world economic situation and prospects 2013 · world economic outlook ... nikkei 225 index level...
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World Economic World Economic Situation and Situation and
Prospects 2013Prospects 2013
ShamshadShamshad AkhtarAkhtar
Feb 11, 2013Feb 11, 2013DESA DESA
United NationsNew York
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Outline
1. World Economic Outlook• Global and regional growth prospects• Trends in international trade and finance
2. Downside Risks and Uncertainties• Euro area crisis• US fiscal cliff• Hard landing in major developing countries
3. Key Policy Issues • Macroeconomic policy stance • International policy coordination
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Global growth projected to pick up slightly – significant downside risks remain
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Synchronized world economies
Annual GDP growth (%)
-8
-6
-4
-2
0
2
4
6
8
10
2004 2006 2008 2010 2012 2014
Developed economies Economies in transition Developing economies
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Contributions to WGP growth by major groups
44%35% 33% 31%
42%
3%4% 4% 4%
4%
53% 61% 63% 65%54%
2010 2011 2012 2013 2014
Developed economies Economies in transition Developing economies
Developing economies drive global growth
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Developed economies: trappedin low-growth?
Annual GDP Growth (%)
-6-4-20246
USA European Union Japan
2007 2008 2009 2010 2011 2012 2013 2014
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Economies in transition: moderate growth
Annual GDP Growth (%)
-10
-5
0
5
10
CIS and Georgia South-Eastern Europe2007 2008 2009 2010 2011 2012 2013 2014
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Developing regions: Gradual pick-up in growth expected
Annual GDP Growth (%)
-2
0
2
4
6
8
10
12
Africa East Asia South Asia WesternAsia
LatinAmericaand the
Caribbean
2007 2008 2009 2010 2011 2012 2013 2014
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Annual GDP growth (%)
0
2
4
6
8
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Least developed countries: Recovery projected, growth below potential
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Monthly unemployment rates (%), Jan 2007 - Nov 2012
0
2
4
6
8
10
12
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Japan United States EU (27 economies)
Jobs crisis continues: Record unemployment in Europe
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2
4
6
8
10
2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1
Philippines BrazilMexico
Developing countries: Unemployment trends differ
0
10
20
30
40
50
60
2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1
South Africa - YouthSouth Africa - Total
Quarterly Unemployment Rates (%)
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Annual consumer price inflation rate (%)
-2
-1
0
1
2
3
4
5
2006 2007 2008 2009 2010 2011 2012 2013 2014
United States European Union Japan
Developed economies: Inflationary pressures remain low
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Developing regions: Inflationprojected to slow
Annual consumer price inflation rate (%)
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012e 2013f 2014f
Africa (excl. Zimbabwe) East AsiaSouth Asia Western AsiaLatin America and the Caribbean
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World exports, Jan 2006- Nov 2012(Jan 2006 = 100)
80
90
100
110
120
130
140
150
160
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
2
Emerging economies World Developed economies
Uneven recovery in international trade
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Commodity price index (2000=100)
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012
Food Agricultural raw materials Minerals, ores and metals Oil (Brent)
International commodity prices:slight moderation
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Stock market indices have recently moved up
20
40
60
80
100
120
140
160
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
S&P 500 Index Level Euro Stoxx 50 Index LevelNikkei 225 Index Level Hang Seng Index Level
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10-yr government bond yield spread vis-a-vis Germany bundUnit: percentage point
0
3
6
9
12
15
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-130
7
14
21
28
35
Ireland (LHS) Italy (LHS) Portugal (LHS) Spain (LHS) Greece (RHS)
Euro area crisis: spreads havecome down
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Financial resources from the poor to the rich
Net capital flows to emerging markets
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Developing countries piling up foreign exchange reserves
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ODA far below the target
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Real effective exchange rates (Jan 2011 = 100)
85
90
95
100
105
110
Jan-2011 Jul-2011 Jan-2012 Jul-2012 Jan-2013
United States Euro area Japan
Significant changes in real effective among major reserve currencies
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Developing countries: diverging trends in real effective exchange rates
Real effective exchange rates (Jan 2011 = 100)
80
85
90
95
100
105
110
Jan-2011 Jul-2011 Jan-2012 Jul-2012 Jan-2013
Republic of Korea China Brazil South Africa
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1. Further deepening of the euro area crisis• Vicious circle between sovereign risk and bank fragility• Downward spiral between austerity and recession • New policies promising, but uncertainties remain
2. From “fiscal cliff” to debt ceiling in the U.S.• Income tax rates maintained for 99% families, but payroll taxes
expired• Automatic government spending cuts postponed• Debt ceiling pending
3. Hard landing in major developing countries• Continued deceleration in fixed investment• Greater weakness in external demand
Downside Risks
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Impact of downside risks onworld economy will be substantial
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Macro policy stance in developed economies• Continued fiscal tightening (Japan exception)• Bold policy actions in Japan• Open-ended strategy in monetary easing• Targeting unemployment rate in the US
Macro policy stance in major developing countries• Proactive fiscal combined with neutral monetary in China• Neutral fiscal combined with expansionary monetary in L.A.• Limited policy space in some developing countries
Policy suggestions from WESP 2013• More concerted policy actions • Focus more on jobs creation
International policy coordination• Global imbalances
Policy issues
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Are global imbalances still a problem?
-3
-2
-1
0
1
2
3
1997 1999 2001 2003 2005 2007 2009 2011 2013
USA Rest of the WorldOil exporters Germany and JapanEuropean Union less Germany East Asia less ChinaChina
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Thank you!