WORLD ECONOMIC OUTLOOK Presentation Oct...April 2017 Update; and IMF, World Economic Outlook October 2017. 3 World Emerging Market and Developing Economies China India Brazil Russia

WORLD ECONOMIC OUTLOOKOctober 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 out, 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…

WorldAdvancedEconomies 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.

20170.1 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.

20170.1 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 ExportingEconomies

Low IncomeDeveloping 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 fromApr. 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 fromApr. 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

5

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

0

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

0

2

4

6

8

10

AEs EMDEs China Fuel Nonfuelexcl.

China

1995-2005 2006-16 2017-22

-5

-3

-1

1

3

5

7

9

LAC MENAP EMDEAsiaexcl.

China

EMDEEurope

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

o Financial stability risks in Chinao A potential tightening of global financial conditionso Risks of capital flow reversalso Challenges facing euro area bankso Financial deregulation

• Threats to global economic integration

• Persistently low inflation in advanced economies

• Non-economic factors 8

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 on 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

9