Notes on World Economic Outlook
Demand
Global growth
 2013
o 2.67% in the first half of 2013 and 3.67% in the second half
o Advanced economies contributed the most to increase
o Pros – Global trade and industrial production gains
o Cons – Lots of inventory accumulation
 2014 – 2015
o Slower growth expected – 3.6% forecasted for ’14 and 3.9% in ‘15
United States
 Growth figures
o 2nd half of 2013 – 3.25%
o Annual growth in 2014 – 2015 expected to be above trend at 2.75%
 Pros
o Relatively moderate fiscal consolidation in terms of primary structural balance
o Accommodative monetary policy
o Real estate starting to pick up after an extended slump
o Household wealth and the wealth effect
o Easier bank lending condition (though ease of credit is uneven)
Germany
 Pros
o Supportive monetary policy
o Strong labor market
o Improved confidence
Euro Area
 Growth figures
o 1.2% in 2014 and 1.5% in 2015
 Pros
o Fiscal consolidation is easing, which will help domestic demand
o Net exports outside of the core
 Cons
o Lack of credit
o Corporate debt burden
o Financial fragmentation
Japan
 Growth figures
o 1% in 2014 and 1.4% in 2015
 Pros
o Exports (yen has depreciated)
o Private investment
 Cons
o Restrictive fiscal policy (increase in consumption taxes)
Emerging Markets
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Growth figures
o 4.7% in 2013, 4.9% in 2014, and 5.3% in 2015
Pros
o Export growth (result of currency depreciation and strengthening advanced economies)
Cons
o Weakness in investment (both external financing and domestic)
 Capital outflows
o In some markets, supply side constraints and infrastructure bottlenecks
China
 Growth Figures
o 7.5%
 Caveats:
o Credit growth must be tapered
India
 Growth figures
o 5.4% in ’14 and 6.4% in ‘15
 Caveats:
o Government must revive investment
o Exports should increase since the rupee has depreciated
Latin America
 Growth outlook
o 2.5% and 3% in ’14 and ’15 respectively
 Mexico
o Expected to benefit from expansionary macroeconomic climate and U.S. spillovers
o Structural reforms in 2015 will promote growth
 Brazil
o Currency depreciation and wage growth are good signs
o Private investment is weak because of business confidence potentially
 Argentina and Venezuela
o Difficult external financial conditions
o Exchange and administrative controls have negative effects
o
Sub-Saharan Africa
 Growth outlook
o 4.9% in 2013 and 5.5% after
 Strong external demand
 Commodities are doing well

Middle East
 Growth Outlook – moderate
 Pros
 Oil exporters support high public spending
 Some oil supply issues expected to be alleviated

Oil importing economies struggle with geopolitical security which weighs on confident
Inflation
 Inflation will remain low because:
o Output remains below potential (output gap)

o Commodity price decreases (fuel and food)
 Global economic recovery will bolster demand for commodities but this will be offset by
supply
 China is growing more slowly, but commodity consumption should continue to increase
with per capita income; however, rebalancing (from investment to consumption driven
growth) is inevitable
United States
 All inflation measures declined in 2013; core less than 1.5%; inflation will remain low for a while:
o Output gap expected to close gradually
o Wage growth is slow
 Unemployment down, but mostly demographic trends and labor force participation
 Unemployment is still high compared to long term trend
Euro Area
 The situation is similar to the U.S., and inflation is expected to remain below target well into 2016
Japan
 Yen depreciation and recovery of economy supported inflation during the past year
 Inflation will accelerate in 2015 because of consumption tax increase
 Labor market tightening and nominal wages have begun to increase
 Expected to converge to 2% gradually
Emerging Markets
 Expected to decline from 6% now to 5.25% in 2016
o Commodity prices in U.S. dollar terms will ease price pressures
 In some economies, offset by exchange rate depreciation
o Activity related price pressures should ease as growth becomes tempered in emerging markets
 Limited by domestic demand pressures and capacity constraints in some sectors
 Output relative to trend, current account, and unemployment
 Generally consistent with output remaining above crisis trend and unemployment having
declined further