1

CHAPTER

GLOBAL PROSPECTS AND POLICIES

A Rocky Recovery near-term path of the economy. Financial conditions

The global economy is yet again at a highly uncer- have tightened, which is likely to entail lower lending
tain moment, with the cumulative effects of the and activity if they persist (see also Chapter 1 of the
past three years of adverse shocks—most notably, April 2023 Global Financial Stability Report).
the COVID-19 pandemic and Russia’s invasion of Prior to recent financial sector ructions, activity
Ukraine—manifesting in unforeseen ways. Spurred by in the world economy had shown nascent signs of
pent-up demand, lingering supply disruptions, and stabilizing in early 2023 after the adverse shocks of
commodity price spikes, inflation reached multidecade last year (Figure 1.2, panels 1 and 2). Russia’s invasion
highs last year in many economies, leading central of Ukraine and the ongoing war caused severe com-
banks to tighten aggressively to bring it back toward modity and energy price shocks and trade disruptions,
their targets and keep inflation expectations anchored. provoking the beginning of a significant reorientation
Although telegraphed by central banks, the rapid and adjustment across many economies. More conta-
rise in interest rates and anticipated slowing of eco- gious COVID-19 strains emerged and spread widely.
nomic activity to put inflation on a downward path Outbreaks particularly affected activity in economies
have, together with supervisory and regulatory gaps in which populations had lower levels of immunity
and the materialization of bank-specific risks, con- and in which strict lockdowns were implemented,
tributed to stresses in parts of the financial system, such as in China. Although these developments
raising financial stability concerns. Banks’ generally imperiled the recovery, activity in many economies
strong liquidity and capital positions suggested that turned out better than expected in the second half of
they would be able to absorb the effects of monetary 2022, typically reflecting stronger-than-anticipated
policy tightening and adapt smoothly. However, some domestic conditions. Labor markets in advanced
financial institutions with business models that relied economies—most notably, the United States—have
heavily on a continuation of the extremely low nom- stayed very strong, with unemployment rates his-
inal interest rates of the past years have come under torically low. Even so, confidence remains depressed
acute stress, as they have proved either unprepared or across all regions compared with where it was at the
unable to adjust to the fast pace of rate rises. beginning of 2022, before Russia invaded Ukraine and
The unexpected failures of two specialized regional the resurgence of COVID-19 in the second quarter
banks in the United States in mid-March 2023 and (Figure 1.2, panel 3).
the collapse of confidence in Credit Suisse—a globally With the recent increase in financial market vol-
significant bank—have roiled financial markets, with atility and multiple indicators pointing in different
bank depositors and investors reevaluating the safety directions, the fog around the world economic outlook
of their holdings and shifting away from institutions has thickened. Uncertainty is high, and the balance of
and investments perceived as vulnerable. The loss of risks has shifted firmly to the downside so long as the
confidence in Credit Suisse resulted in a brokered financial sector remains unsettled. The major forces
takeover. Broad equity indices across major markets that affected the world in 2022—central banks’ tight
have fallen below their levels prior to the turmoil, monetary stances to allay inflation, limited fiscal buf-
but bank equities have come under extreme pressure fers to absorb shocks amid historically high debt levels,
(Figure 1.1). Despite strong policy actions to sup- commodity price spikes and geoeconomic fragmenta-
port the banking sector and reassure markets, some tion with Russia’s war in Ukraine, and China’s eco-
depositors and investors have become highly sensitive nomic reopening—seem likely to continue into 2023.
to any news, as they struggle to discern the breadth But these forces are now overlaid by and interacting
of vulnerabilities across banks and nonbank finan- with new financial stability concerns. A hard landing—
cial institutions and their implications for the likely particularly for advanced economies—has become

International Monetary Fund | April 2023 1

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.1. Broad Equity and Bank Equity Indices for Figure 1.2. Early 2023 Activity Indicators Strengthened but
Selected Major Economies Confidence Remained Depressed
(Index; January 1, 2023 = 100) (Indices)

130 60 1. Manufacturing Output PMI

(Above 50 expanding; below 50 contracting)
World
120 AEs
55
EMDEs

110
50

100
45
90 US S&P 500 US S&P Banks Select
Euro Area EURO Euro Area EURO 40
STOXX 50 STOXX Banks Sep. Jan. May Sep. Feb.
80 2021 22 22 22 23
Japan TOPIX Japan TOPIX Banks

70 60 2. Services’ Business Activity PMI

Jan. Feb. Mar. (Above 50 expanding; below 50 contracting) World
2023 23 23 AEs
55 EMDEs
Sources: Bloomberg Finance L.P.; and IMF staff calculations.
Note: Latest data available are for March 28, 2023.
50

45
a much larger risk. Policymakers may face difficult
trade-offs to bring sticky inflation down and maintain
40
growth while also preserving financial stability. Sep. Jan. May Sep. Feb.
2021 22 22 22 23

110 3. Consumer Confidence

Inflation Is Declining with Rapid Rate Rises but Remains (September 2021 = 100)
Elevated amid Financial Sector Stress
Global headline inflation has been declining since 100
mid-2022 at a three-month seasonally adjusted annual-
ized rate (Figure 1.3). A fall in fuel and energy com-
World
modity prices, particularly for the United States, euro 90 United States
area, and Latin America, has contributed to this decline Euro area
China
(see Figure 1.SF.1). To dampen demand and reduce
80
underlying (core) inflation, the lion’s share of central Sep. Jan. May Sep. Feb.
banks around the world have been raising interest 2021 22 22 22 23
rates since 2021, both at a faster pace and in a more
Sources: Haver Analytics; IHS Markit; and IMF staff calculations.
synchronous manner than in the previous global mon- Note: For AEs in panel 1, sample comprises AUS, AUT, CAN, CHE, DEU, DNK, ESP,
etary tightening episode just before the global financial FRA, GBR, GRC, ITA, IRL, JPN, NLD, NZL, and USA. Contribution to AE
manufacturing GVA is used as weights. For EMDEs in panel 1, sample comprises
crisis (Figure 1.4). This more restrictive monetary policy ARE, BRA, CHN, CZE, COL, EGY, GHA, IND, IDN, KEN, LBN, MYS, MEX, NGA, PHL,
has started to show up in a slowdown in new home POL, RUS, SAU, THA, TUR, VNM, and ZAF. For AEs in panel 2, sample comprises
AUS, DEU, ESP, FRA, GBR, ITA, IRL, JPN, NZL, and USA. Contribution to AE services
construction in many countries (see Box 1.1). Infla- GVA is used as weights. For EMDEs in panel 2, sample comprises BRA, CHN, CZE,
tion excluding volatile food and energy prices has been COL, EGY, GHA, IND, IDN, KEN, LBN, MYS, MEX, NGA, PHL, POL, RUS, SAU, THA,
declining at a three-month rate—although at a slower TUR, VNM, and ZAF. Economy list uses International Organization for
Standardization (ISO) country codes. AEs = advanced economies;
pace than headline inflation—in most (though not all) EMDEs = emerging market and developing economies; GVA = gross value added.
major economies since mid-2022. PMI = purchasing managers’ index.
Even so, both headline and core inflation rates
remain at about double their pre-2021 levels on
average and far above target among almost all

2 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Figure 1.3. Inflation Turning Down or Plateauing? Figure 1.4. Monetary Policy Tightening Rapidly across Many
(Percent, three-month moving average; SAAR) Economies
(Percentage point change a year by episode, distribution by economy
Euro area United States Median group)

15 1. Headline CPI Inflation 5.5 Interquartile range

Median
10 PPPGDP-weighted average pace
4.5

5
3.5
0
2.5
–5
1.5
–10
Jan. Jul. Jan. Jul. Jan. Jul. Jan. Jul. Jan.
2019 19 20 20 21 21 22 22 23 0.5
0.0
12 2. Core CPI Inflation –0.5
AEs EMDEs AEs EMDEs
10 pre-GFC pre-GFC post-COVID post-COVID
8
6 Sources: Haver Analytics; and IMF staff calculations.
Note: The figure shows the distribution (25th to 75th percentiles, median, and
4 weighted average) of the annualized average percentage point change in policy
2 rates by economy group over two episodes: May 2004 to July 2007 (pre-GFC) and
Jan. 2022 to Jan. 2023 (post-COVID). AEs = advanced economies;
0 EMDEs = emerging market and developing economies; GFC = global financial
–2 crisis; PPPGDP = nominal gross domestic product in purchasing-power-parity
international dollars.
–4
Jan. Jul. Jan. Jul. Jan. Jul. Jan. Jul. Jan.
2019 19 20 20 21 21 22 22 23
of job openings to the number of people unem-
Sources: Haver Analytics; and IMF staff calculations. ployed in the United States and the euro area at the
Note: The figure shows the distribution of headline and core CPI inflation
developments across 18 advanced economies and 17 emerging market and
end of 2022 were at their highest levels in decades
developing economies. Core inflation is the percent change in the consumer price (Figure 1.5). At the same time, the cost pressures
index for goods and services, but excluding food and energy (or the closest from wages have so far remained contained despite
available measure). For the euro area (and other European economies for which
data are available), energy, food, alcohol, and tobacco are excluded. The shaded the tightness of labor markets, with no signs of a
band depicts the 25th to the 75th percentiles of the cross-economy distribution of wage-price spiral dynamic—in which both wages and
the indicated inflation measure. The 35 economies in the sample for the figure
account for about 81 percent of 2022 world output. CPI = consumer price index; prices accelerate in tandem for a sustained period—
SAAR = seasonally adjusted annualized rate. taking hold. In fact, real wage growth in advanced
economies has been lower than it was at the end of
inflation-targeting countries. Moreover, differences 2021, unlike what took place in most of the earlier
across economies reflect their varying exposure to historical episodes with circumstances similar to
underlying shocks. For example, headline inflation those prevailing in 2021, when prices were accelerat-
is running at nearly 7 percent (year over year) in the ing and real wage growth was declining, on average
euro area—with some member states seeing rates (Figure 1.6).
near 15 percent—and above 10 percent in the United Inflation expectations have so far remained
Kingdom, leaving household budgets stretched. anchored, with professional forecasters maintaining
The effects of earlier cost shocks and historically their five-year-ahead projected inflation rates near
tight labor markets are also translating into more their pre-pandemic levels (Figure 1.7). To ensure this
persistent underlying price pressures and stickier remains the case, major central banks have generally
inflation. The labor market tightness in part reflects stayed firm in their communications about the need
a slow post-pandemic recovery in labor supply, with, for a restrictive monetary policy stance, signaling that
in particular, fewer older workers participating in interest rates will stay higher for longer than previously
the labor force (Duval and others 2022). The ratios expected to address sticky inflation.

International Monetary Fund | April 2023 3

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.5. Labor Markets Have Tightened in Selected Figure 1.6. Wage-Price Spiral Risks Appear Contained So Far
Advanced Economies (Distribution of real wage growth across historical episodes similar to
today)
4.0 1. Euro Area
(Quarterly job openings rate, percent) 10
United States, 1979:Q2 = 0 COVID-19 average, 2021:Q4 = 0

Percentage point difference since episode start

3.5 Median 10th–90th percentile range
2010:Q1–20:Q1 8
3.0 2020:Q2–22:Q4
2022:Q4 6
2.5
4
2.0
2
1.5
0
1.0
6 7 8 9 10 11 12 13 –2

9 2. United States –4
(Monthly job openings rate, percent)
–6
Jan. 2010–Mar. 2020 –3 0 3 6 9 11
7
Apr. 2020–Jan. 2023 Quarters since episode start
Jan. 2023
5 Sources: International Labour Organization; Organisation for Economic
Co-operation and Development; US Bureau of Economic Analysis; and IMF staff
calculations.
3 Note: The figure shows the evolution over time of historical episodes similar to
2021 in which three of the preceding four quarters had (1) rising price inflation,
(2) falling real wages, and (3) stable or falling unemployment. Twenty-two such
1 episodes are identified for a sample of 30 advanced economies from 1960 to
2 4 6 8 10 12 14 16 2021. See Chapter 2 of the October 2022 World Economic Outlook for more
details. The COVID-19 line shows the average behavior for economies in the
Sources: Eurostat; US Bureau of Labor Statistics; and IMF staff calculations. sample starting in 2021:Q4.
Note: The figure shows the evolution of the Beveridge curve in the indicated
economy, before and after the start of the COVID-19 pandemic. The relationship
describes how the job openings rate (vacancies as a proportion of employment
plus vacancies, y-axes) varies with the unemployment rate (number of
unemployed as a proportion of the labor force, x-axes). Curves that are farther out
from the origin may indicate greater labor market frictions. Labor markets are tight
when the unemployment rate is low and the job openings rate is high. Figure 1.7. Anchored Inflation Expectations
(Percent, average five-year-ahead CPI inflation expectations)

6 Pre-pandemic (2019) survey

As of early 2023, however, financial markets antici- Latest survey (January 2023)
pated that less policy tightening would be needed than 5

central banks suggested, leading to a divergence that

4
raised the risks for a significant market repricing. This
is most clearly evident in the case of the United States
3
(Figure 1.8, blue versus dashed black lines). A repricing
materialized in early March, with the market-implied 2
policy path shifting up to close much of the gap
with the Federal Reserve’s announced expected policy 1
path as markets responded to news about inflation
(Figure 1.8, green line). But recent financial sector 0
AEs EMMIEs LIDCs
turbulence and the associated tightening of credit
conditions have pushed the market-implied policy Sources: Consensus Economics; and IMF staff calculations.
rate path back down, reopening the gap in the United Note: The figure shows the average five-year-ahead inflation expectation for the
indicated economy group from the indicated survey vintage. The sample covers
States (Figure 1.8, red line). This may reflect in part economies in the indicated economy group for which Consensus Economics
the emergence of liquidity and safety premiums in surveys are available. The pre-pandemic survey is from long-term consensus
forecasts in 2019. AEs = advanced economies; CPI = consumer price index;
response to financial market volatility rather than pure EMMIEs = emerging market and middle-income economies; LIDCs = low-income
policy expectations. Nevertheless, the risks to financial developing countries.

4 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Figure 1.8. Shifting Market-Implied US Policy Rate Figure 1.9. Sovereign Spreads in Emerging Market and
Expectations by Vintage and Repricing Risks Developing Economies Have Narrowed
(Annualized percent) (Basis points, distribution by economy group)

6 2,500 August 2021

August 2022
2,000 March 2023

5
1,500

1,000
4 Jan. 24, 2023
Mar. 8, 2023
Mar. 27, 2023 500
Federal funds target level, end-2023

3 0
Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. EMDE Asia EMDE Europe LAC ME&CA SSA
2023 23 23 23 23 23 23 23 23 23
Sources: Bloomberg Finance L.P.; and IMF staff calculations.
Sources: Federal Reserve Board; and Haver Analytics. Note: The figure shows the distribution (box-whisker plot) by economy group and
Note: The three solid lines plot the market-implied federal funds rate expectations date of sovereign spreads. Line in the middle is the median, upper limit of the box
for the United States over the next months by vintage (indicated in the legend). is the third quartile, and lower limit of the box is the first quartile. Whiskers show
Expectations are calculated based on federal funds futures and forward overnight the maximum and minimum within the boundary of 1.5 times the interquartile
index swaps. The dashed, black line is the median federal funds rate target level range from upper and lower quartiles, respectively. A country’s sovereign spread is
for end-2023, taken from the Federal Reserve’s Mar. 22, 2023 Summary of the par-value weighted average of all a country’s bonds with more than one year
Economic Projections. US = United States. remaining maturity. Y-axis is cut off at 2,500 basis points. The box-whisker plots
for March 2023 are computed with daily data until March 17, 2023.
EMDE = emerging market and developing economy; LAC = Latin America and the
Caribbean; ME&CA = Middle East and Central Asia; SSA = sub-Saharan Africa.
markets from sudden repricing due to policy rate
expectation changes—also highlighted in the January
2023 World Economic Outlook (WEO) Update—remain but there is a tangible risk of a surprise increase in
highly relevant (see also Chapter 1 of the April 2023 coming months should global financial conditions
Global Financial Stability Report). tighten further. The share of economies at high risk of
debt distress remains high in historical context, leaving
many of them susceptible to unfavorable fiscal shocks
Indebtedness Staying High in the absence of policy actions (see Chapter 3).
As a result of the pandemic and economic upheaval
over the past three years, private and public debt have
reached levels not seen in decades in most economies Commodity Shocks Unwinding Even as Russia’s War in
and remain high, despite their fall in 2021–22 on the Ukraine Persists
back of the economic rebound from COVID-19 and The shock of Russia’s invasion of Ukraine in
the rise in inflation (see Chapter 1 of the April 2023 February 2022 continues to reverberate around the
Fiscal Monitor and Chapter 3 of this report). Monetary world. Economic activity in Europe in 2022 was
policy tightening—particularly by major advanced more resilient than expected given the large negative
economies—has led to sharp increases in borrowing terms-of-trade fallout from the war and associated
costs, raising concerns about the sustainability of some economic sanctions. Large budgetary support mea-
economies’ debts. Among the group of emerging mar- sures for households and firms—on the order of
ket and developing economies, the average level and about 1.3 percent of GDP (net budgetary cost) in
distribution of sovereign spreads increased markedly the case of the European Union—were deployed to
in the summer of 2022, before coming down in early help them weather the energy crisis. The stinging
2023 (Figure 1.9). The effects of the latest financial hike in prices galvanized a reorientation of gas flows,
market turmoil on emerging market and developing with marked increases in non-Russian pipeline and
economy sovereign spreads have been limited so far, liquefied natural gas deliveries to Europe, alongside

International Monetary Fund | April 2023 5

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.10. China’s Reopening and Recovery to declines in mobility and economic activity in the
(Percent deviation from trend; right scale is international flights a day) fourth quarter of 2022 due to the disease’s direct
5 300
effects on human health and heightened fears of con-
tagion (Figure 1.10). Supply disruptions also returned
0 250 to the fore, even if temporarily, leading to a rise in
supplier delivery times. The surge in infections com-
–5 200 pounded the headwinds from property market stresses
in China. Declining property sales and real estate
–10 150 investment posed a drag on economic activity last year.
There remains a large backlog of presold unfinished
–15 100 housing to be delivered, generating downward pressure
Mobility index on house prices, which price floors have so far limited
–20 Retail sales volume 50
in some regions.
Planned international flights (right scale)
The Chinese authorities have responded with a
–25 0
Jan. Apr. Jul. Oct. Feb. variety of measures, including additional monetary
2022 22 22 22 23
easing, tax relief for firms, new vaccination targets for
Sources: National Bureau of Statistics of China; Wind Data Service; and IMF staff the elderly, and measures to encourage the comple-
calculations. tion and delivery of unfinished real estate projects. As
Note: The blue line shows the percent deviation of the seven-day moving average
of national average mobility index from its average behavior over the lunar years
COVID-19 waves subsided in January of this year,
2017–19. The red line shows the percent deviation of the national retail sales mobility normalized, and high-frequency economic
volume index from its 2017–19 linear trend. The gold line shows the seven-day indicators—such as retail sales and travel bookings—
moving average of planned international flights into and out of China by day. Data
for all series are as of February 16, 2023. started picking up (Figure 1.10). With China absorb-
ing about a quarter of exports from Asia and between
5 and 10 percent from other geographic regions, the
demand compression in the context of a mild winter reopening and growth of its economy will likely gener-
and adjustments by industries to substitute for gas and ate positive spillovers (Figure 1.11; see also Srinivasan,
to change production processes where feasible. Oil Helbling, and Peiris 2023), with even greater spillovers
and gas prices also began trending downward from for countries with stronger trade links and reliance on
their peaks in mid-2022. Together, these actions and Chinese tourism.
channels have dampened the negative effects of the
energy crisis in Europe, with better-than-expected
levels of consumption and investment in the third A Challenging Outlook
quarter of 2022. A return of the world economy to the pace of
Beyond Europe, a broad decline in food and energy economic growth that prevailed before the bevy of
prices in the fourth quarter of 2022—although prices shocks in 2022 and the recent financial sector turmoil
are still high—has brought some relief to consumers is increasingly elusive. More than a year after Russia’s
and commodity importers, contributing to the fall invasion of Ukraine and the outbreak of more conta-
in headline inflation. Sustaining lower prices this gious COVID-19 variants, many economies are still
year will depend on the absence of further negative absorbing the shocks. The recent tightening in global
supply shocks. financial conditions is also hampering the recovery.
As a result, many economies are likely to experi-
ence slower growth in incomes in 2023, amid rising
China’s Economic Reopening joblessness. Moreover, even with central banks having
The evolution of especially contagious SARS-CoV-2 driven up interest rates to reduce inflation, the road
variants kindled a surge in COVID-19 around the back to price stability could be long. Over the medium
world in 2022. Eventually, these variants made their term, the prospects for growth now seem dimmer
way to China, which had hitherto escaped much of than in decades.
the disease’s spread, partly through strict contain- This section first describes the baseline projec-
ment measures. As the country’s COVID restrictions tions for the global economy and the assumptions
were ultimately lifted, multiple large outbreaks led on which they are predicated. The baseline scenario

6 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Figure 1.11. Shares of Economies’ Total Exports Directed to Figure 1.12. Assumptions on Monetary and Fiscal Policy
China in 2021 Stances
(Percent of total exports, distribution by economy group)
8 1. Policy Rates in Selected AEs
40 Interquartile range (Percent, annualized; dashed lines are October 2022 WEO vintage)
Median 6
35 Mean United States
4 Euro area
30 Japan
25 2

20
0
15
–2
10 2022:Q1 23:Q1 24:Q1 25:Q1 26:Q1 27:Q1

5 6 2. Fiscal Stance, 2021–24

(Change in structural primary fiscal balance, percent of
4
0 potential GDP)
East Asia Sub- Latin USA and Europe & South Asia Middle 2
& Pacific Saharan America & Canada Central East &
Africa Caribbean Asia North 0
Africa –2
–4
Sources: United Nations Comtrade Database; World Bank; and IMF staff October 2022 WEO
calculations. –6
January 2022 WEO Update
Note: The figure shows the distribution (box-whisker plot) of total export shares to –8 Cyclically adjusted primary balance (percent of GDP)
China in 2021 by geographic region. Line and diamond inside the box denote
median and simple mean, respectively; upper limit of the box is the third quartile, –10
lower limit of the box is the first quartile. Whiskers show the maximum and 2021 22 23 24 2021 22 23 24
minimum within the boundary of 1.5 times the interquartile range from upper and AEs EMDEs
lower quartiles, respectively. Geographic groupings come from the World Bank.
Source: IMF staff calculations.
Note: In panel 2, cyclically adjusted primary balance is the general government
balance (excluding interest income or expenses) adjusted for the economic cycle.
Structural primary fiscal balance is the cyclical adjusted primary balance corrected
assumes that the recent financial sector turmoil is for a broader range of noncyclical factors, such as asset and commodity price
contained and does not generate material disrup- changes. AEs = advanced economies; EMDEs = emerging market and developing
economies; WEO = World Economic Outlook.
tions to global economic activity with widespread
recession (a broad-based contraction in economic
activity that usually lasts more than a few months).
Fuel and nonfuel commodity prices are generally At the same time, in consideration of the elevated
expected to decline in 2023, amid slowing global risks and uncertainties stemming from the recent
demand (see the Commodity Special Feature). Crude global financial market turmoil, this section also places
oil prices are projected to fall by about 24 percent strong emphasis on a plausible alternative scenario that
in 2023 and a further 5.8 percent in 2024, while illustrates the impact of downside risks materializing.
nonfuel commodity prices are expected to remain
broadly unchanged. The forecasts are also based on
Feeble and Uneven Growth
the assumption that global interest rates will stay
elevated for longer than expected at the time the Baseline Scenario
October 2022 WEO was published, as central banks The baseline forecast is for global output growth,
remain focused on returning inflation to targets estimated at 3.4 percent in 2022, to fall to 2.8 percent
while deploying tools to maintain financial stability in 2023, 0.1 percentage point lower than predicted
as needed (Figure 1.12). Governments are on average in the January 2023 WEO Update (Table 1.1), before
expected to gradually withdraw fiscal policy support, rising to 3.0 percent in 2024. This forecast for the
including, as commodity prices decline, by scaling coming years is well below what was expected before
back packages designed to shield households and the onset of the adverse shocks since early 2022.
firms from the effects of the fuel and energy price Compared with the January 2022 WEO Update
spikes in 2022. forecast, global growth in 2023 is 1.0 percentage point

International Monetary Fund | April 2023 7

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.13. Growth Outlook: Feeble and Uneven Figure 1.14. Projected Unemployment Rate Rises in
(Percent; dashed lines are from January 2022 WEO Update vintage) Advanced Economies
(Percentage point difference from 2022 level)
7 World
Advanced economies 2.5 Advanced Economies United Kingdom
6 Emerging market and developing economies United States Japan
Euro area Canada
2.0
5

4 1.5

3 1.0

2
0.5
1
0.0
0
2021 22 23 24 25
–0.5
2022 23 24 25 26 27 28
Source: IMF staff calculations.
Note: The figure shows the projected evolution of real GDP growth for the Source: IMF staff calculations.
indicated economy groups. WEO = World Economic Outlook.

lower, and this growth gap is expected to close only middle-income economies (3.2 percent) and so below
gradually in the coming two years (Figure 1.13). The the path needed for standards of living to converge
baseline prognosis is also weak by historical standards. with those in middle-income economies.
During the two pre-pandemic decades (2000–09 and
2010–19), world growth averaged 3.9 and 3.7 percent Plausible Alternative Scenario
a year, respectively. Recent events have revealed how greater-than-
For advanced economies, growth is projected to expected fragilities in segments of the banking systems
decline by half in 2023 to 1.3 percent, before rising to of the United States and of other regions can cause
1.4 percent in 2024. Although the forecast for 2023 financial sector turmoil. The fragilities come from a
is modestly higher (by 0.1 percentage point) than in combination of unrealized losses, which reflect the
the January 2023 WEO Update, it is well below the speed and magnitude of monetary policy tightening,
2.6 percent forecast of January 2022. About 90 percent and reliance on uninsured or wholesale funding. Fur-
of advanced economies are projected to see a decline in ther shocks stemming from such fragilities are plausi-
growth in 2023. With the sharp slowdown, advanced ble, with potentially significant impact on the global
economies are expected to see higher unemployment: economy. This subsection uses the IMF’s Group of
a rise of 0.5 percentage point on average from 2022 to Twenty (G20) Model to analyze the economic conse-
2024 (Figure 1.14). quences of a scenario in which pertinent and plausible
For emerging market and developing economies, risks materialize.
economic prospects are on average stronger than The plausible alternative scenario assumes a mod-
for advanced economies, but these prospects vary erate additional tightening in credit conditions. The
more widely across regions. On average, growth tightening stems from further stress in individual banks
is expected to be 3.9 percent in 2023 and to rise that are vulnerable on two metrics: share of nonretail
to 4.2 percent in 2024. The forecast for 2023 is or uninsured depositors and unrealized losses. Funding
modestly lower (by 0.1 percentage point) than in conditions for all banks tighten, due to greater con-
the January 2023 WEO Update and significantly cern for bank solvency and potential exposures across
below the 4.7 percent forecast of January 2022. In the financial system. Stricter supervision also adds to
low-income developing countries, GDP is expected to more cautious bank behavior. The overall impact is a
grow by 5.1 percent, on average, over 2023–24, but decrease in the supply of credit and higher spreads for
projected per capita income growth averages only nonfinancial firms and for households. It is assumed
2.8 percent during 2023–24, below the average for that the stock of real bank lending in the United States

8 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Table 1.1. Overview of the World Economic Outlook Projections

(Percent change, unless noted otherwise)
Difference from January Difference from October
Projections 2023 WEO Update1 2022 WEO1
2022 2023 2024 2023 2024 2023 2024
World Output 3.4 2.8 3.0 –0.1 –0.1 0.1 –0.2
Advanced Economies 2.7 1.3 1.4 0.1 0.0 0.2 –0.2
United States 2.1 1.6 1.1 0.2 0.1 0.6 –0.1
Euro Area 3.5 0.8 1.4 0.1 –0.2 0.3 –0.4
Germany 1.8 –0.1 1.1 –0.2 –0.3 0.2 –0.4
France 2.6 0.7 1.3 0.0 –0.3 0.0 –0.3
Italy 3.7 0.7 0.8 0.1 –0.1 0.9 –0.5
Spain 5.5 1.5 2.0 0.4 –0.4 0.3 –0.6
Japan 1.1 1.3 1.0 –0.5 0.1 –0.3 –0.3
United Kingdom 4.0 –0.3 1.0 0.3 0.1 –0.6 0.4
Canada 3.4 1.5 1.5 0.0 0.0 0.0 –0.1
Other Advanced Economies2 2.6 1.8 2.2 –0.2 –0.2 –0.5 –0.4
Emerging Market and Developing Economies 4.0 3.9 4.2 –0.1 0.0 0.2 –0.1
Emerging and Developing Asia 4.4 5.3 5.1 0.0 –0.1 0.4 –0.1
China 3.0 5.2 4.5 0.0 0.0 0.8 0.0
India3 6.8 5.9 6.3 –0.2 –0.5 –0.2 –0.5
Emerging and Developing Europe 0.8 1.2 2.5 –0.3 –0.1 0.6 0.0
Russia –2.1 0.7 1.3 0.4 –0.8 3.0 –0.2
Latin America and the Caribbean 4.0 1.6 2.2 –0.2 0.1 –0.1 –0.2
Brazil 2.9 0.9 1.5 –0.3 0.0 –0.1 –0.4
Mexico 3.1 1.8 1.6 0.1 0.0 0.6 –0.2
Middle East and Central Asia 5.3 2.9 3.5 –0.3 –0.2 –0.7 0.0
Saudi Arabia 8.7 3.1 3.1 0.5 –0.3 –0.6 0.2
Sub-Saharan Africa 3.9 3.6 4.2 –0.2 0.1 –0.1 0.1
Nigeria 3.3 3.2 3.0 0.0 0.1 0.2 0.1
South Africa 2.0 0.1 1.8 –1.1 0.5 –1.0 0.5
Memorandum
World Growth Based on Market Exchange Rates 3.0 2.4 2.4 0.0 –0.1 0.3 –0.2
European Union 3.7 0.7 1.6 0.0 –0.2 0.0 –0.5
ASEAN-54 5.5 4.5 4.6 0.2 –0.1 0.0 –0.3
Middle East and North Africa 5.3 3.1 3.4 –0.1 –0.1 –0.5 0.1
Emerging Market and Middle-Income Economies 3.9 3.9 4.0 –0.1 –0.1 0.3 –0.1
Low-Income Developing Countries 5.0 4.7 5.4 –0.2 –0.2 –0.2 –0.1
World Trade Volume (goods and services) 5.1 2.4 3.5 0.0 0.1 –0.1 –0.2
Imports
Advanced Economies 6.6 1.8 2.7 –0.1 0.2 –0.2 –0.1
Emerging Market and Developing Economies 3.5 3.3 5.1 0.2 0.7 0.3 0.4
Exports
Advanced Economies 5.2 3.0 3.1 0.4 0.2 0.5 –0.3
Emerging Market and Developing Economies 4.1 1.6 4.3 –0.6 –0.4 –1.3 –0.2
Commodity Prices (US dollars)
Oil5 39.2 –24.1 –5.8 –7.9 1.3 –11.2 0.4
Nonfuel (average based on world commodity import
weights) 7.4 –2.8 –1.0 3.5 –0.6 3.4 –0.3
World Consumer Prices6 8.7 7.0 4.9 0.4 0.6 0.5 0.8
Advanced Economies7 7.3 4.7 2.6 0.1 0.0 0.3 0.2
Emerging Market and Developing Economies6 9.8 8.6 6.5 0.5 1.0 0.5 1.2
Source: IMF staff estimates.
Note: Real effective exchange rates are assumed to remain constant at the levels prevailing during February 15, 2023–March 15, 2023. Economies are listed
on the basis of economic size. The aggregated quarterly data are seasonally adjusted. WEO = World Economic Outlook.
1Difference based on rounded figures for the current, January 2023 WEO Update, and October 2022 WEO forecasts.
2Excludes the Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries.
3For India, data and forecasts are presented on a fiscal year basis, and GDP from 2011 onward is based on GDP at market prices with fiscal year 2011/12 as a

base year. Quarterly data are non-seasonally adjusted and differences from the January 2023 WEO Update and October 2022 WEO are not available.
4Indonesia, Malaysia, Philippines, Singapore, Thailand.

International Monetary Fund | April 2023 9

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Table 1.1. Overview of the World Economic Outlook Projections (continued)

(Percent change, unless noted otherwise)
Q4 over Q48
Difference from January Difference from October
Projections 2023 WEO Update1 2022 WEO1
2022 2023 2024 2023 2024 2023 2024
World Output 2.0 2.9 3.1 –0.3 0.1 0.2 ...
Advanced Economies 1.2 1.1 1.6 0.0 0.0 –0.2 ...
United States 0.9 1.0 1.3 0.0 0.0 0.0 ...
Euro Area 1.9 0.7 1.8 0.0 –0.3 –0.7 ...
Germany 0.9 0.2 1.8 0.2 –0.5 –0.3 ...
France 0.5 0.8 1.4 –0.1 –0.4 –0.1 ...
Italy 1.4 0.4 1.1 0.3 0.1 –0.1 ...
Spain 2.7 1.3 2.1 0.0 –0.7 –0.7 ...
Japan 0.6 1.3 1.0 0.3 0.0 0.4 ...
United Kingdom 0.4 –0.4 2.0 0.1 0.2 –0.6 ...
Canada 2.1 1.4 1.8 0.2 –0.1 0.1 ...
Other Advanced Economies2 1.0 1.9 1.8 –0.2 –0.4 –0.4 ...
Emerging Market and Developing Economies 2.8 4.5 4.4 –0.5 0.3 0.6 ...
Emerging and Developing Asia 3.8 5.8 5.3 –0.4 0.4 1.6 ...
China 3.0 5.8 4.7 –0.1 0.6 3.2 ...
India3 4.5 6.2 6.4 ... ... ... ...
Emerging and Developing Europe –1.7 2.4 2.5 –1.1 –0.3 –2.1 ...
Russia –4.0 0.9 1.4 –0.1 –0.6 –0.1 ...
Latin America and the Caribbean 2.5 1.2 2.1 –0.7 0.2 –1.0 ...
Brazil 2.3 0.9 2.0 0.1 –0.2 0.2 ...
Mexico 3.7 1.2 1.9 0.1 0.0 0.0 ...
Middle East and Central Asia ... ... ... ... ... ... ...
Saudi Arabia 5.5 3.1 3.2 0.4 –0.3 –0.6 ...
Sub-Saharan Africa ... ... ... ... ... ... ...
Nigeria 3.1 3.0 3.7 –0.1 0.8 0.7 ...
South Africa 1.3 1.1 1.7 0.6 –0.1 0.1 ...
Memorandum
World Growth Based on Market Exchange Rates 1.7 2.4 2.6 –0.1 0.1 0.3 ...
European Union 1.8 1.0 1.9 –0.2 –0.1 –1.0 ...
ASEAN-54 4.7 4.3 5.3 –1.4 1.3 –1.3 ...
Middle East and North Africa ... ... ... ... ... ... ...
Emerging Market and Middle-Income Economies 2.7 4.5 4.3 –0.5 0.2 0.6 ...
Low-Income Developing Countries ... ... ... ... ... ... ...
Commodity Prices (US dollars)
Oil5 8.8 –17.3 –3.4 –7.5 2.5 –9.0 ...
Nonfuel (average based on world commodity import
weights) –0.7 3.5 –0.5 2.1 –0.3 3.8 ...
World Consumer Prices6 9.2 5.6 3.7 0.6 0.2 0.9 ...
Advanced Economies 7.7 3.2 2.2 0.1 –0.1 0.1 ...
Emerging Market and Developing Economies6 10.5 7.6 5.0 1.0 0.5 1.5 ...
Source: IMF staff estimates.
Note: Real effective exchange rates are assumed to remain constant at the levels prevailing during February 15, 2023–March 15, 2023. Economies are listed
on the basis of economic size. The aggregated quarterly data are seasonally adjusted. WEO = World Economic Outlook.
5Simple average of prices of UK Brent, Dubai Fateh, and West Texas Intermediate crude oil. The average price of oil in US dollars a barrel was $96.36 in

2022; the assumed price, based on futures markets, is $73.13 in 2023 and $68.90 in 2024.
6Excludes Venezuela. See the country-specific note for Venezuela in the “Country Notes” section of the Statistical Appendix.
7The inflation rates for 2023 and 2024, respectively, are as follows: 5.3 percent and 2.9 percent for the euro area, 2.7 percent and 2.2 percent for Japan, and

4.5 percent and 2.3 percent for the United States.

8For world output, the quarterly estimates and projections account for approximately 90 percent of annual world output at purchasing-power-parity weights.

For Emerging Market and Developing Economies, the quarterly estimates and projections account for approximately 85 percent of annual emerging market
and developing economies’ output at purchasing-power-parity weights.

10 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Table 1.2. Overview of the World Economic Outlook Projections at Market Exchange Rate Weights
(Percent change)
Difference from January Difference from October
Projections 2023 WEO Update1 2022 WEO1
2022 2023 2024 2023 2024 2023 2024
World Output 3.0 2.4 2.4 0.0 –0.1 0.3 –0.2
Advanced Economies 2.6 1.2 1.3 0.0 –0.1 0.1 –0.2
Emerging Market and Developing Economies 3.6 4.0 4.0 –0.1 –0.1 0.4 0.0
Emerging and Developing Asia 3.9 5.2 4.8 0.0 –0.1 0.5 –0.1
Emerging and Developing Europe 0.3 1.0 2.3 –0.2 –0.2 0.8 –0.1
Latin America and the Caribbean 3.7 1.5 2.1 –0.2 0.1 –0.1 –0.2
Middle East and Central Asia 5.6 3.0 3.5 –0.2 0.0 –0.3 0.5
Sub-Saharan Africa 3.8 3.4 4.0 –0.3 0.1 –0.2 0.2
Memorandum
European Union 3.5 0.7 1.5 0.0 –0.2 0.1 –0.5
Middle East and North Africa 5.8 3.1 3.3 –0.1 0.0 –0.1 0.4
Emerging Market and Middle-Income Economies 3.5 3.9 3.9 –0.1 –0.1 0.4 –0.1
Low-Income Developing Countries 4.9 4.7 5.4 –0.1 –0.1 –0.1 0.0
Source: IMF staff estimates.
Note: The aggregate growth rates are calculated as a weighted average, in which a moving average of nominal GDP in US dollars for the preceding three years
is used as the weight. WEO = World Economic Outlook.
1Difference based on rounded figures for the current, January 2023 WEO Update, and October 2022 WEO forecasts.

declines by 2 percent in 2023, relative to the baseline–– crisis in 2020 and the global financial crisis in 2009.
about one-tenth of the decrease experienced during Real GDP is 0.2 percent lower than the baseline in
2008–09 and equivalent to a 150 basis point increase 2024 and gradually recovers thereafter. The effects are
in corporate spreads, on average, in 2023. The tighten- generally larger in advanced economies than in emerging
ing gradually dissipates after 2023. A similar decrease market economies, with growth falling below 1 percent
in credit and a similar increase in spreads occur in the compared with 1.3 percent in the baseline forecast.
euro area and in Japan. Other countries also experience The United States, the euro area, and Japan have the
a tightening in financial conditions, with the magnitude largest declines in growth compared with the baseline:
related to how closely correlated their respective finan- about 0.4 percentage point lower in 2023. Countries
cial conditions are with conditions in the United States. with greater trade exposures to the United States (such as
Countries are also affected through trade spillovers and Mexico and Canada) experience a sharper impact; those
the impact on global commodity prices. with smaller exposures (such as China) are less affected.
The scenario assumes that monetary policy responds to
the resulting decline in economic activity and inflation-
ary pressures, with policy rates lower than in the baseline. Inflation: Still High but Falling
Regarding fiscal policy, it is assumed that automatic sta- The baseline forecast is for global headline (consumer
bilizers operate but that there is no additional legislated price index) inflation to decline from 8.7 percent in
stimulus. Balance sheet policies and other interventions 2022 to 7.0 percent in 2023. This forecast is higher (by
by central banks and regulators, to preserve the stability 0.4 percentage point) than that of January 2023 but
of the financial system, are not explicitly modeled but are nearly double the January 2022 forecast (Figure 1.16).
implicitly assumed to help avert a larger crisis. Disinflation is expected in all major country groups, with
Figure 1.15 summarizes the global effects of this about 76 percent of economies expected to experience
plausible alternative scenario on the level of real GDP in lower headline inflation in 2023. Initial differences in
2023 and 2024. Results are presented as percent devia- the level of inflation between advanced economies and
tions from the baseline forecast. The moderate tightening emerging market and developing economies are, however,
in financial conditions leads to a decrease in the level expected to persist. The projected disinflation reflects
of world output by 0.3 percent in 2023, implying real declining fuel and nonfuel commodity prices as well as
growth of about 2.5 percent instead of 2.8 percent in the the expected cooling effects of monetary tightening on
baseline forecast––the lowest outcome since the global economic activity. At the same time, inflation excluding
slowdown of 2001, excluding the initial COVID-19 that for food and energy is expected to decline globally

International Monetary Fund | April 2023 11

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.15. Real GDP Level in Plausible Alternative Scenario Figure 1.16. Inflation Coming Down over Time
in 2023–24 (Percent; dashed lines from January 2022 WEO Update vintage)
(Percent deviation from baseline)
World
0.1 1. Year 2023 Advanced economies
Emerging market and developing economies
0.0
12 1. Headline Inflation
–0.1 10

–0.2 8

6
–0.3
4
–0.4
United AEs ex. US EMDEs ex. China World 2
States China
0
0.1 2. Year 2024 2021 22 23 24 25

0.0 10 2. Core Inflation

–0.1 8

–0.2 6

–0.3 4

–0.4 2
United AEs ex. US EMDEs ex. China World
States China 0
2021 22 23 24 25
Source: IMF staff calculations.
Note: AEs ex. US = advanced economies excluding United States; EMDEs ex. Source: IMF staff calculations.
China = emerging market and developing economies excluding China. Note: Inflation is based on the consumer price index. Core inflation excludes
volatile food and energy prices. Emerging market and developing economies’ core
inflation from January 2022 WEO Update is estimated using available data.
much more gradually in 2023: by only 0.2 percentage WEO = World Economic Outlook.
point, to 6.2 percent, reflecting the aforementioned stick-
iness of underlying inflation. This forecast is higher (by
0.5 percentage point) than that of January 2023. In the aforementioned plausible alternative scenario,
Overall, returning inflation to target is expected to with additional tightening in credit conditions, global
take until 2025 in most cases. A comparison of official headline inflation decreases by about 0.2 percentage
inflation targets with the latest forecasts for 72 infla- point more in 2023, partly on the back of lower global
tion-targeting economies (34 advanced economies and commodity prices. Oil prices decline by 3 percent
38 major emerging market and developing economies) more, on average, in 2023 than in the baseline.
suggests that annual average inflation will exceed tar- There is a modest additional fall in inflation excluding
gets (or the midpoints of target ranges) in 97 percent food and energy.
of cases in 2023 (Figure 1.17). The median deviation
from target is expected to be 3.3 percentage points.
In 2024, inflation is still expected to exceed targets in The Medium Term: Not What It Used to Be
91 percent of cases, with an expected median deviation The world economy is not currently expected to
of about 1 percentage point. Among countries with an return over the medium term to the rates of growth
inflation target range, however, inflation is expected to that prevailed before the pandemic. Looking out to
be in the target range in about 50 percent of cases in 2028, global growth is forecast at 3.0 percent––the
2024. By 2025, inflation is expected to be close to tar- lowest medium-term growth forecast published in all
gets (or the midpoints of target ranges), with a median WEO reports since 1990 (Figure 1.18). Forecasts of
deviation of only 0.2 percentage point. medium-term growth peaked at about 4.9 percent

12 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Figure 1.17. Inflation Slowly Converging to Target Figure 1.18. Five-Year-Ahead Real Growth Projections by
(Percentage point, distribution of gap from inflation target) World Economic Outlook Forecast Vintage
(Percent; unless noted otherwise)
12
Advanced economies 7 1. Economy Contributions to Five-Year-Ahead World Growth
Emerging market (PPP-weighted contributions; percentage points)
9 and developing economies 6
US China Euro area India Other World
5
6 4
3
3 2
1
0
0
2010 11 12 13 14 15 16 17 18 19 20 21 22 23
–3
2022 23 24 25 26 10 2. Selected Advanced Economies
United United
Germany Japan Korea
Sources: Central banks’ websites; Haver Analytics; and IMF staff calculations. 8 States Kingdom
Note: The figure shows the distribution (box-whisker plot) for the indicated
economy group by year. Line in the middle is the median, upper limit of the box is 6
the third quartile, and lower limit of the box is the first quartile. Whiskers show the
maximum and minimum within the boundary of 1.5 times the interquartile range
from upper and lower quartiles respectively. The y-axis is cut at 12 percentage 4
points.
2

in 2008. The decline in medium-term global growth 0

1990 95 2000 05 10 15 20 23
prospects reflects the progress that several economies,
such as China and Korea, have made in increasing 14 3. Selected Emerging Market Economies
their living standards and the associated decline in the China Brazil India Russia
12
rate of change (see Chapter 2 and Kremer, Willis, and
10
You 2022). It also reflects slower global labor force
growth––United Nations medium-term population 8
growth projections have declined since 2010 by about 6
one-quarter of a percentage point. Geoeconomic 4
fragmentation, including developments stemming from 2
Brexit, ongoing US-China trade disputes, and Russia’s
0
invasion of Ukraine (Aiyar and others 2023), has also 1990 95 2000 05 10 15 20 23
contributed to the weaker outlook, as has a slower
expected pace of supply-enhancing reforms. Dimmer Source: IMF staff calculations.
Note: In panel 1, US = United States and Other = all other economies excluding
prospects for growth in China and other large emerging China, India, United States, and the euro area. Spring World Economic Outlook
market economies will weigh on the prospects of trading forecast vintages in the indicated years are used across all figures.
PPP = purchasing power parity.
partners through the world’s highly integrated supply
chains. It will also complicate the efforts of middle- and
low-income countries seeking to converge to higher are consistent with economic fluctuations affecting
standards of living. investments in capital, training, and research and
Moreover, with global growth over the coming years development.
not expected to overshoot pre-2022 shock forecasts,
the level of global output is unlikely to recover to its
previous path. The shortfall of global GDP in 2022 Global Trade Slowdown, with Narrowing Balances
compared with January 2022 WEO Update forecasts is Growth in the volume of world trade is expected
about 1 percent. By 2026, the output loss (cumulative to decline from 5.1 percent in 2022 to 2.4 percent in
growth gap) is projected to widen to 2.7 percent: more 2023, echoing the slowdown in global demand after
than double the initial impact. Persistent effects two years of rapid catch-up growth from the pandemic

International Monetary Fund | April 2023 13

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.19. Current Account and International Investment increases triggered by the war in Ukraine, which
Positions caused a widening in oil and other commodity trade
(Percent of global GDP) balances. Over the medium term, global balances
European creditors United States are expected to narrow gradually as commodity
China Euro area debtors prices decline.
Japan Others Creditor and debtor stock positions remained histor-
Oil exporters Discrepancy
ically elevated in 2022, reflecting the offsetting effects
3 1. Global Current Account Balance of widening current account balances and the dollar’s
strength, which caused valuation gains in countries
2
with long positions in foreign currency. Over the
1 medium term, elevated positions are expected to mod-
0 erate only slightly as current account balances narrow.

–1

–2 Downside Risks Dominate

–3
Risks to the outlook are squarely to the downside.
2005 07 09 11 13 15 17 19 21 23 25 27 28 Much uncertainty clouds the short- and medium-term
outlook as the global economy adjusts to the shocks
30 2. Global International Investment Position
of 2020–22 and the recent financial sector turmoil.
20 Recession concerns have gained prominence, while
10 worries about stubbornly high inflation persist.
There is a significant risk that the recent banking
0
system turbulence will result in a sharper and more
–10 persistent tightening of global financial conditions than
anticipated in the baseline and plausible alternative
–20
scenarios, which would further deteriorate business
–30 and consumer confidence. Additional downside risks
2005 07 09 11 13 15 17 19 21 23 25 27 28
include sharper contractionary effects than expected
Source: IMF staff calculations. from the synchronous central bank rate hikes amid
Note: European creditors = Austria, Belgium, Denmark, Finland, Germany,
Luxembourg, The Netherlands, Norway, Sweden, Switzerland; euro area debtors = historically high private and public debt levels (see
Cyprus, Greece, Ireland, Italy, Portugal, Slovenia, Spain; oil exporters = Algeria, Box 1.2). The combination of higher borrowing costs
Azerbaijan, Iran, Kazakhstan, Kuwait, Nigeria, Oman, Qatar, Russia, Saudi Arabia,
United Arab Emirates, Venezuela.
and lower growth could cause systemic debt distress
in emerging market and developing economies. In
addition, inflation may prove stickier than expected,
recession and the shift in the composition of spend- prompting further monetary tightening than currently
ing from traded goods back toward domestic services. anticipated. Other adverse risks include a faltering
Rising trade barriers and the lagged effects of US dollar in China’s post–COVID-19 recovery, escalation of
appreciation in 2022, which made traded products the war in Ukraine, and geoeconomic fragmenta-
more costly for numerous economies given the dollar’s tion further hindering multilateral efforts to address
dominant role in invoicing, are also expected to economic challenges. With debt levels, inflation, and
weigh on trade growth in 2023. Overall, the out- financial market volatility elevated, policymakers have
look is for weaker trade growth than during the two limited space to offset new negative shocks, especially
pre-pandemic decades (2000–19), when it averaged in low-income countries.
4.9 percent. On the upside, the global economy could prove
Meanwhile, global current account balances––the more resilient than expected, just as it did in 2022.
sums of absolute surpluses and deficits––are expected With a stock of excess savings from the pandemic
to narrow in 2023, following their significant increase years and tight labor markets in a number of econo-
in 2022 (Figure 1.19). As reported in the IMF’s 2022 mies, household consumption could again overshoot
External Sector Report, the rise in current account forecasts, although this would complicate the fight
balances in 2022 largely reflected commodity price against inflation. A renewed easing in supply-chain

14 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

bottlenecks––the Federal Reserve Bank of New York’s occur, with a sharp loss of investor appetite spreading
Global Supply Chain Pressure Index recently eased to across geographic regions and asset types. The market
more normal levels, for example––and a cooling in for safe assets (such as US or German government
labor markets from falling vacancies rather than rising bonds) could also seize up, with reduced ease of trad-
unemployment could allow for a softer-than-expected ing amid a rush out of riskier assets.
landing, requiring less monetary tightening. Box 1.3 provides a quantification of such a sce-
Overall, the estimated probability of global growth nario of severe financial sector stress and concludes
in 2023 falling below 2.0 percent—an outcome that that, even with monetary policy responding to the
has occurred on only five occasions since 1970 (in decline in economic activity and inflation and even
1973, 1981, 1982, 2009, and 2020)––is now about with fiscal automatic stabilizers operating, global real
25 percent: more than double the normal probability GDP growth in 2023 could be 1.8 percentage points
(see Box 1.3). Growth falling below 2.0 percent could below the baseline. Such an outcome would imply
occur in the case of a severe credit disruption or from near-zero growth in global GDP per capita. The
a combination of shocks materializing together. A con- downturn in global aggregate demand would have
traction in global per capita real GDP in 2023—which a strong disinflationary impulse, with global head-
often happens when there is a global recession—has line and core inflation lower by about 1 percentage
an estimated probability of about 15 percent. Turning point in 2023.
to prices, the probability of global headline inflation Sharper monetary policy impact amid high debt:
exceeding its 2022 level in 2023, is less than 10 per- The interaction between rising real interest rates and
cent, as Box 1.3 explains. However, for core inflation, historically elevated corporate and household debt is
which is set to decline more gradually in 2023, the another source of downside risk, as debt servicing costs
probability is higher, at 30 percent. Stickier services rise amid weaker income growth. This can lead to debt
inflation, amid still-overheating labor markets, could overhang, with lower-than-expected investment and
push core inflation above its 2022 level. In what consumption, higher unemployment, and widespread
follows, the most prominent downside risks to the bankruptcies, especially in economies with elevated
outlook are discussed. house prices and high levels of household debt issued
A severe tightening in global financial conditions: In at floating rates (see Box 1.1). In such a case, inflation
many countries, the financial sector will remain highly would decline faster and growth would be lower than
vulnerable to the realized rise in real interest rates in in the baseline forecast.
the coming months, both in banks and in nonbank Stickier inflation: With labor markets remain-
financial institutions (see Chapter 1 of the April 2023 ing exceptionally tight in many countries, the
Global Financial Stability Report). In a severe downside incipient decline in headline and core infla-
scenario in which risks stemming from bank balance tion could stall before reaching target levels,
sheet fragilities materialize, bank lending in the United amid stronger-than-expected wage growth. An
States and other advanced economies could sharply even-stronger-than-predicted economic rebound in
decline, with macroeconomic effects amplified by a China could––especially if combined with an esca-
number of channels. Household and business confi- lation of the war in Ukraine—reverse the expected
dence would deteriorate, leading to higher household decline in commodity prices, raise headline inflation,
precautionary saving and lower investment. Depressed and pass through into core inflation and inflation
activity in the most affected economies would spill expectations. Such conditions could prompt central
over to the rest of the world through lower demand banks in major economies to tighten policies further
for imports and lower commodity prices. As in past and keep a restrictive stance for longer, with adverse
episodes of global financial stress, a broad-based effects on growth and financial stability.
outflow of capital from emerging market and devel- Systemic sovereign debt distress in emerging market
oping ­economies could occur, causing further dollar and developing economies: Several emerging market
appreciation, which would worsen vulnerabilities in and developing economies still face sovereign credit
economies with dollar-denominated external debt. The spreads above 1,000 basis points. The easing in spreads
dollar appreciation would further depress global trade, since October, which partly reflects the depreciation
as many products are invoiced in dollars. In an envi- of the US dollar and lower import bills from declin-
ronment of elevated financial fragility, contagion could ing commodity prices, has provided some relief.

International Monetary Fund | April 2023 15

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.20. External Debt Vulnerabilities for Emerging some vulnerabilities are more acute. A higher share of
Market and Developing Economies Are High external debt is now issued at variable interest rates and
in US dollars, implying greater exposure to mone-
120 1. External Debt Measures 600
(Percent) tary tightening in advanced economies (Figure 1.20,
100 panel 2). And for low-income countries, comparisons
450
80 with the situation in the mid-1990s are increasingly rel-
evant (IMF 2022a). A new wave of debt-restructuring
60 300
requests could take place, but the creditor landscape has
40 become more complex, making restructuring poten-
150 tially more difficult than in the past (see Chapter 3).
20 External debt over gross national income
External debt over exports (right scale) The share of external debt owed to Paris Club offi-
0 0 cial bilateral creditors fell from 39 percent in 1996
1970 80 90 2000 10 20
to 12 percent in 2020, and that owed to non–Paris
40 2. Selected External Debt Characteristics 80 Club official bilateral creditors rose from 8 percent to
(Percent of total external debt, left scale; 22 percent; the share of private creditors doubled from
percent of total PPG external debt, right scale)
30 60 8 percent to 16 percent (IMF 2022a).
Faltering growth in China: With a substantial
20 40 share of economies’ exports absorbed by China, a
weaker-than-expected recovery in China would have
10 20 significant cross-border effects, especially for com-
Short term US dollar denominated (right scale) modity exporters and tourism-dependent economies.
Variable rate Risks to the outlook include the ongoing weakness
0 0
1970 80 90 2000 10 20 in the Chinese real estate market, which could pose
a larger-than-expected drag on growth and poten-
120 3. Risks of Debt Distress in LIDCs Low High
(Percent of PRGT-eligible countries) Moderate In debt distress tially lead to financial stability risks (see Box 1.1
100
10 and IMF 2023).
14 16 16 17
80
Escalation of the war in Ukraine: An escalation of
27
41
Russia’s war in Ukraine––now in its second year––
60 43 42 39
could trigger a renewed energy crisis in Europe and
40 38 exacerbate food insecurity in low-income coun-
30 30 32 33 tries. For the winter of 2022–23, a gas crisis was
20
25
14
averted, with ample storage at European facilities
10 10 10
0 thanks to higher liquefied natural gas imports, lower
2009–19 20 21 22 23
gas demand amid high prices, and atypically mild
Sources: IMF-World Bank LIDC Debt Sustainability Analysis Database; World Bank weather. The risks of price spikes, however, remain for
International Debt Statistics; and IMF staff calculations.
Note: X-axes show the calendar year across panels. Panels 1 and 2 show
next winter (see the Commodity Special Feature). A
unweighted averages across emerging market and developing economies. For possible increase in food prices from a failed exten-
panel 3, details on the classification of debt riskiness in LIDCs can be found in IMF sion of the Black Sea Grain Initiative would weigh
(2018). LIDCs = low-income developing countries; PPG = public and publicly
guaranteed; PRGT = Poverty Reduction and Growth Trust. further on food importers, particularly those that lack
fiscal space to cushion the impact on households and
businesses. Amid elevated food and fuel prices, social
unrest might increase.
But vulnerabilities remain high. About 56 percent Fragmentation further hampers multilateral cooperation:
of low-income developing countries are estimated to The ongoing retreat from cross-border economic inte-
be either already in debt distress or at high risk of it gration began more than a decade ago after the global
(Figure 1.20, panel 3), and about 25 percent of emerg- financial crisis, with notable developments including
ing market economies are also estimated to be at high Brexit and China-US trade tensions. The war in Ukraine
risk. While the level of external debt as a share of gross has reinforced this trend by raising geopolitical tensions
national income is on average one-third lower today (Figure 1.21, panel 1) and splitting the world economy
than in the 1980s and 1990s (Figure 1.20, panel 1), into geopolitical blocs. Barriers to trade are steadily

16 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

increasing (Figure 1.21, panel 2). They range from the Figure 1.21. Geopolitical and Trade Tensions Rising over Time
imposition of export bans on food and fertilizers in
200 1. Geopolitical Risk Index
response to the commodity price spike following Russia’s (Index, average 1990–2019 = 100)
Russian invasion
invasion of Ukraine to restrictions on trade in micro- of Ukraine

chips and semiconductors (as in the US Creating Help- 150

ful Incentives to Produce Semiconductors and Science

Act) and on green investment that are aimed at prevent- 100
ing the transfer of technology and include local-content
requirements. Further geoeconomic fragmentation risks 50
not only lower cross-border flows of labor, goods, and
capital (see Chapter 4 of this report and Chapter 3 of 0
Jan. Jan. Jan. Jan. Jan. Jan.
the April 2023 Global Financial Stability Report) but 2009 12 15 18 21 23
also reduced international action on vital global public
goods, such as climate change mitigation and pandemic 3,000 2. Harmful Trade Restrictions Imposed
(Number of measures)
resilience. Some countries may benefit from an associ- 2,500
ated rearrangement in global production, but the overall Goods
2,000 Investment
impact on economic well-being would likely be negative
Service
(see Aiyar and others 2023 and Chapter 3 of the 1,500
October 2022 Regional Economic Outlook: Asia and the
1,000
Pacific), with costs particularly high in the short term, as
replacing disrupted flows takes time. 500

0
2009 10 11 12 13 14 15 16 17 18 19 20 21 22
Policy Priorities: Walking a Narrow Path
Sources: Caldara and Iacoviello (2022); and Global Trade Alert.
With the fog around current and prospective Note: In panel 2, data on harmful trade restrictions are as of February 1, 2023.
economic conditions thickening, policymakers have
a narrow path to walk toward restoring price stability
while avoiding a recession and maintaining financial would ward off the risk of de-anchoring infla-
stability. Achieving strong, sustainable, and inclusive tion expectations. Given the elevated volatility in
growth will require policymakers to stay agile and be financial markets, central banks should stand ready
ready to adjust as information becomes available. to address liquidity and financial sector risks if and
when needed, as discussed later. Under the plausi-
ble alternative scenario, in which the tightening of
Policies with Immediate Impact financial conditions leads to a cooling in real activity
Ensuring a durable fall in inflation: With inflation and lower price pressures, central banks would need
still well above targets for most economies, the priority to carefully recalibrate monetary policy, including
remains reducing inflation and ensuring that expecta- the timing and size of policy rate changes needed to
tions stay anchored while containing financial market align inflation rates with their targets. If the severe
strains and minimizing the risk of further turbulence. downside scenario materializes and financial stability
Achieving this outcome in the midst of heightened is at stake, substantial readjustment of monetary
market volatility and a sizable disconnect between policy paths might be needed in response to the
markets’ anticipation of monetary policy paths and disinflationary shock to minimize economic damage
central bank communications requires the following: and contain financial sector contagion.
•• Steady but ready monetary policy: Under the baseline •• Clear communication: Given heightened uncertainty
forecast, real (inflation-adjusted) policy rates in regarding the effects of monetary policy on both
major economies are expected to increase gradually, inflation and financial stability, and the reemerging
even as the pace of nominal rate rises slows on the disconnect between central banks, and markets’
back of declining inflation (Figure 1.22). Where expectations of monetary policy paths, clear com-
core inflation pressures persist, raising real policy munication about central bank policy objectives and
rates and holding them above their neutral levels responses will be crucial. Estimates of the real interest

International Monetary Fund | April 2023 17

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.22. Real Policy Rates in Selected Advanced Figure 1.23. Is US Unemployment Unnaturally Low?
Economies (Percent)
(Percent, annualized)
8 Unemployment rate, February 2023
4 IMF unemployment forecast, 2024:Q4
U*: IMF staff
2 7 U*: Congressional Budget Office
U*: Ball, Leigh, and Mishra (2022)
0 U*: Crump and others (2022)
6 U*: Michaillat and Saez (2022)
–2

–4 5
–6 United States
Euro area
4
–8

–10
3
2017 18 19 20 21 22 23
–12
2022:Q1 22:Q3 23:Q1 23:Q3 24:Q1 24:Q4
Sources: April 2023 World Economic Outlook; Ball, Leigh, and Mishra (2022);
Source: IMF staff calculations. Crump and others (2022); US Bureau of Labor Statistics; US Congressional Budget
Note: The real policy rate is calculated as the nominal policy rate minus average Office; and IMF staff calculations.
expected headline inflation over the next year. Nominal policy rates are the federal Note: U* denotes estimates of the natural rate of unemployment in the United
funds target rate for the United States and the euro short-term rate for the euro States (the level of the unemployment rate that is associated with stable inflation).
area. The estimate from the Congressional Budget Office is the noncyclical
unemployment rate series. The estimate labeled Michaillat and Saez (2022) is
calculated by IMF staff using their method. Estimate of Crump and others reflects
both the secular trend of the unemployment rate as well as the behavior of wage
and price inflation and inflation expectations as explained in the paper.
rate consistent with stable inflation (commonly
called the “natural rate of interest” and denoted r*)
are uncertain (see Chapter 2). An unemployment
rate above the level consistent with stable inflation •• Applying the lessons from past premature easing: An
(commonly called the “natural rate of unemploy- easing of rates before price pressures have adequately
ment” and denoted u*) would contribute to reduc- receded could increase the costs of disinflation, as
ing inflation. But as with r*, estimates are highly exemplified by the experience of the United States
uncertain. For example, recent estimates of u* for in the early 1980s. The Federal Reserve loosened
the United States range from 4 percent to 7 percent, policy after a first wave of tightening and an increase
which is above the current unemployment rate. This in unemployment, which contributed to expecta-
has contributed to projections of rising unemploy- tions that high inflation would solidify (Goodfriend
ment by 2024 (Figure 1.23). It will be essential that, and King 2005). A second wave of sharp policy rate
faced with such uncertainty, monetary policymakers increases was required to bring inflation down and
calibrate policy in a data-dependent manner. In reestablish credibility, with more negative growth
addition, volatility has been unusually high: markets and employment implications (Figure 1.24).
have reacted strongly to any news, leading to sudden
repricing in the path of policy rates and amplifying Safeguarding financial stability: Minimizing financial
the disconnect between market expectations and stability risks will require careful monitoring of risks,
the rate path communicated by central banks. In managing market strains, and strengthening oversight.
that context, policymakers should reinforce their •• Monitoring risks: In this period of high uncertainty
communication about the likely need for a restric- and market volatility, monitoring the buildup of
tive monetary policy stance until there is tangible risks across industries and promptly addressing vul-
evidence that inflation is returning toward target. At nerabilities that come to the fore will be crucial to
the same time, policymakers should reassure market restore confidence and safeguard financial stability
participants that they stand ready to change course (see Chapter 1 of the April 2023 Global Financial
and use the full set of available instruments should Stability Report). As central banks continue raising
market turmoil deepen. rates to fight inflation and gradually unwind their

18 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

balance sheets, more intensive and high-frequency Figure 1.24. Sticky Inflation and Premature Easing: The US
monitoring of risks in the banking sector, nonbank Experience in the 1980s
financial institutions, and the housing sector will (Percent)
be essential. 20 Recession 10
•• Managing market strains: Where market strains Effective federal funds rate
emerge, deploying tools that provide liquidity Core PCE inflation (right scale)
16 US unemployment rate 8
support promptly and forcefully, while mitigating
the risk of moral hazard, will be necessary to ease
pressures and limit contagion. Liquidity support 12 6

should be targeted as well as properly collateralized

and preserve the transmission of monetary policy. 8 4
Intervention and resolution procedures may need
to be initiated promptly for weak and nonviable 4 2
institutions.
•• Strengthening oversight: Financial sector regulations 0 0
introduced after the global financial crisis contributed Jan. Jan. Jan. Jan. Jan. Jan.
1978 80 82 84 86 88
to the resilience of banks throughout the pandemic.
More efforts are needed, however, to address Sources: Federal Reserve Board; and US Bureau of Economic Analysis.
shortcomings in the supervisory oversight of banks, Note: The figure shows the evolution of the effective federal funds rate, along with
core inflation and unemployment rate during the late 1970s and early 1980s. The
including in the prudential framework for exposures PCE price index measures prices that US consumers face for goods and services.
to interest rate risk, and to ensure that stringent pru- Core PCE inflation is the annual percent change in the PCE price index for goods
dential requirements align with the Basel framework and services, excluding food and energy. PCE = personal consumption
expenditures.
on capital and liquidity regulations. In addition,
the intensity of supervision must be commensurate
with banks’ risks and systemic importance, and it is
essential to address supervisory gaps in the nonbank economic fundamentals such as the rapid tightening
financial sector (see also Chapter 1 of the April 2023 of US monetary policy and more favorable terms of
Global Financial Stability Report). trade for the United States (Figure 1.25). Emerging
•• Using the global financial safety net: With multiple market economies should let their currencies adjust
shocks hitting the global economy, it is appropriate as much as possible in response to such fundamen-
to make full use of the global financial safety net tals (Gopinath and Gourinchas 2022). As guided
afforded by international financial institutions. This by the IMF’s Integrated Policy Framework, foreign
includes proactively employing the IMF’s precau- exchange interventions may be appropriate on a
tionary financial arrangements and focusing aid temporary basis if currency movements and capital
from the international community on low-income flows substantially raise financial stability risks––as in
countries facing shocks, including through the the context of shallow foreign exchange markets or
rechanneling of special drawing rights and support high foreign currency debt––or jeopardize the central
from the Poverty Reduction and Growth Trust and bank’s ability to maintain price stability. Temporary
the Resilience and Sustainability Trust. The recent capital flow management measures on outflows may
enhancement of dollar funding swap lines between also be useful in a crisis or when one is imminent
the Federal Reserve and major advanced economy but should not substitute for needed macroeconomic
central banks should help limit financial strains. It is policy adjustment. In response to developments
important to ensure that other central banks are also in 2022, some economies resorted to capital flow
able to access liquidity to guard against potential management measures (for example, China and
external funding shocks. Malawi, among others).
Normalizing fiscal policy: As deficits and debts
Dealing with currency swings: The US dollar has remain above pre-pandemic levels, fiscal efforts will be
depreciated in real terms since October 2022—by warranted in 2023. Fiscal policymakers should support
6 percent on a trade-weighted basis––but remains monetary policy in getting inflation back to target.
stronger than it has been since 2000, reflecting Where inflation remains high, a steady tightening of

International Monetary Fund | April 2023 19

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.25. US Dollar Remains Strong Despite Some Figure 1.26. Europe’s Energy Crisis: Status and Costs of
Moderation Fiscal Support in 2022–23
(US REER index, 2010 = 100)
120 1. Natural Gas Storage in Europe
160 (Percent of capacity by month)
100

80
140
60

40 Minimum–maximum, 2011–21
120 Mean 2011–21
20 Path 2022–23

0
100 Apr. Jul. Oct. Jan. Apr.
2022 22 22 23 23

1.6 2. Fiscal Support to European Households in 2022–23

80 (Percent of European GDP)
1980 85 90 95 2000 05 10 15 20 Feb. 1.4
23 1.2
1.0
Source: IMF staff calculations.
Note: The figure shows the evolution of the real effective exchange rate (REER) 0.8
index based on the consumer price index for the United States. 0.6
0.4
0.2
the fiscal stance would moderate the need for mone- 0.0
tary tightening. In a severe downside scenario, auto- Targeted Untargeted Targeted Untargeted
Price-based Transfers
matic stabilizers should be allowed to operate fully, and
temporary support measures should be used as needed Sources: Ari and others (2022); Gas Infrastructure Europe, Aggregated Gas
(including to buttress the financial system), with due Storage Inventory; and IMF staff calculations.
Note: Panel 1 shows natural gas in storage as a percent of storage for European
consideration of available fiscal space (see Chapter 1 of economies for which data are available. In panel 2, European GDP is the aggregate
the April 2023 Fiscal Monitor). Protecting the vulnera- of 24 economies in an IMF survey of fiscal costs in 2023.
ble through targeted measures should remain a priority.
Supporting the vulnerable: The surge in global energy
and food prices in 2022 triggered a cost-of-living crisis For example, emerging market and developing econo-
in many countries, especially low-income countries, mies’ net imports of wheat account for more than half
many of which are still suffering from food insecu- of total wheat consumption, but domestic storage in
rity. Governments acted swiftly to extend support to these economies tends to be low, making them more
households and firms, which helped cushion the effects vulnerable to trade shocks (Figure 1.27). Restrictions
on growth. However, the fiscal support extended to on exports of food and fertilizers—particularly those
households and firms in many European economies most recently imposed—should be lifted to safeguard
was largely untargeted (Figure 1.26). Such broad-based food supplies and their distribution globally.
measures are becoming increasingly costly and should
be replaced by more targeted approaches (Ari and
others 2022). Moreover, in the event of a renewed Policies with Payoffs in the Medium Term
commodity price spike, measures taken should preserve Restoring debt sustainability: With lower growth and
the market signal from higher energy prices as much as higher borrowing costs, public debt ratios are becom-
possible, as high prices encourage a reduction in energy ing unsustainable in many countries. Actions must be
consumption, limiting the risks of shortages (see also taken to put them on a credible downward path. For
the October 2022 Fiscal Monitor). economies at high risk of debt distress (Figure 1.20),
Improving food security everywhere: Trade restrictions fiscal consolidation and structural reforms to cre-
on food and fertilizers run the risk of pushing a large ate sound policy frameworks and revitalize growth
share of the global population into food insecurity. remain the fundamental solution to sustainable debt

20 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

(Box 3.1). In some cases, debt restructuring may be Figure 1.27. Vulnerability to Food Insecurity: The Case of
necessary to help reduce fiscal vulnerabilities. As shown Wheat
in Chapter 3, waiting to restructure debt until after (Percent of annual wheat consumption)
a default occurs is associated with larger declines in 100 Net imports Domestic storage
a country’s output, investment, private sector credit,
and capital inflows than when debt restructuring is
80
preemptive. The world is at a critical juncture, and
international cooperation is needed to reduce the
likelihood of a snowballing global debt crisis. Progress 60

has been made in regard to countries that requested

debt treatment under the G20 Common Framework 40
(for example, Chad). Official and private creditors need
to stand ready to respond swiftly to requests from a 20
broad set of countries, including the poorest nations
that were part of the Debt Service Suspension Initia- 0
tive, as well as middle-income economies under stress LIDCs EMMIEs AEs
(for example, Sri Lanka). It is also necessary to agree
Sources: United Nations; USDA Foreign Agricultural Service; and IMF staff
on mechanisms to address debt-restructuring needs for calculations.
a broader set of economies, including middle-income Note: The share of wheat consumption that is imported is calculated as the ratio of
an economy’s imports of wheat in 2022 to the annual consumption of the
economies that are not eligible under the current economy’s consumption of wheat in 2022. Storage levels are estimated as of the
Common Framework. Large creditors, including non– beginning of 2022. Ratios are averaged across economies within each income
Paris Club and private creditors, have a crucial role to group. AEs = advanced economies; EMMIEs = emerging market and middle-
income economies; LIDCs = low-income developing countries.
play in ensuring effective, predictable, and timely debt
resolution processes. The newly created Global Sover-
eign Debt Roundtable (GSDR) will help multilateral
agencies and private and public creditors identify key policies are not available. Industrial policy should not
impediments to restructurings and design standards introduce distortions and should be consistent with
and processes that can address them. international agreements and World Trade Organiza-
Reinforcing supply: Well-designed supply-side tion (WTO) rules. This will also help prevent unneces-
policies could help address structural factors impeding sary business uncertainty. Where industrial policies are
medium-term growth and recoup some of the output rolled out, wasteful subsidy races or the imposition of
losses accumulated since the pandemic. Policy actions domestic production requirements should be avoided.
could include structural reforms to reduce harmful Such measures could lead to lower productivity and
market power and rent-seeking behavior as well as undermine trade relations and would be particu-
overly rigid regulation and planning processes. They larly damaging to emerging market and develop-
could also involve stimulating investment in infra- ing economies.
structure improvements and productive digitalization Containing pandemic risks: Authorities should
initiatives and enhancing access to and quality of remain vigilant to the risks of a reemergence of the
education. Policies intended to reduce labor market COVID-19 virus and new pandemics and their
tightness—by encouraging participation and reducing potential impacts on the global economy. This includes
job search and matching frictions—would also help coordinated efforts to boost access to vaccines and
smooth inflation’s path back to target. They could medicines where immunity is low and greater pub-
include adopting measures to bolster active labor lic support for vaccine development and systematic
market policies, such as short-term training programs responses to future epidemics.
for professions experiencing shortages, passing labor
laws and regulations that increase work flexibility
through telework and leave policies, and allowing for Policies for a Better Long Term
the resumption of regular immigration flows. Indus- Strengthening multilateral cooperation: The host
trial policy could be pursued if frictions (for instance, of complex challenges currently facing the world
market failures) are well established and if other necessitates a coordinated and common response to

International Monetary Fund | April 2023 21

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

bolster the global economy’s resilience and achieve the (see Chapter 3 of the October 2022 World Economic
best outcomes. To this end, actions on fundamental Outlook). International coordination on carbon pricing
areas of common interest are critical to improving trust or equivalent policies would facilitate a faster decarbon-
and limiting the risks stemming from increasing geo- ization in a cost-efficient way. With declining invest-
political fragmentation. Strengthening the multilateral ment in fossil fuels, a concerted push on alternative
trading system would help reduce the risks to growth clean energy investment could help ensure sufficient
and resilience from such fragmentation by providing energy supplies and achieve the needed decarbonization.
fair and predictable rules for exchange. To achieve such This could be achieved through investment incentives
strengthening, WTO rules in critical areas such as for green materials and electricity grid upgrades, easing
agricultural and industrial subsidies must be upgraded, of permitting processes for renewables, and support for
new WTO-based agreements implemented, and the research and development, among other efforts. The
WTO dispute settlement system fully restored. meetings at the 27th United Nations Climate Change
Speeding up the green transition: Progress in emission Conference of the Parties resulted in encouraging signs
reductions needed to contain global warming at 2°C of international cooperation on adaptation to climate
or less remains inadequate. Implementing credible change, but more needs to be done, including channel-
policies now will limit the overall costs of mitigation ing aid to vulnerable countries.

22 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Box 1.1. House Prices: Coming off the Boil

As central banks raised borrowing costs to fight inflation in which house prices rose more during the pandemic.
in 2022, real house price growth turned negative in both Economies with high levels of household debt and a
advanced and emerging market economies. If mortgage large share of debt issued at floating rates are more
rates continue to rise, demand for borrowing is likely to exposed to higher mortgage payments, with a greater
weaken, further depressing house prices. Economies with risk of experiencing a wave of defaults (Figure 1.1.2).
elevated house prices and high levels of household debt In economies in which house prices increased rapidly
issued at floating rates are particularly vulnerable to any and affordability declined, but household debt levels
ensuing financial sector stress.

During the COVID-19 pandemic, real house prices

rose to record levels in many countries—especially among Figure 1.1.2. Indicators of Housing Market
advanced economies—reflecting a combination of ample Risk
policy support and limited numbers of available proper-
ties on the market. In the second quarter of 2022, how-
Lowest risk Highest risk
ever, quarterly real house prices fell, with about two-thirds
of economies experiencing negative growth and the CAN
remainder positive but slower growth (Figure 1.1.1). AUS
Among advanced economies, the deterioration in the LUX
housing market was more pronounced in those that NOR
SWE
showed signs of overvaluation before and during the pan- NLD
demic. With central banks hiking interest rates, mortgage USA
rates climbed to an average of 6.8 percent in advanced PRT
DNK
economies in late 2022, up from 2.8 percent in January
FIN
2022. If mortgage rates continue to rise, demand for EST
borrowing and house prices are likely to weaken further. GBR
CZE
Who Is at Risk? LTU
AUT
Housing markets and prices are likely to cool more ESP
and be more sensitive to policy rate hikes in economies IRL
FRA
BEL
POL
Figure 1.1.1. Global Average Real House Index DEU
(Index, GDP-weighted; 2019:Q1 = 100) LVA
GRC
125 Advanced economies HUN
Emerging market and developing economies ITA
120 SVN
SVK
115 C1 C2 C3 C4 C5 Total
score
110

105 Sources: Bank for International Settlements; European

Central Bank; Hypostat, European Mortgage Federation;
100 Organisation for Economic Co-operation and Development;
and IMF staff calculations.
95 Note: C1 = households’ outstanding debt as a percentage of
gross disposable income, 2022:Q2; C2 = share of debt
90 outstanding at variable interest rate (fixed rate up to one
year), 2022:Q3; C3 = share of households owning home
85 with a mortgage, 2020; C4 = cumulative real house price
2015:Q1 16:Q1 17:Q1 18:Q1 19:Q1 20:Q1 21:Q1 22:Q2 growth, 2020:Q1–22:Q1; C5 = cumulative policy rate
changes, 2022:Q1–22:Q3. For each of the five criteria,
countries obtain a score between 0 and 4 reflecting their
Sources: Bank for International Settlements; and IMF staff position in the cross-country distribution. The total score is
calculations. the sum of the individual criteria scores. Economy list uses
International Organization for Standardization (ISO)
Prepared by Nina Biljanovska. country codes.

International Monetary Fund | April 2023 23

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Box 1.1 (continued)

Figure 1.1.3. Household Indebtedness Rates in policy intervention.1 Data from 2021 show that
Selected Economies banks are better capitalized than before the global
(Percent) financial crisis, with the regulatory ratio of Tier 1
250 capital to risk-weighted assets standing at 17.5 percent
NOR on average across countries (IMF 2021), compared
with 13.4 percent in 2007. Moreover, banks’ under-
200 SWE AUS writing standards in many advanced economies are
CAN tighter today than before the global financial crisis.
2022:Q1–Q2 average

NLD
150 FIN However, the average household debt-to-income ratio
GBR
FRA across countries in 2022 was on par with that in
BEL PRT 2007, driven mainly by households in economies that
100 IRL
POL
CHL DEU ESP managed to escape the brunt of the global financial
USA crisis and have since run up substantial borrowing
50 AUT
HUN (Figure 1.1.3).
SVN At the same time, in China, the real estate sector
0 has experienced a protracted contraction, with early
0 50 100 150 200 250 signs of stabilization in 2023. Share prices of property
2007:Q1–Q2 average developers rebounded partially following the wave of
support measures announced in November 2022, but
Sources: Organisation for Economic Co-operation and
Development; and IMF staff calculations. a correction in house prices could intensify financial
Note: Data labels in the figure use International Organization stress for property developers. The Chinese economy
for Standardization (ISO) country codes. is vulnerable to a correction in real estate prices, as
the real estate and construction sectors account for
remained moderate up to the recent onset of monetary about one-fifth of final demand absorption and a
tightening, a more gradual price decline is expected, significant fraction of lending (IMF 2022b). Although
which could improve affordability. the Chinese authorities have recently stepped up their
support to the sector, the share of property developers
How Is This Housing Episode Different from the in need of restructuring remains large (IMF 2023),
2007–08 Global Financial Crisis Episode? and the loosening of lending standards could exacer-
In most cases, it is unlikely that an ongoing fall bate financial stability risks.
in house prices will lead to a financial crisis, but a
sharp drop in house prices could adversely affect the 1See the April 2023 Global Financial Stability Report for
economic outlook. The buildup of medium-term vul- analysis of the risks to the global economic outlook from a sharp
nerabilities warrants close monitoring and, potentially, decline in house prices.

24 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Box 1.2. Monetary Policy: Speed of Transmission, Heterogeneity, and Asymmetries

Understanding how long monetary policy takes to affect Figure 1.2.1. Years-to-Trough Responses of
output and inflation is central to policy deliberations. Prices to Monetary Tightening
The literature has not yet reached consensus, but several (Number of years)
factors are known to shape the effects. Central bank
4.5
credibility and mortgage rate flexibility increase trans-
4.0
mission speed. Other factors, such as financial devel-
3.5
opment and offsetting (uncoordinated) fiscal policies,
3.0
reduce it. With the ongoing synchronous tightening,
2.5
a faster and stronger response of economic output and
2.0
prices could occur.
1.5
Transmission Speed 1.0
0.5
A review of studies1 on the United States and
0.0
the euro area reveals that estimates of the timing of All countries AEs EMDEs
monetary policy transmission to output vary between
near-immediate effects and a lag of about three Sources: Havranek and Rusnak (2013); and IMF staff
calculations.
quarters. Later, output usually reverts to its initial level Note: The figure shows the average number of years to the
within two to three years, although more persistent maximum decrease in prices. The whisker indicates the
effects may occur. Estimates of the lag in transmis- interquartile range. AEs comprise Australia, Canada, Czech
Republic, Denmark, Estonia, euro area, Finland, France,
sion of monetary policy to prices vary as well. At the Germany, Greece, Ireland, Italy, Japan, Korea, Latvia, New
upper end, estimates indicate a delay of about 1.5 to Zealand, Slovak Republic, Slovenia, Spain, United Kingdom,
2.5 years. This lag might be driven by firms’ staggered and United States. EMDEs comprise Brazil, Bulgaria,
Hungary, Lithuania, Malaysia, Philippines, Poland, Romania,
price adjustment, or it might be due to informational Thailand, and Türkiye. AEs = advanced economies;
frictions that make it difficult to disentangle pure EMDEs = emerging market and developing economies.
monetary policy shocks from outlook information that
central banks convey during policy announcements.
At the lower end of the range of estimates, studies
accounting for the information component find that with a wide range (Figure 1.2.1). Prices in advanced
prices decline immediately following monetary shocks. economies take about twice the time needed in
The immediate response is driven by exchange rate emerging market and developing economies. Multiple
appreciation and changes in inflation expectations. In country-specific factors may affect the transmission
addition, macroeconomic variables are found to react channels of monetary policy, consequently shaping the
faster to forward guidance, since it may signal a more speed and strength of the transmission.
persistent change in financial market conditions. •• Financial development affects the credit channel.
Developed financial systems provide more oppor-
Country Heterogeneity tunities to hedge against monetary surprises in
A meta-analysis of 67 published studies covering advanced economies, delaying the impact of a
30 different economies (Havranek and Rusnak 2013) policy adjustment (Havranek and Rusnak 2013). At
finds that the effect of a tightening on prices takes the same time, more competitive financial sectors
an average of about three years to reach its trough, exhibit faster and more complete interest rate
pass-through (Georgiadis 2014).
•• Financial frictions affect the investment channel and
Prepared by Silvia Albrizio and Francesco Grigoli. Yang Liu
provided research support.
capital reallocation. Firms’ investment sensitivity to
1The review considers the following studies, among others: monetary policy is higher for low-liquidity firms,
Bernanke, Boivin, and Eliasz (2005); Choi and others (2022); since it increases their fixed-debt issuance costs
Christiano, Trabandt, and Walentin (2010); Gertler and Karadi (Jeenas 2019); for younger non-dividend-paying
(2015); Jarociński and Karadi (2020); Miranda-Agrippino and firms, since their external finances are more
Ricco (2021); and Romer and Romer (2004). These estimates
refer to the time it takes for macroeconomic variables to start
exposed to asset value fluctuations (Cloyne and
responding to monetary policy shocks in a statistically sig- others, forthcoming); for low-risk firms, since their
nificant way. marginal cost of investment finance is flatter than

International Monetary Fund | April 2023 25

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Box 1.2 (continued)

that of high-risk firms (Ottonello and Winberry Conversely, mortgage rate rigidities dampen this effect,
2020); and for firms with a high marginal product by decreasing the responsiveness of residential invest-
of capital, since they are financially constrained ment (Calza, Monacelli, and Stracca 2013) and the
(González and others 2022; Albrizio, González, and sensitivity of defaults, house prices, car purchases, and
Khametshin 2023). Overall, following a monetary employment (Di Maggio and others 2017) to interest
tightening, investment declines more in countries rate changes. Therefore, a large share of adjustable-rate
with higher levels of financial frictions, capital mortgages, more common in emerging market and
misallocation increases, and productivity declines. developing economies (Cerutti and others 2016),
•• Central bank credibility and effective communica- amplifies the contractionary output effect of mone-
tion strongly affect the expectation and exchange rate tary tightening.
channels. When inflation expectations are well
anchored and central bank independence is high, Asymmetric Effects
monetary policy is more effective at restoring price Monetary policy shocks may have asymmetric and
stability with a lower output cost (Chapter 3 of the cyclically dependent output and inflation effects.
October 2018 World Economic Outlook; Bems and There is evidence that policy easing has large effects
others 2020). Conversely, if expectations are more on prices but small effects on real activity, whereas
backward looking, as in many emerging market and policy tightening has large output effects, especially
developing economies, a stronger monetary policy during booms, but small effects on prices (Barnichon
reaction to reanchor expectations is warranted and Matthes 2018; Angrist, Jordà, and Kuersteiner
(Chapter 2 of the October 2022 World Economic 2018; Forni and others 2020; Tenreyro and Thwaites
Outlook; Alvarez and Dizioli 2023), and the 2016). These asymmetric effects might be driven by
exchange rate pass-through to consumer prices will the presence of downward nominal rigidities (Forni
be stronger (Carrière-Swallow and others 2021). and others 2020); by the interaction with fiscal policy,
•• The household wealth and income distribution shapes which dampens monetary policy in recessions but
the consumption and saving channels. Households reinforces it in expansions (Tenreyro and Thwaites
with a mortgage are the most responsive to mon- 2016); or by changes in firms’ price-setting behavior
etary policy tightening, as they reduce spending when inflation increases (Alvarez, Lippi, and Paciello
on durables (Cloyne, Ferreira, and Surico 2020). 2011; Nakamura and Steinsson 2008; Albagli, Grigoli,
Moreover, households adjust their decisions and Luttini 2023). Finally, cross-country synchronized
depending on the liquidity of their asset hold- tightening can counteract global shocks, such as global
ings: Households at the bottom of the liquid asset surges in commodity prices. Synchronization among
distribution decrease their consumption, households energy importers effectively lowers energy world
at the midpoint reduce saving or increase borrow- demand, hence reducing inflation faster (Auclert and
ing, and households at the top increase consump- others 2022).
tion substantially on account of a rise in interest Overall, with today’s exceptionally synchronous
income (Holm, Paul, and Tischbirek 2021). Finally, global monetary tightening, accompanied by wide-
high-income consumers cut spending more than spread withdrawal of fiscal support, sharply increas-
low-income consumers, possibly because of less ing residential mortgage rates, and global financial
binding borrowing constraints and stronger inter- conditions highly sensitive to policy news, a shorter
temporal substitution effects triggered by higher transmission lag than in the past could occur in several
interest rates (Grigoli and Sandri 2022). countries. Clear and effective communication by major
Nominal rigidities shape the output effect of mone- central banks regarding their resolve to keep inflation
tary policy in multiple ways. Greater wage rigidities expectations anchored and reduce inflation is expected
amplify the output effect (Olivei and Tenreyro 2010). to further accelerate policy transmission.

26 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Box 1.3. Risk Assessment Surrounding the World Economic Outlook Baseline Projections
This box uses the IMF’s Group of Twenty (G20) Figure 1.3.1. Distribution of Forecast
Model to derive confidence bands around the World Uncertainty around World Growth and
Economic Outlook (WEO) growth and inflation forecasts Inflation Projections
and to quantify a severe downside scenario. As in the (Percent)
October 2022 WEO, the risk of global growth falling
WEO baseline projection
below 2 percent in 2023—a low-growth outcome that
has happened only five other times (in 1973, 1981, 6 1. Real GDP Growth
1982, 2009, and 2020) since 1970—remains elevated
5
at about 25 percent, with the balance of risks clearly
tilted to the downside. This box introduces inflation 4
confidence bands for the first time. The chance that core 3
inflation will be higher in 2023 than in 2022 is close to
30 percent. The downside scenario illustrates how shocks 2
to credit supply, stemming from banking sector fragility 1
in the face of tightening monetary policy and amplified
0
through risk-off behavior and a decline in confidence, 2022 23 24 25
could reduce global growth to about 1 percent.
12 2. Headline CPI Inflation
Confidence Bands
10
The methodology for producing confidence bands is
8
based on Andrle and Hunt (2020). The G20 Model,
presented in Andrle and others (2015), is used to 6
interpret historical data on output growth, inflation, 4
and international commodity prices and to recover
the implied economic shocks to aggregate demand 2
and supply. The recovered shocks are sampled through 0
nonparametric methods and fed back into the model 2022 23 24 25
to generate predictive distributions around the WEO
9 3. Core CPI Inflation
projections. The resulting confidence bands thus depend 8
on the joint distribution of the estimated shocks, the 7
structure of the model, and the initial conditions for 6
the projections. Distributions for global variables are 5
obtained by aggregating country-level estimates. 4
In the October 2022 WEO, two versions of the 3
forecast distribution were presented: one that sampled 2
all historical data uniformly, that is, without judgment, 1
and one with judgment that sampled the year 1982 0
2022 23 24 25
more heavily, to stress the risk of a more pronounced
slowdown from contractionary monetary policy. The Source: IMF staff calculations.
distribution is shown for the latter case (with judg- Note: The chart shows the distribution of forecast uncertainty
ment), as uncertainty about the impact of monetary around the baseline projection as a fan. Each shade of blue
represents a five percentage point probability interval.
policy tightening remains central to the assessment of CPI = consumer price index; WEO = World Economic
risk. The judgment is applied to the first two years in Outlook.
the projection horizon (2023 and 2024).
Figure 1.3.1 shows the distributions for global growth
and inflation projections. Each shade represents a
5 percentage point interval, and the entire band covers

Prepared by Michal Andrle, Jared Bebee, Allan Dizioli, Rafael

Portillo, and Aneta Radzikowski.

International Monetary Fund | April 2023 27

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Box 1.3 (continued)

90 percent of the distribution. Regarding global growth, domestic financial conditions is small. The tightening
the added judgment makes the distribution skewed to in financial conditions is persistent and extends into
the downside, with lower growth outcomes more likely 2024 and (to a lesser extent) beyond.
than higher growth outcomes. There is a 70 percent The macroeconomic effects are amplified through
probability that 2023 global growth could be between three additional channels:
1.0 percent and 3.8 percent. Similarly, there is a 70 per- •• Equity prices: Global equity prices fall by
cent probability that growth will be between 1.4 percent 10 percent on impact and by about 6 percent on
and 4.3 percent in 2024. average in 2023.
Regarding global inflation, there is a 70 percent •• Flight to safety and dollar appreciation: In emerging
chance that 2023 headline inflation could be about markets excluding Asia, sovereign premiums increase
1.2 percentage points higher or lower than cur- considerably and the US dollar appreciates by close
rently projected. The distribution for core inflation to 10 percent. The shock for emerging market econ-
is narrower: The range associated with a 70 percent omies in Asia is about half as large, and China is
probability is 0.7 percentage point higher or lower not directly affected. Sovereign spreads in some euro
than the baseline. Both distributions are skewed to the area countries increase by a modest amount.
upside in the near term, but the skew is more notable •• Fall in confidence: It is assumed that greater precau-
for core inflation, with about a 30 percent probability tionary saving (about 75 percent of the estimated
that 2023 core inflation will exceed the 2022 level. increase in precautionary saving during the global
The upside skew for core in the near term reflects in financial crisis) leads to a decrease in consumption,
part the inflation surge seen during the COVID-19 while a decline in business sentiment leads to a
period. Big positive shocks to inflation are now seen as decrease in investment. For reference, in this layer,
more likely than before the pandemic. US consumption and investment decrease by 0.3
and 1 percent, respectively, relative to the baseline.
Risk Scenarios
Recent events have revealed greater-than-expected The Policy Response
fragility in parts of the global banking system, with Monetary policy responds endogenously to the
potential losses from the speed and magnitude of the resulting decrease in activity and inflationary pressures. In
monetary policy tightening and the risk of deposit terms of fiscal policy, it is assumed that automatic stabiliz-
withdrawals weighing on valuations and access to ers operate in advanced economies but not in emerging
funding. The IMF’s G20 Model is used to quantify a markets. Balance sheet policies and other interventions
severe downside scenario in which the overall supply by central banks and regulators, to preserve the stability
of credit is reduced and other channels add to the of the financial system, are not explicitly modeled but
impact on global activity. Each channel is presented as should be thought of as helping avert a crisis, with larger
a separate layer in the following discussion. effects on activity than what is shown here. The potential
cost of these interventions and their impact on countries’
Layers fiscal stance are not considered in this scenario. Should
The first layer includes the impact from lower global fiscal policy, especially in countries with limited fiscal
credit supply. Due to the stress on some banks’ balance space, tighten due to the strains on debt sustainability, the
sheets, bank lending in the United States decreases by macroeconomic impact would be larger.
4 percent in 2023 relative to current baseline projec-
tions, equivalent to about one-fifth of the contraction Impact on World Output and Inflation
in credit experienced during the global financial crisis Figure 1.3.2 shows the effects of the scenario on the
(relative to the precrisis trend). Corporate spreads level of GDP (in panel 1) and core inflation (panel 2)
increase by 250 basis points in 2023. Other countries for 2023 and 2024. Results are presented as percent
also experience a shock to the supply of credit. For deviations from the baseline, for the case of GDP, and
euro area countries and Japan, the impact is similar percentage point deviations from the baseline, for the
in magnitude to that for the United States; for other case of core inflation. The contribution from each layer
countries, the size of the shock varies depending on (credit conditions, equity prices, dollar appreciation
how their financial conditions correlate with those and flight to safety, confidence) is shown in stacked
in the United States. The assumed impact on China’s form in the figures. Country results are grouped into

28 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Box 1.3 (continued)

four regions: the United States, advanced economies Figure 1.3.2. Impact of Downside Scenario
excluding the United States, emerging markets exclud- on GDP and Core Inflation
ing China, and China.
Results can be summarized as follows: Credit conditions Dollar appreciation
Equity prices Confidence
•• The credit conditions layer subtracts 0.5 percent
from global output in 2023. The impact of this 1 1. Impact on GDP Level
layer is larger in the United States and in other (Percent deviation from baseline)
advanced economies than in emerging markets. The 2023 2024
impact on China is small. 0
•• The appreciation of the US dollar vis-à-vis emerg-
ing market economies’ currencies and tightening in
emerging market (and some advanced) economies’ –1
sovereign premiums subtract another 0.2 percent
globally in 2022. The effect is larger in emerg-
ing market economies, at –0.4 percent in 2023. –2
Advanced economies as a group are also affected US CHN WRL US CHN WRL
AEs ex. EMs ex. AEs ex. EMs ex.
by the currency depreciation in emerging market US CHN US CHN
economies and lower global demand.
•• The decline in equity prices subtracts another 1 2. Impact on Core Inflation
0.5 percent from global output in 2023, with a (Percentage point deviation from baseline)
somewhat larger impact in advanced economies 2023 2024
than in emerging markets. 0
•• The confidence layer subtracts 0.5 percent from global
activity in 2023, with advanced economies again
seeing a larger hit to activity than emerging markets. –1
•• The combined effect from all layers implies a
decrease in the level of global output of 1.8 per-
cent in 2023 and 1.4 percent in 2024, relative to –2
US CHN WRL US CHN WRL
the baseline. The overall effect on global output
AEs ex. EMs ex. AEs ex. EMs ex.
is about one-fourth the size of the impact of the US CHN US CHN
global financial crisis during 2008–09. The United
States and other advanced economies see a broadly Source: IMF staff calculations.
similar hit to activity (1.8 percent in 2023). Note: AEs = advanced economies; CHN = China; AEs ex.
US = advanced economies excluding United States; EMs ex.
Emerging market economies excluding China see an CHN = emerging markets excluding China; US = United
even larger effect (–1.9 percent) due mainly to the States; WRL = World.
dollar appreciation layer, while China experiences a
smaller impact overall (–1.2 percent).
•• Oil prices fall by close to 15 percent in 2023 China, due to the assumption that Phillips curves
relative to the baseline, due to the decrease in global are steeper, but the decline in inflation is also sizable
demand, before gradually returning to the baseline in advanced economies.
over the projection horizon. •• Policy rates (not shown) are also considerably
•• The disinflationary impulse, shown in panel 2, lower in this scenario. US policy rates decline by
is pronounced. Global core inflation declines by 1.6 percentage points in 2023 and 1.8 percent-
0.9 percentage point in 2023 and by 1.1 percentage age points in 2024, relative to the baseline; the
points in 2024, relative to the baseline. Disinflation global average of policy rates declines by 2.1 and
is more pronounced in emerging markets excluding 2.3 percentage points over the same period.

International Monetary Fund | April 2023 29

WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Commodity Special
Special Feature:
Feature Title:Market
SpecialDevelopments
Feature Head and the
Macroeconomic Impact of Declines in Fossil Fuel Extraction

Primary commodity prices declined 28.2 percent between Figure 1.SF.1. Commodity Market Developments
August 2022 and February 2023. The decrease was led
400 1. Commodity Price Indices with Forecast1
by energy commodities, down 46.4 percent. European (Index, 2016 = 100)
natural gas prices declined by 76.1 percent amid lower 300 All commodities Energy
consumption and high storage levels. Base and pre- Food Base metals
cious metal prices rebounded by 19.7 and 3.3 percent, 200
respectively, whereas food prices increased slightly, by
1.9 percent. This Special Feature analyzes the impact of 100

declines in the extraction of fossil fuel and other minerals

0
on the macroeconomic activity of commodity exporters. 2015 16 17 18 19 20 21 22 23 24
Q1 Q4

160 2. Brent Futures Curves2

Commodity Market Developments (US dollars a barrel; expiration dates on x-axis)
Energy prices waver. Crude oil prices retreated by October 2021 WEO April 2022 WEO
120
15.7 percent between August 2022 and February 2023 October 2022 WEO April 2023 WEO
as the slowing global economy weakened demand
(Figure 1.SF.1, panels 1 and 3). China experienced its 80
first annual decline in oil consumption this century
amid repeated shutdowns in response to COVID-19 40
2021 22 23 24 25 26 27 28
outbreaks and a faltering real estate market. Recession
fears due to higher-than-expected inflation and tighter 240 3. Brent Price Medium-Term Prospects3
monetary policy in many major economies and bank- (US dollars a barrel)
ing woes sparked concerns about flagging demand. 180 Futures
On the supply side, uncertainty over the effects of 68 percent confidence interval
120 86 percent confidence interval
Western sanctions on Russian crude oil exports whip- 95 percent confidence interval
sawed expectations about global market balances. As of
60
March, Russian crude oil exports had held steady since
implementation of the Group of Seven (G7) price cap 0
and ban on crude oil imports on December 5. Russia 2017 18 19 20 21 22 23 24 25

rerouted its oil, reportedly sold at a major discount to

Sources: Bloomberg Finance L.P.; IMF, Primary Commodity Price System; Kpler;
Brent oil prices, to nonsanctioning countries, primar- Refinitiv Datastream; and IMF staff calculations.
ily India and China. Downside supply risks did not Note: WEO = World Economic Outlook.
1
Adjusted for inflation using the US consumer price index (CPI). Last actual value is
materialize until Russia’s recent announcement of a applied to the forecast period. Dashed lines are the forecasts from 2023:Q1 to
modest production reduction. A sizable release of stra- 2024:Q4.
2
WEO futures prices are baseline assumptions for each WEO and derived from
tegic petroleum reserves by Organisation for Economic futures prices. Prices in the April 2023 WEO are based on the March 17, 2023
Co-operation and Development member countries also closing.
3
Derived from prices of futures options on March 17, 2023.
helped keep oil markets well supplied, in part offset-
ting underproduction and reduced targets by OPEC+
(Organization of the Petroleum Exporting Countries
Futures markets suggest that crude oil prices will
plus selected nonmember countries).
slide by 24.1 percent, to average $73.1 a barrel, in
2023 (from $96.4 in 2022) and continue to fall in
The contributors to this Special Feature are Mehdi Benatiya the coming years, to $65.4 in 2026 (Figure 1.SF.1,
Andaloussi, Lukas Boehnert, Christian Bogmans, Rachel Brasier,
Andrea Pescatori (team leader), Ervin Prifti, and Martin Stuermer, panel 2). Uncertainty around this price outlook is ele-
with research assistance from Wenchuan Dong and Tianchu Qi. vated in part due to the uncertain rebound in China’s

30 International Monetary Fund | April 2023

Commodit y Special Feature  Market Developments and the Macroeconomic Impact of Declines in Fossil Fuel Extraction

growth, as well as the energy transition (Figure 1.SF.1, Figure 1.SF.2. EU Gas Storage and Futures Contract Prices
panel 3). Upside price risks stem from potential supply (US dollars per million British thermal units; percent)
disruptions, including those from Russian retaliation March 2023 March 2028
to a binding price cap, and insufficient investment in March 2024 Average price (2015–20)
fossil fuel extraction. Following the financial market March 2025 EU gas storage utilization (right scale)
March 2026
turmoil that emerged in mid-March, downside price
risks of a widespread global economic relapse have 120 100
increased significantly.
100 80
Natural gas prices at the European Title Transfer
Facility trading hub receded 76.1 percent from record 80
60
highs in August 2022 to $16.7 a million British ther-
60
mal units (MMBtus) in February 2023 as concerns
40
about supply shortages faded. Prices reached nearly 40
$100 a MMBtu in late August when EU countries 20
20
raced to refill their gas storage facilities amid fears
of supply shortages during the winter. This followed 0 0
Jan. Mar. May July Sept. Nov. Jan. Mar.
Russia’s progressive shutdown of roughly 80 percent 2022 22 22 22 22 22 23 23
of pipeline gas supplies to European countries. Prices
in the global liquefied natural gas market followed Sources: Argus Direct; Bloomberg L.P.; Gas Infrastructure Europe (GIE); and IMF
staff calculations.
in lockstep. For the winter of 2022–23, a crisis was Note: European Union country coverage by the GIE definition. Dates in legend are
averted, with ample storage at European facilities Dutch Title Transfer Facility (TTF) futures contracts expiration date.
owing to higher liquefied natural gas imports and
lower gas demand amid high prices as well as an
atypically mild winter. Lower demand due to an eco- then decrease 2.6 percent in 2024. Traders seem to
nomic slowdown in China and substitution of other price in a potential rebound in demand from China.
fuel sources, such as coal, also helped ease pressures Agricultural prices continue on a downward trend.
on the global liquefied natural gas market. A price Drawdowns of stocks of staple foods in major export-
decline to historical averages is expected by 2028 ing countries, due to major shocks in the past two
(Figure 1.SF.2). Risks of price spikes remain some- years from the pandemic and the war in Ukraine, have
what elevated, however, for next winter. Spillovers stopped as supply and demand have reacted to higher
from gas markets caused a 50.9 percent slide in coal prices. Food and beverage prices peaked in May 2022
prices over the reference period. and are up 1.3 percent from last August. They remain
Metal prices recover after steep drop. The base metal 22.3 percent above the past-five-year average and
price index dropped below levels preceding Russia’s 39.1 percent above pre-pandemic levels. The sup-
invasion of Ukraine. It surged after the invasion ply outlook improved as Ukrainian wheat and other
but experienced a broad-based retreat amid slow- products entered the global market after the Black Sea
ing Chinese metal demand (accounting for roughly corridor initiative was renewed last November. High
half of global consumption of major metals) and prices also provided incentives to other regions, such
monetary policy tightening. With China’s reopening as the European Union and India, to step up wheat
and increased infrastructure spending, as well as an production. However, some of the correction has likely
expected slower pace of interest rate hikes from the come from demand destruction of price-elastic compo-
Federal Reserve, base metal prices partially rebounded, nents such as meat and biofuels. Risks remain balanced
increasing by 19.7 percent from August 2022 to as spillovers from gas to fertilizer prices and a possible
February 2023. Recent banking distress presents abrupt ending of the Black Sea corridor deal offset pos-
significant downside risks to prices. The IMF’s energy sibly reduced consumption and a potentially stronger
transition metal index increased 14.3 percent. Gold supply reaction. Prices of raw agricultural materials
prices rose by 5.1 percent, and central banks’ net declined by 9.1 percent from last August amid slowing
purchases broke a 55-year record. The base metal price global demand but, like base metal prices, have partly
index is projected to increase 3.5 percent in 2023 and rebounded in recent months.

International Monetary Fund | April 2023 31

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.SF.3. Global Fossil Fuel Production Declines production is detrimental or beneficial to countries’
60 Percent in a Net Zero Emissions Scenario economic growth.2
(Exajoule) This Special Feature contributes to filling this gap
Oil Coal by estimating the macroeconomic impact of per-
Natural gas Renewables and nuclear sistent declines in extraction activity.3 It focuses on
production declines, given that the effects of climate
700 policies on fossil fuel prices are uncertain, depending
600
on whether policies curbing demand for fossil fuels
will prevail over those curbing their supply (see the
500 April 2022 World Economic Outlook). Even though
production declines will likely vary substantially and
400
are hard to anticipate, these estimates can help inform
300 fossil-fuel-exporting countries’ medium- to long-term
planning and policies.
200
Countries depending on fossil fuel output: Between
100 2010 and 2019, average oil and gas produc-
tion-to-GDP ratios were large in countries such as
0 Angola, Azerbaijan, the Republic of Congo, Kuwait,
2000 10 20 30 40 50
and Saudi Arabia (Figure 1.SF.4 panel 1). Gas pro-
Sources: International Energy Agency; and IMF staff calculations. duction is particularly relevant in Qatar and Trinidad
Note: Renewables include solar, wind, hydro, bioenergy, and traditional use of and Tobago. Coal production, on the other hand, is
biomass. Fossil fuel production includes fossil fuels for non-energy use (for
example, petrochemicals) as well as carbon capture and storage abatement. less relevant to GDP at the country level, except in
the case of Mongolia. Most extracted fossil fuels are
exported and so are a fundamental source of cash
inflows in economies’ external balance. Indeed, ratios
The Macroeconomic Impact of Declines in Fossil of net exports of oil and gas to GDP surpassed 25
Fuel Extraction percent on average over 2010–2019 in more than
Reaching net zero emissions by 2050 will require ten countries (Figure 1.SF.4 panel 2). The oil and gas
an 80 percent reduction in global fossil fuel extraction sector is also a substantial contributor to tax revenues
compared with 2021 levels, according to the Interna- and, to a lesser extent, to employment (see Online
tional Energy Agency (2022) (Figure 1.SF.3). Though Annex Figures 1.SF.1 to 1.SF.4).4
the situation is highly uncertain, it is worth asking A new data set on declines in extraction: The empir-
what economic repercussions a contraction in fossil ical exercise conducted for this Special Feature relies
fuel extraction could have for fossil fuel exporters. A on a new data set on the extraction of oil, coal, gas,
large amount of literature emphasizes the negative and metals for countries worldwide from 1950 to
impact a sizable extraction industry has on a coun- 2020. To deal with endogeneity, the analysis identifies
try’s economic growth (the resource curse) because 35 episodes involving persistent declines in extractive
it weighs on the performance of the manufacturing activity out of a total of 154 observed episodes. It
sector (Krugman 1987; Frankel 2012) and on the verifies that these episodes are driven by factors exog-
quality of institutions (Mauro 1995; Lane and Tornell enous to economic conditions such as depletion or
1996).1 There is, however, a dearth of analysis on the sector-specific policy changes. For example, included
macroeconomic effects of a reversal, to the extent that are episodes such as the sudden tax increase on bauxite
there is still debate over whether a decline in fossil fuel mining in Suriname in 1974, which led to a ­persistent

2A small body of literature examines the local effects of mining

1“Dutchdisease” is a version of the resource curse in which an booms and busts. See Black, McKinnish, and Sanders (2005); Jacob-
increase in commodity prices leads to a real exchange rate appreci- sen and Parker (2016); Cavalcanti, Da Mata, and Toscani (2019);
ation that crowds out a commodity exporter’s domestic manufac- Watson, Lange, and Linn (2023); and Hanson (2023).
turing sector. Total output can still expand, and the country can 3This Special Feature is based on Bems and others (forthcoming).

become richer. See Brunnschweiler and Bulte (2008) and van der 4All online annexes are available at www​.imf​.org/​en/​

Ploeg and Venables (2012). Publications/​WEO.

32 International Monetary Fund | April 2023

 Commodit y Special Feature  Market Developments and the Macroeconomic Impact of Declines in Fossil Fuel Extraction

Figure 1.SF.4. Top Twenty Countries by Share of Fossil Fuel Figure 1.SF.5. Episodes of Extraction Declines
Production and Net Exports in GDP (Percent)
(Percent)
20 Median 25th–75th percentile
Coal Natural gas Crude oil
0
70 1. Production-to-GDP Ratio
–20
60
50 –40
40
30 –60
20
–80
10
0 –100
KWT
COG
TTO
GNQ
AZE
QAT
IRQ
SSD
SAU
BRN
VEN

OMN
AGO
GAB

KAZ
MNG
ARE
BHR
LBY

DZA –120
–10 –5 0 5 10 15
60 2. Net-Exports-to-GDP Ratio
50 Sources: Bems and others (forthcoming); and IMF staff calculations.
Note: X-axis unit is years before and after peak extraction year.
40
30
20
the horizon h, up to 10 years. Results may thus be
10
interpreted as cumulative percentage changes from the
0
baseline to a shock in year t. The term Δqt,i captures
–10
the percentage change in extraction output for episode
BRN
KWT
QAT
AGO
COG

IRQ
OMN
AZE
SAU

ARE
VEN
KAZ
NOR
RUS

MNG
BOL
TTO
LBY

DZA

NGA

i at year t. The baseline includes country fixed effects

Sources: International Energy Agency; United Nations Comtrade database; World
ψn to account for structural differences across coun-
Bank; and IMF staff calculations. tries, time fixed effects ​​ϕ​  t​​​to control for global price
Note: Ratios are computed annually and averaged over 2010–2019. Prices are movements and other common global factors, as well
taken at the regional level in US dollars. Iran is excluded due to data limitation.
Country list uses International Organization for Standardization (ISO) country as three lags of the dependent variable, and a shock
codes. series to deal with autocorrelation, following Montiel
Olea and Plagborg-Møller (2021).
Negative macroeconomic effects: A typical episode
contraction in bauxite output (other examples feature
leads to a 1 percent initial decline from the baseline in
in Bems and others, forthcoming). Extraction declines
real GDP, cumulating to 5 percent after five years. The
driven by global recessions, policy decisions directly
decline is persistent, with no rebound until the end of
affecting other sectors of an economy, and structural
the horizon (Figure 1.SF.6, panel 1).
transitions such as the breakup of the Soviet Union
The real exchange rate depreciates slowly by 20 per-
and civil wars are excluded. Across those identified, the
cent. This does not stimulate enough reallocation of
typical episode is a 10 percent contraction in extraction
production factors such as labor and capital toward
activity in the episode’s first year that cumulates to a
tradables sectors, which could offset the decline in
40 percent reduction over 10 years (Figure 1.SF.5).
exports that depend on extractive industries. Instead,
Estimating the macroeconomic effects of declines in
the trade balance worsens, driven by a decline in
extractive activity: Following Jordà (2005), local projec-
exports of about 6 percent (Figure 1.SF.6, panel 3).
tions are used to estimate the effects of episodes of per-
Imports and investment also decline, though the
sistent exogenous extraction declines on real GDP and
estimates for these effects are less precise. Aggregate
the external and domestic sectors using the following:
consumption responds only with a lag of more than
​​y​ t+h,i​​  − ​y​ t−1,i​​  =  α + ​β​​  h​ Δ ​q​ t,i​​  + ​∑ pj=1   ​ ​​ ​Γ​  hj​  ​ ​y​ t−j,i​​  five years.
+ ​∑ pj=1  ​ ​​ ​Π​  hj​  ​ Δ ​q​ t−j,i​​  + ​ψ​  n​​  + ​ϕ​  t​​  + ​u​ t+h,i​​ ​y​  t+h,i​​  − ​y​  t−1,i​​​. The role of manufacturing: Spillover effects on the
manufacturing and services sectors are significant
The equation’s left side represents the log deviation and negative. Their value added falls significantly by
of the variable of interest from its initial value over about 5 percent (Bems and others, forthcoming).

International Monetary Fund | April 2023 33

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Figure 1.SF.6. Responses of Macroeconomic Variables to an Figure 1.SF.7. Response of Institutional Quality Interacted
Extraction Decline Shock with Manufacturing Sector Size to an Extraction Decline
(Percent) Shock
(Percent)
2 1. Real GDP 2. Role of Institutions 4
20 Small manufacturing sector Large manufacturing sector
0
0
–2 10
–4
–4
0
–8
–6
–12 –10
–8 Bad institutions
Good institutions
–10 –16 –20
0 2 4 6 8 10 0 2 4 6 8 10

4 3. Trade 4. Exchange Rate 80 –30

0 60 –40
0 1 2 3 4 5 6 7 8 9 10
40
–4
Sources: Bems and others (forthcoming); and IMF staff calculations.
20 Note: The unit of the x-axis is years after the shock. Shaded areas represent
–8 90 percent confidence intervals.
0
–12 Imports –20
Exports
–16 –40 The role of institutions: The estimated GDP impact is
0 2 4 6 8 10 0 2 4 6 8 10
significantly larger for middle- and low-income coun-
6 5. Consumption 6. Investment 8 tries than for those with high incomes. One plausible
3 4 explanation for this is that high-income countries tend
to have stronger institutions. Five years after the shock,
0 0
the GDP difference between countries with high and
–3 –4 low institutional quality is about 5 percentage points
(Figure 1.SF.6, panel 2). This could indicate that
–6 –8
Private strong institutions help buffer the negative economic
–9 Public –12 effects of a persistent decline in extraction activity.
–12 –16 While explaining what determines the quality of
0 2 4 6 8 10 0 2 4 6 8 10 institutions is beyond the scope of this analysis, the
economic literature on the resource curse emphasizes
Sources: Bems and others (forthcoming); and IMF staff calculations.
Note: The unit of the x-axis is years after the shock. Shaded areas represent that resource booms can lead to a deterioration in the
90 percent confidence intervals. quality of institutions. What happens, however, in
the reverse, a resource extraction bust? The exercise
shows that a decline in extraction activity does not
These ­sectors provide mining sector inputs and pro- restore the quality of institutions, not even a decade
cess outputs. The negative impact more than offsets after the shock. This suggests a hysteresis effect and an
the potential benefits of the depreciation in the real asymmetric response of institutions to shocks: once
exchange rate. The initial share of the manufacturing institutions are damaged, improving them is hard (see
sector in value added matters. Economies with bigger Figure 1.SF.7).
initial manufacturing shares fare better, suggesting the Anticipation: It could bias the results toward a smaller
presence of sunk costs in the tradables sector that favor estimated impact if the regression does not capture
existing exporting manufacturing firms over new ones. earlier adjustment. To explore anticipation, projections
The negative impact on employment is, on the other of commodity production in IMF Article IV reports
hand, small, likely owing to the high capital intensity are reviewed and compared with actual production.
of the extraction sector. Out of 26 decline episodes with Article IV coverage,

34 International Monetary Fund | April 2023

Commodit y Special Feature  Market Developments and the Macroeconomic Impact of Declines in Fossil Fuel Extraction

only 4 were anticipated. In the other 22, extraction was sovereign wealth funds, and facilitate the reallo-
expected either to increase or to remain stable (or in a cation of production factors. Possible policies for
few cases, it was not mentioned). The lack of anticipa- accomplishing these goals include ameliorating the
tion, in turn, suggests that uncertainty about the size business environment to attract investment in new,
and persistence of the ensuing contraction may have productive, higher-value-added sectors; modernizing
delayed the economic adjustment needed, surprising the infrastructure and attracting foreign direct investment
country’s policymakers and private sector alike. In fact, in research and development; and improving the
both private and public consumption initially increase, human capital stock of the labor force by investing
declining only with a delay to a 4 percent lower level. in education.
This suggests that the shock was typically not fully The pace and direction of the clean energy transi-
anticipated, or income-side policies are implemented tion as well as the price outlook depend on the policy
to buffer the initial impact, or both. Accordingly, the mix. This creates great uncertainty in countries that
exchange rate moves in only a modest and statistically produce fossil fuels. If fossil fuel prices decline because
nonsignificant way. of a climate policy mix that works mostly through the
A More Challenging Energy Transition: Countries demand side, high-cost producers will need to shut
at risk of declining fossil fuel output need to address down production. If those prices instead rise based on
the possibility of a challenging structural adjustment. a climate policy mix that relies on supply cuts, local
To do so, they can improve public finances and the production declines will depend on domestic policy
quality of their institutions (for example, by enhanc- decisions (see the Special Feature in the April 2022
ing the management of public sector institutions World Economic Outlook). Climate policy certainty, at
and the regulatory business environment), diversify the country and global levels, could make adjustments
their economies (Cherif and others 2022), set up more predictable and less costly.

International Monetary Fund | April 2023 35

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Annex Table 1.1.1. European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
Europe 2.7 0.8 1.7 15.4 10.5 6.5 1.7 1.3 1.5 ... ... ...
Advanced Europe 3.6 0.6 1.4 8.5 5.6 3.0 1.6 1.7 2.0 6.0 6.2 6.2
Euro Area4,5 3.5 0.8 1.4 8.4 5.3 2.9 –0.7 0.6 0.9 6.8 6.8 6.8
Germany 1.8 –0.1 1.1 8.7 6.2 3.1 4.2 4.7 5.1 3.1 3.3 3.3
France 2.6 0.7 1.3 5.9 5.0 2.5 –1.7 –1.2 –0.7 7.3 7.4 7.3
Italy 3.7 0.7 0.8 8.7 4.5 2.6 –0.7 0.7 1.0 8.1 8.3 8.4
Spain 5.5 1.5 2.0 8.3 4.3 3.2 1.1 0.9 0.8 12.9 12.6 12.4
The Netherlands 4.5 1.0 1.2 11.6 3.9 4.2 5.5 6.3 6.3 3.5 3.9 4.2
Belgium 3.1 0.7 1.1 10.3 4.7 2.1 –3.4 –2.7 –1.4 5.5 6.0 6.0
Ireland 12.0 5.6 4.0 8.1 5.0 3.2 8.8 8.2 7.5 4.5 4.5 4.5
Austria 5.0 0.4 1.1 8.6 8.2 3.0 0.3 1.2 0.6 4.8 5.3 5.6
Portugal 6.7 1.0 1.7 8.1 5.7 3.1 –1.3 –0.8 –0.7 6.0 6.6 6.5
Greece 5.9 2.6 1.5 9.3 4.0 2.9 –9.7 –8.0 –6.0 12.2 11.2 10.4
Finland 2.1 0.0 1.3 7.2 5.3 2.5 –4.2 –3.4 –2.2 6.8 7.5 7.5
Slovak Republic 1.7 1.3 2.7 12.1 9.5 4.3 –4.3 –3.5 –2.6 6.1 6.0 5.9
Croatia 6.3 1.7 2.3 10.7 7.4 3.6 –1.2 –1.8 –1.8 6.8 6.4 6.0
Lithuania 1.9 –0.3 2.7 18.9 10.5 5.8 –4.5 –3.0 –2.0 5.9 7.0 6.5
Slovenia 5.4 1.6 2.1 8.8 6.4 4.5 –0.4 0.3 0.8 4.0 3.9 4.0
Luxembourg 1.5 1.1 1.7 8.1 2.6 3.1 4.0 4.3 4.3 4.8 5.1 5.4
Latvia 2.0 0.4 2.9 17.2 9.7 3.5 –6.3 –3.1 –2.2 6.9 7.0 6.8
Estonia –1.3 –1.2 3.2 19.4 9.7 4.1 –2.2 –1.2 –0.9 5.6 6.1 5.7
Cyprus 5.6 2.5 2.8 8.1 3.9 2.5 –8.8 –7.8 –7.2 6.7 6.5 6.2
Malta 6.9 3.5 3.5 6.1 5.8 3.4 0.7 1.8 1.7 2.9 3.1 3.2
United Kingdom 4.0 –0.3 1.0 9.1 6.8 3.0 –5.6 –5.2 –4.4 3.7 4.2 4.7
Switzerland 2.1 0.8 1.8 2.8 2.4 1.6 9.8 7.8 8.0 2.2 2.3 2.4
Sweden 2.6 –0.5 1.0 8.1 6.8 2.3 4.3 3.9 3.9 7.5 7.8 8.0
Czech Republic 2.4 –0.5 2.0 15.1 11.8 5.8 –2.2 0.3 2.4 2.3 3.5 2.5
Norway 3.3 2.1 2.5 5.8 4.9 2.8 30.4 25.4 23.2 3.3 3.5 3.7
Denmark 3.6 0.0 1.0 8.5 4.8 2.8 12.8 9.5 7.7 4.5 5.1 5.1
Iceland 6.4 2.3 2.1 8.3 8.1 4.2 –1.5 –1.7 –1.5 3.8 3.4 3.8
Andorra 8.7 1.3 1.5 6.2 5.6 2.9 17.1 17.6 18.1 2.0 2.1 1.7
San Marino 4.6 1.2 1.0 7.1 4.6 2.7 4.3 2.4 2.0 5.5 5.1 5.1
Emerging and Developing Europe6 0.8 1.2 2.5 27.9 19.7 13.2 2.4 –0.8 –0.7 ... ... ...
Russia –2.1 0.7 1.3 13.8 7.0 4.6 10.3 3.6 3.2 3.9 3.6 4.3
Türkiye 5.6 2.7 3.6 72.3 50.6 35.2 –5.4 –4.0 –3.2 10.5 11.0 10.5
Poland 4.9 0.3 2.4 14.4 11.9 6.1 –3.2 –2.4 –2.1 2.9 3.2 3.5
Romania 4.8 2.4 3.7 13.8 10.5 5.8 –9.3 –7.9 –7.7 5.6 5.6 5.4
Ukraine7 –30.3 –3.0 ... 20.2 21.1 ... 5.7 –4.4 ... 24.5 20.9 ...
Hungary 4.9 0.5 3.2 14.5 17.7 5.4 –8.1 –4.6 –1.9 3.6 4.1 3.8
Belarus –4.7 0.7 1.2 14.8 7.5 10.1 4.2 1.3 1.6 4.5 4.3 3.9
Bulgaria5 3.4 1.4 3.5 13.0 7.5 2.2 –0.7 –0.5 –1.0 4.3 4.6 4.4
Serbia 2.3 2.0 3.0 12.0 12.2 5.3 –6.9 –6.1 –5.7 9.4 9.2 9.1
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2Percent of GDP.
3Percent. National definitions of unemployment may differ.
4Current account position corrected for reporting discrepancies in intra-area transactions.
5Based on Eurostat’s harmonized index of consumer prices except for Slovenia.
6Includes Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, and North Macedonia.
7See the country-specific note for Ukraine in the “Country Notes” section of the Statistical Appendix.

36 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Annex Table 1.1.2. Asian and Pacific Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
Asia 3.8 4.6 4.4 3.8 3.4 2.9 1.8 1.5 1.4 ... ... ...
Advanced Asia 1.8 1.8 1.8 3.8 3.3 2.4 3.6 3.9 4.2 2.9 3.0 3.0
Japan 1.1 1.3 1.0 2.5 2.7 2.2 2.1 3.0 4.0 2.6 2.3 2.3
Korea 2.6 1.5 2.4 5.1 3.5 2.3 1.8 2.2 2.8 2.9 3.7 3.7
Taiwan Province of China 2.5 2.1 2.6 2.9 1.9 1.7 13.4 11.9 11.3 3.7 3.7 3.7
Australia 3.7 1.6 1.7 6.6 5.3 3.2 1.2 1.4 0.2 3.7 4.0 4.1
Singapore 3.6 1.5 2.1 6.1 5.8 3.5 19.3 15.5 15.0 2.1 2.1 2.1
Hong Kong SAR –3.5 3.5 3.1 1.9 2.3 2.4 10.7 8.0 6.5 4.2 3.4 3.3
New Zealand 2.4 1.1 0.8 7.2 5.5 2.6 –8.9 –8.6 –7.2 3.3 4.3 5.3
Macao SAR –26.8 58.9 20.6 1.0 2.5 2.3 –23.5 13.1 23.1 3.0 2.7 2.5

Emerging and Developing Asia 4.4 5.3 5.1 3.8 3.4 3.0 1.1 0.7 0.5 ... ... ...
China 3.0 5.2 4.5 1.9 2.0 2.2 2.3 1.4 1.1 4.2 4.1 3.9
India4 6.8 5.9 6.3 6.7 4.9 4.4 –2.6 –2.2 –2.2 ... ... ...
Indonesia 5.3 5.0 5.1 4.2 4.4 3.0 1.0 –0.3 –0.7 5.9 5.3 5.2
Thailand 2.6 3.4 3.6 6.1 2.8 2.0 –3.3 1.2 3.0 1.0 1.0 1.0
Vietnam 8.0 5.8 6.9 3.2 5.0 4.3 –0.9 0.2 0.6 2.3 2.4 2.4
Philippines 7.6 6.0 5.8 5.8 6.3 3.2 –4.4 –2.5 –2.4 5.4 5.3 5.1
Malaysia 8.7 4.5 4.5 3.4 2.9 3.1 2.6 2.6 2.7 3.8 3.6 3.5

Other Emerging and Developing Asia5 3.4 4.2 5.6 12.5 11.3 6.6 –3.3 –1.7 –3.0 ... ... ...

Memorandum
ASEAN-56 5.5 4.5 4.6 4.8 4.3 2.9 2.5 2.5 2.5 ... ... ...
Emerging Asia7 4.4 5.3 5.0 3.4 3.1 2.9 1.3 0.7 0.5 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2Percent of GDP.
3Percent. National definitions of unemployment may differ.
4See the country-specific note for India in the “Country Notes” section of the Statistical Appendix.
5Other Emerging and Developing Asia comprises Bangladesh, Bhutan, Brunei Darussalam, Cambodia, Fiji, Kiribati, Lao P.D.R., Maldives, Marshall Islands, Micronesia,

Mongolia, Myanmar, Nauru, Nepal, Palau, Papua New Guinea, Samoa, Solomon Islands, Sri Lanka, Timor-Leste, Tonga, Tuvalu, and Vanuatu.
6Indonesia, Malaysia, Philippines, Singapore, Thailand.
7Emerging Asia comprises China, India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

International Monetary Fund | April 2023 37

 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Annex Table 1.1.3. Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
North America 2.3 1.6 1.1 7.9 4.6 2.5 –3.3 –2.5 –2.3 ... ... ...
United States 2.1 1.6 1.1 8.0 4.5 2.3 –3.6 –2.7 –2.5 3.6 3.8 4.9
Mexico 3.1 1.8 1.6 7.9 6.3 3.9 –0.9 –1.0 –1.0 3.3 3.3 3.5
Canada 3.4 1.5 1.5 6.8 3.9 2.4 –0.4 –1.1 –1.1 5.3 5.8 6.2
Puerto Rico4 4.8 0.4 –1.6 4.3 3.3 2.2 ... ... ... 6.0 7.9 8.8

South America5 3.9 1.0 1.9 17.4 17.2 11.8 –3.1 –2.1 –2.0 ... ... ...
Brazil 2.9 0.9 1.5 9.3 5.0 4.8 –2.9 –2.7 –2.7 7.9 8.2 8.1
Argentina 5.2 0.2 2.0 72.4 98.6 60.1 –0.7 1.0 0.8 7.0 7.6 7.4
Colombia 7.5 1.0 1.9 10.2 10.9 5.4 –6.2 –5.1 –4.6 11.2 11.3 10.9
Chile 2.4 –1.0 1.9 11.6 7.9 4.0 –9.0 –4.2 –3.8 7.9 8.3 7.9
Peru 2.7 2.4 3.0 7.9 5.7 2.4 –4.5 –2.1 –2.3 7.8 7.6 7.4
Ecuador 3.0 2.9 2.8 3.5 2.5 1.5 2.2 2.0 2.0 3.8 3.6 3.6
Venezuela 8.0 5.0 4.5 200.9 400.0 200.0 3.5 5.0 5.5 ... ... ...
Bolivia 3.2 1.8 1.9 1.7 4.0 3.7 –1.5 –2.5 –2.6 4.7 4.9 5.0
Paraguay 0.2 4.5 3.5 9.8 5.2 4.1 –5.2 –2.5 –3.1 7.2 6.4 6.1
Uruguay 4.9 2.0 2.9 9.1 7.6 6.1 –2.5 –2.5 –2.2 7.9 8.3 8.0
Central America6 5.3 3.8 3.8 7.3 5.5 4.0 –3.5 –2.8 –2.7 ... ... ...
Caribbean7 13.4 9.9 14.1 12.6 13.5 6.8 4.2 2.6 3.6 ... ... ...

Memorandum
Latin America and the Caribbean8 4.0 1.6 2.2 14.0 13.3 9.0 –2.5 –1.8 –1.7 ... ... ...
Eastern Caribbean Currency Union9 9.1 4.5 4.0 5.6 4.3 2.4 –14.2 –11.9 –10.7 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix. Aggregates exclude

Venezuela.
2Percent of GDP.
3Percent. National definitions of unemployment may differ.
4Puerto Rico is a territory of the United States, but its statistical data are maintained on a separate and independent basis.
5See the country-specific notes for Argentina and Venezuela in the “Country Notes” section of the Statistical Appendix.
6Central America refers to CAPDR (Central America, Panama, and the Dominican Republic) and comprises Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras,

Nicaragua, and Panama.

7The Caribbean comprises Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent

and the Grenadines, Suriname, and Trinidad and Tobago.

8Latin America and the Caribbean comprises Mexico and economies from the Caribbean, Central America, and South America. See the country-specific notes for Argentina and

Venezuela in the “Country Notes” section of the Statistical Appendix.

9Eastern Caribbean Currency Union comprises Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines as well as Anguilla

and Montserrat, which are not IMF members.

38 International Monetary Fund | April 2023

 CHAPTER 1   Global Prospects and Policies

Annex Table 1.1.4. Middle East and Central Asia Economies: Real GDP, Consumer Prices, Current Account Balance, and
Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
Middle East and Central Asia 5.3 2.9 3.5 14.3 15.9 12.0 7.5 3.6 2.1 ... ... ...
Oil Exporters4 5.1 3.1 3.2 14.4 12.6 9.3 12.4 6.5 4.8 ... ... ...
Saudi Arabia 8.7 3.1 3.1 2.5 2.8 2.3 13.8 6.2 3.6 ... ... ...
Iran 2.5 2.0 2.0 49.0 42.5 30.0 4.7 1.8 1.9 9.5 9.8 10.1
United Arab Emirates 7.4 3.5 3.9 4.8 3.4 2.0 11.7 7.1 7.0 ... ... ...
Kazakhstan 3.2 4.3 4.9 15.0 14.8 8.5 2.8 –1.9 –2.0 4.9 4.8 4.8
Algeria 2.9 2.6 2.6 9.3 8.1 7.7 7.2 0.8 –2.7 ... ... ...

Iraq 8.1 3.7 3.1 5.0 6.6 1.6 11.6 4.4 –2.5 ... ... ...
Qatar 4.2 2.4 1.8 5.0 3.0 2.7 26.0 19.2 14.9 ... ... ...
Kuwait 8.2 0.9 2.7 3.9 3.3 2.6 28.5 19.7 16.8 ... ... ...
Azerbaijan 4.6 3.0 2.6 13.8 11.3 8.0 30.5 19.2 17.4 5.9 5.8 5.8
Oman 4.3 1.7 5.2 2.8 1.9 2.4 3.2 2.1 1.4 ... ... ...
Turkmenistan 1.8 2.3 2.1 11.5 6.7 10.7 5.7 4.6 2.8 ... ... ...

Oil Importers5,6 5.5 2.7 4.0 14.1 20.5 15.8 –2.0 –2.4 –3.6 ... ... ...
Egypt 6.6 3.7 5.0 8.5 21.6 18.0 –3.5 –2.8 –3.1 7.3 7.6 7.7
Pakistan 6.0 0.5 3.5 12.1 27.1 21.9 –4.6 –2.3 –2.4 6.2 7.0 6.8
Morocco 1.1 3.0 3.1 6.6 4.6 2.8 –4.3 –3.7 –3.5 12.9 11.0 10.5
Uzbekistan 5.7 5.3 5.5 11.4 11.8 9.9 1.4 –3.5 –3.7 8.9 8.4 7.9
Sudan –2.5 1.2 2.7 138.8 71.6 51.9 –6.2 –7.2 –8.3 32.1 33.1 33.0

Tunisia 2.5 1.3 1.9 8.3 10.9 9.5 –8.5 –7.1 –5.7 ... ... ...
Jordan 2.7 2.7 2.7 4.2 3.8 2.9 –7.4 –6.0 –5.2 22.8 ... ...
Georgia 10.1 4.0 5.0 11.9 5.9 3.2 –3.1 –4.1 –4.2 18.7 19.5 20.2
Armenia 12.6 5.5 5.0 8.7 7.1 5.0 0.1 –1.7 –3.3 12.5 12.5 13.0
Tajikistan 8.0 5.0 4.5 6.6 5.4 6.5 6.2 –1.9 –2.4 ... ... ...

Kyrgyz Republic 7.0 3.5 3.8 13.9 11.3 7.8 –26.8 –9.7 –9.0 9.0 9.0 9.0
West Bank and Gaza 4.0 3.5 2.7 3.7 3.2 2.7 –12.4 –11.8 –11.5 24.4 24.2 24.0
Mauritania 5.0 4.4 5.1 9.6 9.5 7.0 –14.3 –7.2 –8.6 ... ... ...
Memorandum
Caucasus and Central Asia 4.8 4.2 4.5 13.0 11.8 8.5 5.8 1.1 0.5 ... ... ...
Middle East, North Africa, Afghanistan, 5.4 2.7 3.4 14.4 16.4 12.5 7.8 3.9 2.3 ... ... ...
and Pakistan6
Middle East and North Africa 5.3 3.1 3.4 14.8 14.8 11.1 9.0 4.5 2.7 ... ... ...
Israel7 6.4 2.9 3.1 4.4 4.3 3.1 3.7 3.5 3.3 3.8 3.8 3.7
Maghreb8 0.7 4.4 3.4 7.9 6.9 5.9 0.9 –0.5 –1.7 ... ... ...
Mashreq9 6.0 3.7 4.8 12.3 22.8 17.8 –5.0 –3.9 –4.1 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2Percent of GDP.
3Percent. National definitions of unemployment may differ.
4Includes Bahrain, Libya, and Yemen.
5Includes Djibouti, Lebanon, and Somalia. See the country-specific note for Lebanon in the “Country Notes” section of the Statistical Appendix.
6Excludes Afghanistan and Syria because of the uncertain political situation. See the country-specific notes in the “Country Notes” section of the Statistical Appendix.
7Israel, which is not a member of the economic region, is shown for reasons of geography but is not included in the regional aggregates.
8The Maghreb comprises Algeria, Libya, Mauritania, Morocco, and Tunisia.
9The Mashreq comprises Egypt, Jordan, Lebanon, and West Bank and Gaza. Syria is excluded because of the uncertain political situation.

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 WORLD ECONOMIC OUTLOOK: A Rock y Recovery

Annex Table 1.1.5. Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024
Sub-Saharan Africa 3.9 3.6 4.2 14.5 14.0 10.5 –2.0 –2.6 –2.7 ... ... ...
Oil Exporters4 3.1 3.2 3.0 18.1 17.6 14.1 2.0 0.7 0.0 ... ... ...
Nigeria 3.3 3.2 3.0 18.8 20.1 15.8 –0.7 –0.6 –0.5 ... ... ...
Angola 2.8 3.5 3.7 21.4 11.7 10.8 11.0 6.2 3.1 ... ... ...
Gabon 2.8 3.0 3.1 4.3 3.4 2.6 1.2 –0.1 –1.1 ... ... ...
Chad 2.5 3.5 3.7 5.3 3.4 3.0 2.8 –1.4 –4.9 ... ... ...
Equatorial Guinea 1.6 –1.8 –8.2 5.0 5.7 5.2 0.0 –2.1 –5.8 ... ... ...

Middle-Income Countries5 3.6 2.7 3.7 9.3 9.4 6.2 –2.7 –3.3 –3.0 ... ... ...
South Africa 2.0 0.1 1.8 6.9 5.8 4.8 –0.5 –2.3 –2.6 33.5 34.7 34.7
Kenya 5.4 5.3 5.4 7.6 7.8 5.6 –4.7 –5.3 –5.3 ... ... ...
Ghana 3.2 1.6 2.9 31.9 45.4 22.2 –2.3 –2.9 –2.0 ... ... ...
Côte d’Ivoire 6.7 6.2 6.6 5.2 3.7 1.8 –6.5 –5.7 –5.3 ... ... ...
Cameroon 3.4 4.3 4.4 5.3 5.9 4.7 –1.6 –2.8 –3.0 ... ... ...
Zambia 3.4 4.0 4.1 11.0 8.9 7.7 2.4 3.8 4.5 ... ... ...
Senegal 4.7 8.3 10.6 9.7 5.0 2.0 –16.0 –10.4 –4.6 ... ... ...

Low-Income Countries6 5.2 5.4 6.2 18.5 16.9 13.1 –6.2 –5.5 –5.6 ... ... ...
Ethiopia 6.4 6.1 6.4 33.9 31.4 23.5 –4.3 –3.4 –2.6 ... ... ...
Tanzania 4.7 5.2 6.2 4.4 4.9 4.3 –4.6 –4.0 –3.3 ... ... ...
Democratic Republic of the Congo 6.6 6.3 6.5 9.0 10.8 7.2 –2.2 –3.9 –3.0 ... ... ...
Uganda 4.9 5.7 5.7 6.8 7.6 6.4 –8.1 –10.9 –11.9 ... ... ...
Burkina Faso 2.5 4.9 5.9 14.1 1.5 2.3 –5.2 –3.6 –2.7 ... ... ...
Mali 3.7 5.0 5.1 10.1 5.0 2.8 –6.9 –6.2 –5.5 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Table A6 and A7 in the Statistical Appendix.
2Percent of GDP.
3Percent. National definitions of unemployment may differ.
4Includes Republic of Congo and South Sudan.
5Includes Benin, Botswana, Cabo Verde, Comoros, Eswatini, Lesotho, Mauritius, Namibia, São Tomé and Príncipe, and Seychelles.
6Includes Burundi, Central African Republic, Eritrea, The Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mozambique, Niger, Rwanda, Sierra Leone, Togo, and

Zimbabwe.

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 CHAPTER 1   Global Prospects and Policies

Annex Table 1.1.6. Summary of World Real per Capita Output

(Annual percent change; in constant 2017 international dollars at purchasing power parity)
Average Projections
2005–14 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
World 2.3 2.1 1.9 2.4 2.4 1.6 –4.0 5.7 2.4 1.8 2.0
Advanced Economies 0.9 1.7 1.3 2.1 1.9 1.3 –4.7 5.3 2.3 0.9 1.0
United States 0.8 2.0 0.9 1.6 2.4 1.8 –3.6 5.6 1.7 1.0 0.4
Euro Area1 0.4 1.7 1.6 2.5 1.6 1.3 –6.5 5.5 3.2 0.6 1.2
Germany 1.4 0.6 1.4 2.3 0.7 0.8 –3.8 2.6 1.1 –0.2 1.1
France 0.4 0.6 0.7 2.2 1.5 1.5 –8.1 6.5 2.3 0.4 1.0
Italy –0.9 0.9 1.5 1.8 1.1 0.7 –8.7 8.1 3.8 0.7 0.8
Spain –0.4 3.9 2.9 2.8 1.9 1.2 –11.8 5.4 5.0 1.1 1.6
Japan 0.6 1.7 0.8 1.8 0.8 –0.2 –4.0 2.4 1.3 1.7 1.5
United Kingdom 0.5 1.6 1.3 1.8 1.1 1.1 –11.4 7.3 3.3 –0.7 0.5
Canada 0.9 –0.1 0.0 1.8 1.4 0.4 –6.2 4.4 1.7 –0.6 0.1
Other Advanced Economies2 2.3 1.5 1.8 2.5 2.0 1.3 –2.2 5.4 2.3 1.2 1.8
Emerging Market and Developing Economies 4.4 2.8 2.9 3.3 3.3 2.3 –3.1 6.1 2.8 2.8 3.0
Emerging and Developing Asia 7.1 5.8 5.8 5.7 5.6 4.4 –1.3 6.8 3.7 4.7 4.5
China 9.4 6.5 6.2 6.4 6.3 5.6 2.1 8.4 3.0 5.3 4.6
India3 6.2 6.7 7.0 5.6 5.3 2.8 –6.7 8.0 5.8 4.9 5.4
Emerging and Developing Europe 3.5 0.5 1.5 4.0 3.4 2.3 –1.5 7.4 2.4 1.9 2.2
Russia 3.4 –2.2 0.0 1.8 2.9 2.2 –2.3 6.1 –0.6 0.9 1.5
Latin America and the Caribbean 2.2 –0.8 –1.9 0.2 0.2 –1.1 –8.0 6.1 3.1 0.7 1.3
Brazil 2.5 –4.4 –4.1 0.5 1.0 0.4 –4.0 4.6 2.3 0.3 0.9
Mexico 0.7 2.1 1.5 1.0 1.1 –1.2 –8.9 3.8 2.2 1.0 0.7
Middle East and Central Asia 1.9 0.8 2.1 –0.4 0.5 –0.4 –4.7 6.2 3.3 1.1 1.7
Saudi Arabia 1.3 1.7 –0.5 –2.6 0.3 –1.5 –6.5 6.7 6.6 1.0 1.1
Sub-Saharan Africa 2.5 0.4 –1.3 0.1 0.5 0.5 –4.3 2.1 1.2 0.9 1.5
Nigeria 4.1 0.0 –4.2 –1.8 –0.7 –0.4 –4.3 1.1 0.7 0.7 0.5
South Africa 1.6 –0.2 –0.8 –0.3 0.0 –1.1 –7.7 4.0 1.3 –1.4 0.3
Memorandum
European Union 0.8 2.1 1.8 2.9 2.1 1.8 –5.8 5.7 3.5 0.6 1.5
ASEAN-54 3.7 3.3 3.6 4.1 3.9 3.2 –5.4 3.2 4.4 3.6 3.7
Middle East and North Africa 1.3 0.5 2.4 –1.1 0.1 –1.0 –5.0 2.8 3.3 1.3 1.6
Emerging Market and Middle-Income Economies 4.6 3.0 3.2 3.5 3.6 2.5 –3.0 6.4 3.1 3.1 3.3
Low-Income Developing Countries 3.5 2.2 1.5 2.5 2.7 2.6 –1.2 2.6 2.7 2.5 3.2
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1Data calculated as the sum of individual euro area countries.
2Excludes the Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries.
3See the country-specific note for India in the “Country Notes” section of the Statistical Appendix.
4ASEAN-5 comprises Indonesia, Malaysia, Philippines, Singapore, and Thailand.

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WORLD ECONOMIC OUTLOOK: A Rock y Recovery

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