world economic situation and prospects 2013 · 2013. 2. 12. · world economic outlook ... nikkei...

World Economic World Economic Situation and Situation and

Prospects 2013Prospects 2013

ShamshadShamshad AkhtarAkhtar

Feb 11, 2013Feb 11, 2013DESA DESA

United NationsNew York

2

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

Global growth projected to pick up slightly – significant downside risks remain

4

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

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

Developed economies: trappedin low-growth?

Annual GDP Growth (%)

-6-4-20246

USA European Union Japan

2007 2008 2009 2010 2011 2012 2013 2014

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

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

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

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

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 (%)

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

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

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

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

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

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

Financial resources from the poor to the rich

Net capital flows to emerging markets

Developing countries piling up foreign exchange reserves

ODA far below the target

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

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

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

24

Impact of downside risks onworld economy will be substantial

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

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

Thank you!