poor Countries and Low-Income Developing Countries 138 Table F. Economies with Exceptional Reporting Periods Table G Key Data Documentation 141 Box Al. Economic Policy Assumptions Underlying the Projections for Selected Economies 151 Output(Tables A1l-A4) Financial Policies(Table A8) Foreign Trade(Table A9) Current Account Transactions(Tables AlO-Al2 Balance of Payments and External Financing (Table A13) 178 Flow of Funds(Table A14) Medium-Term Baseline Scenario(Table A15) World Economic Outlook, Selected Topics IMF Executive Board Discussion of the Outlook, April 2019 Table Table 1. 1. Overview of the World Economic Outlook Projections Scenario Table 1. Trade Assumptions in the Baseline, Scenario A, and Scenario B Table 1. SE1. Commodity Price Cycle Descriptive Statistics Table lse. Global Industrial Production nowcast Table 1.SF 3. Global GDP Nowcast 84445 Table 1.SF4. Forecasting Global Industrial Production and GDP Annex Table 1. 1.1. European Economies: Real GDP Consumer Prices, Current Account Balance, and Unemployment Annex Table 1. 1. 2. Asian and Pacific Economies: Real GDP Consumer Prices, Current Accou Balance, and Unemployment Annex Table 1.1.3. Western Hemisphere Economies: Real GDP Consumer Prices, Current Account Annex Table 1. 4. Commonwealth of Independent States Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment Annex Table 1. 1.5. Middle East, North African Economies, Afghanistan, and Pakistan: Real GDP, Consumer Prices, Current Account Balance, and Unemployment Annex Table 1. 1.6. Sub-Saharan African Economies: Real GDP Consumer Prices, Current Account Balance, and Unemployment 5 Annex Table 1.1.7. Summary of World Real per Capita Output Table 3.1. Sectoral Producer Prices Table 3.2. Real Investment Rate and the Relative Price of Machinery and Equipment Table 4.1. Sign and Significance of Tariff Effects on Economic Variables Table 4.4.1. Macro Effects from a 25 Percent Increase in Tariffs Affecting All US-China Trade: Bilateral trade flows with Third Countries Online Tables-Statistical Appendix Table B1. Advanced Economies: Unemployment, Employment, and Real GDP per Capita Table B2. Emerging Market and Developing Economies: Real GDP Table B3. Advanced Economies: Hourly Earnings, Productivity, and Unit Labor Costs in Table B4. Emerging Market and Developing Economies: Consumer Prices
contents International Monetary Fund | April 2019 v Table E. Emerging Market and Developing Economies by Region, Net External Position, and Status as Heavily Indebted Poor Countries and Low-Income Developing Countries 138 Table F. Economies with Exceptional Reporting Periods 140 Table G. Key Data Documentation 141 Box A1. Economic Policy Assumptions Underlying the Projections for Selected Economies 151 List of Tables Output (Tables A1–A4) 156 Inflation (Tables A5–A7) 163 Financial Policies (Table A8) 168 Foreign Trade (Table A9) 169 Current Account Transactions (Tables A10–A12) 171 Balance of Payments and External Financing (Table A13) 178 Flow of Funds (Table A14) 182 Medium-Term Baseline Scenario (Table A15) 185 World Economic Outlook, Selected Topics 187 IMF Executive Board Discussion of the Outlook, April 2019 197 Tables Table 1.1. Overview of the World Economic Outlook Projections 8 Scenario Table 1. Trade Assumptions in the Baseline, Scenario A, and Scenario B 28 Table 1.SF.1. Commodity Price Cycle Descriptive Statistics 41 Table 1.SF.2. Global Industrial Production Nowcast 44 Table 1.SF.3. Global GDP Nowcast 44 Table 1.SF.4. Forecasting Global Industrial Production and GDP 45 Annex Table 1.1.1. European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 46 Annex Table 1.1.2. Asian and Pacific Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 47 Annex Table 1.1.3. Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 48 Annex Table 1.1.4. Commonwealth of Independent States Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 49 Annex Table 1.1.5. Middle East, North African Economies, Afghanistan, and Pakistan: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 50 Annex Table 1.1.6. Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment 51 Annex Table 1.1.7. Summary of World Real per Capita Output 52 Table 3.1. Sectoral Producer Prices 87 Table 3.2. Real Investment Rate and the Relative Price of Machinery and Equipment 89 Table 4.1. Sign and Significance of Tariff Effects on Economic Variables 117 Table 4.4.1. Macro Effects from a 25 Percent Increase in Tariffs Affecting All US–China Trade: Bilateral Trade Flows with Third Countries 126 Online Tables—Statistical Appendix Table B1. Advanced Economies: Unemployment, Employment, and Real GDP per Capita Table B2. Emerging Market and Developing Economies: Real GDP Table B3. Advanced Economies: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing Table B4. Emerging Market and Developing Economies: Consumer Prices