World economic outlook, October 2017 : seeking sustainable growth : short-term, long-term challenges

Cover
Contents
Assumptions and Conventions
Further Information and Data
Preface
Foreword
Executive Summary
Chapter 1. Global Prospects and Policies
	Recent Developments and Prospects
	The Forecast
	Risks
	Policy Priorities
	Scenario Box 1. Impact of Recommended Policies in the Group of Twenty Economies
	Box 1.1. Labor Force Participation Rates in Advanced Economies
	Box 1.2. Will the Revival in Capital Flows to Emerging Markets Be Sustained?
	Box 1.3. Emerging Market and Developing Economy Growth: Heterogeneity and Income Convergence over the Forecast Horizon
	Box 1.4. Macroeconomic Changes in Emerging Market Commodity Exporters
	Box 1.5. Remittances and Consumption Smoothing
	Special Feature: Commodity Market Developments and Forecasts
	References
Chapter 2. Recent Wage Dynamics in Advanced Economies: Drivers and Implications
	Introduction
	Wage Determination––A Primer
	Advanced Economy Labor Markets: Surface Healing Masks Deeper Changes
	Drivers of Recent Wage Dynamics
	Summary and Policy Implications
	Box 2.1. Labor Market Dynamics by Skill Level
	Box 2.2. Worker Contracts and Nominal Wage Rigidities in Europe: Firm-Level Evidence
	Box 2.3. Wage and Employment Adjustment after the Global Financial Crisis: Firm-Level Evidence
	Annex 2.1. Country Coverage and Data
	Annex 2.2. Empirical Methodologies
	Annex 2.3. Empirical Results
	References
Chapter 3: The Effects of Weather Shocks on Economic Activity: How Can Low-Income Countries Cope?
	Introduction
	Temperature and Precipitation: Historical Patterns and Projections
	The Macroeconomic Impact of Weather Shocks
	Coping with Weather Shocks and Climate Change
	Long-Term Effects of Temperature Increase—A Model-Based Approach
	Summary and Policy Implications
	Box 3.1. The Growth Impact of Tropical Cyclones
	Box 3.2. The Role of Policies in Coping with Weather Shocks: A Model-Based Analysis
	Box 3.3. Strategies for Coping with Weather Shocks and Climate Change: Selected Case Studies
	Box 3.4. Coping with Weather Shocks: The Role of Financial Markets
	Box 3.5. Historical Climate, Economic Development, and World Income Distribution
	Box 3.6. Mitigating Climate Change
	Annex 3.1. Data Sources and Country Groupings
	Annex 3.2. Weather Shocks and Natural Disasters
	Annex 3.3. Empirical Analysis of the Macroeconomic Effects of Weather Shocks and the Role of Policies
	Annex 3.4. The Impact of Weather Changes and Natural Disasters on International Migration
	Annex 3.5. Model-Based Analysis
	Annex 3.6. Reduced Form Approach to Estimating Potential Long-Term Effects of Climate Change
	References
Chapter 4. Cross-Border Impacts of Fiscal Policy: Still Relevant?
	Introduction
	Spillovers from Fiscal Policy—A Conceptual Framework
	Spillovers on Economic Activity: Empirical Evidence
	The Transmission of Fiscal Shocks—Model-Based Analysis
	Fiscal Reforms
	Conclusions
	Box 4.1. The Spillover Impact of US Government Spending Shocks on External Positions
	Annex 4.1. Data
	Annex 4.2. Empirical Strategy
	Annex 4.3. Robustness Tests
	References
Statistical Appendix
	Assumptions
	What’s New
	Data and Conventions
	Country Notes
	Classification of Countries
	General Features and Composition of Groups in the World Economic Outlook Classification
	Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2017
	Table B. Advanced Economies by Subgroup
	Table C. European Union
	Table D. Emerging Market and Developing Economies by Region and Main Source of Export Earnings
	Table E. Emerging Market and Developing Economies by Region, Net External Position, and Status as Heavily Indebted Poor Countries and Low-Income Developing Countries
	Table F. Economies with Exceptional Reporting Periods
	Table G. Key Data Documentation
	Box A1. Economic Policy Assumptions Underlying the Projections for Selected Economies
	List of Tables
		Output (Tables A1–A4)
		Inflation (Tables A5–A7)
		Financial Policies (Table A8)
		Foreign Trade (Table A9)
		Current Account Transactions (Tables A10–A12)
		Balance of Payments and External Financing (Table A13)
		Flow of Funds (Table A14)
		Medium-Term Baseline Scenario (Table A15)
World Economic Outlook, Selected Topics
IMF Executive Board Discussion of the Outlook, October 2017
Tables
	Table 1.1. Overview of the World Economic Outlook Projections
	Scenario Table 1. Assumed Policy Actions Relative to the WEO Baseline
	Table 1.3.1. Correlates of Growth Projections, EMDEs, 2017–22
	Annex Table 1.1.1. European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.2. Asian and Pacific Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.3. Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.4. Commonwealth of Independent States Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.5. Middle East, North African Economies, Afghanistan, and Pakistan: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.6. Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
	Annex Table 1.1.7. Summary of World Real per Capita Output
	Table 2.3.1. Precrisis Financial Vulnerabilities and Postcrisis Labor Adjustments
	Annex Table 2.1.1. Country Coverage
	Annex Table 2.1.2. Data Sources
	Annex Table 2.2.1. Aggregate Forces and Sectoral Exposures
	Annex Table 2.3.1. Estimates of Wage Phillips Curves
	Annex Table 2.3.2. Estimates of Wage Phillips Curves with Alternative Measures
	Annex Table 2.3.3. Estimation of Wage Phillips Curve Augmented with Involuntary Part-Time Employment Share by Country Group
	Annex Table 2.3.4. Estimation of Wage Phillips Curve Augmented with Involuntary Part-Time Employment Share: Full Sample and Countries with Unemployment Rates Lower than 2000–07 Average
	Annex Table 2.3.5. Estimation of Wage Phillips Curve Augmented with Involuntary Part-Time Employment Share: Countries with Unemployment Rates Moderately Higher and Appreciably Higher than 2000–07 Average
	Annex Table 2.3.6. Estimation of Wage Phillips Curve Augmented with Temporary Contract Employment Share: Full Sample and Countries with Unemployment Rates Lower than 2000–07 Average
	Annex Table 2.3.7. Estimation of Wage Phillips Curve Augmented with Temporary Contract Employment Share: Countries with Unemployment Rates Moderately Higher and Appreciably Higher than 2000–07 Average
	Annex Table 2.3.8. Estimation of Wage Phillips Curve Augmented with Structural Variables
	Annex Table 2.3.9. Estimation of Wage Phillips Curve Augmented with Structural Variables: Excluding 2008 and 2009
	Annex Table 2.3.10. Drivers of Involuntary Part-Time Employment Share, Aggregate Analysis
	Annex Table 2.3.11. Drivers of Sectoral Nominal Wage Growth
	Annex Table 2.3.12. Drivers of Sectoral Part-Time Employment Shares
	Annex Table 2.3.13. Drivers of Nominal Wage Growth, Employment Growth, and Part-Time Employment
	Table 3.1.1. Characteristics of the Average Tropical Cyclone by Country Group
	Table 3.1.2. Effect of Weather and Wind Shocks on Economic Activity
	Table 3.5.1. Effect of Historical Climate on Current Real Output
	Annex Table 3.1.1. Data Sources
	Annex Table 3.1.2. Country and Territory Groups
	Annex Table 3.2.1. Effect of Weather Shocks on Natural Disasters, 1990–2014
	Annex Table 3.3.1. Effect of Weather Shocks on Output
	Annex Table 3.3.2. Effect of Weather Shocks on Sectoral Output
	Annex Table 3.3.3. Effect of Weather Shocks on Productivity, Capital, and Labor
	Annex Table 3.3.4. Role of Policy Buffers
	Annex Table 3.3.5. Role of Structural Policies and Institutions
	Annex Table 3.3.6. Role of Development: Evidence from Subnational Data
	Annex Table 3.4.1. Effect of Weather Shocks and Natural Disasters on Emigration, 1980–2015
	Annex Table 3.5.1. Parameterization of the Debt, Investment, and Growth Model
	Annex Table 4.1.1. Data Sources for Quarterly Fiscal Data by Source Country
	Annex Table 4.1.2. Data Sources for Recipient Countries
	Annex Table 4.1.3. Recipient Countries in Sample
Figure
	Figure 1.1. Global Activity Indicators
	Figure 1.2. Global Fixed Investment and Trade
	Figure 1.3. Commodity Prices
	Figure 1.4. Global Inflation
	Figure 1.5. Advanced Economies: Monetary and Financial Market Conditions
	Figure 1.6. Real Effective Exchange Rate Changes, November 2016–September 2017
	Figure 1.7. Emerging Market Economies: Equity Markets and Credits
	Figure 1.8. Emerging Market Economies: Interest Rates
	Figure 1.9. Emerging Market Economies: Capital Flows
	Figure 1.10. Revisions to 2017 Growth and 2016 Output Gaps
	Figure 1.11. Emerging Markets: Terms-of-Trade Windfall Gains and Losses
	Figure 1.12. GDP Growth, 1999–2022
	Figure 1.13. Fiscal Indicators
	Figure 1.14. Global Current Account Balances
	Figure 1.15. Real Exchange Rates and Current Account Balances in Relation to Economic Fundamentals
	Figure 1.16. Net International Investment Positions
	Figure 1.17. Geopolitical Risk Index
	Figure 1.18. Risks to the Global Outlook
	Figure 1.19. Recession and Deflation Risks
	Figure 1.20. Advanced Economy Output Gaps, 2017
	Figure 1.21. Emerging Market and Developing Economy Output Gaps, 2017
	Figure 1.22. Per Capita Real GDP Growth across Low-Income Developing Countries
	Scenario Figure 1. Group of Twenty Macro Scenario
	Figure 1.1.1. Population Shares by Age Group and Gender
	Figure 1.1.2. Labor Force Participation Rates by Age Group and Gender
	Figure 1.1.3. Decomposition of Change in Labor Force Participation Rate, 2007–16
	Figure 1.1.4. Changes in Labor Force Participation, Select Advanced Economies, 2007–16
	Figure 1.1.5. Changes in Labor Force Participation Rates for the 25–54 Age Group by Gender, Select Advanced Economies
	Figure 1.1.6. Convergence in Female Labor Force Participation Rates
	Figure 1.2.1. Capital Flows to Emerging Market and Developing Economies
	Figure 1.2.2. China: Reserves and Capital Flows
	Figure 1.2.3. Latest Capital Flows Trends and Prospects
	Figure 1.3.1. Per Capital Real GDP Growth across Country Groups
	Figure 1.3.2. Per Capita Real GDP Growth, Emerging Market and Developing Economies, by Region
	Figure 1.3.3. EMDEs’ per Capita Real GDP Growth Differentials vis-à-vis Advanced Economies: 1995–2016 versus 2017–22
	Figure 1.3.4. Distribution of EMDE per Capita Real GDP Growth Differentials with Respect to Advanced Economies
	Figure 1.3.5. Distribution of EMDE per Capita Real GDP Growth Differentials with Respect to Advanced Economies, by Type of Export Earnings and Region
	Figure 1.3.6. Distribution of EMDE Population by per Capita Real GDP Growth Rate
	Figure 1.3.7. Projected per Capita Real Growth Rates and 2011 Real Levels, AEs and EMDEs
	Figure 1.4.1. Commodity Prices
	Figure 1.4.2. Exchange Rate Regimes of Commodity-Exporting Emerging Market and Developing Economies
	Figure 1.4.3. Commodity Terms of Trade
	Figure 1.4.4. Evolution of Exchange Rates
	Figure 1.4.5. Net Export Adjustment, 2013–16
	Figure 1.4.6. Fiscal Indicators
	Figure 1.4.7. Change in per Capita GDP Growth and Inflation in Fuel Exporters, Conditional on CToT
	Figure 1.5.1. Net Remittances as a Share of Output, 2015
	Figure 1.5.2. Financial Integration
	Figure 1.5.3. Smoothing Effects of Remittances
	Figure 1.5.4. Contribution of Remittances to Consumption Risk Sharing
	Figure 1.SF.1. Commodity Market Developments
	Figure 2.1. Distribution of Labor Market Indicators
	Figure 2.2. Distribution of Nominal Wage Growth and Correlation with Changes in the Unemployment Rate
	Figure 2.3. Job Attributes: Involuntary Part-Time Employment
	Figure 2.4. Job Attributes: Temporary Contracts
	Figure 2.5. Job Attributes: Hours per Worker
	Figure 2.6. Average Nominal Wage Growth, 2009–16, Actual versus Imputed Using 2008 Sectoral Employment Shares
	Figure 2.7. Changes in Labor Market Indicators, Actual versus Imputed Using 2008 Sectoral Employment Shares
	Figure 2.8. Job Attributes and Changes in Sectoral Employment Shares, 2008–16
	Figure 2.9. Effects on Growth of Compensation per Hour: Panel Estimation
	Figure 2.10. Effects on Growth of Compensation per Hour: Country-by-Country Estimation, Cross-Country Dispersion
	Figure 2.11. Effects of Involuntary Part-Time Employment on Growth of Compensation per Hour, 2000–16
	Figure 2.12. Decomposition of Wage Dynamics, 2000–16
	Figure 2.13. Year Fixed Effects and Common Drivers, 2000–16
	Figure 2.14. Changes in Growth Expectations and Labor Market Institutions
	Figure 2.15. Long-Term Drivers of Labor Market Dynamics
	Figure 2.16. Effects on Involuntary Part-Time Employment Share, Aggregate Analysis
	Figure 2.1.1. Evolution of Skill Premiums in the United States
	Figure 2.1.2. Skill Premiums and Changes in Skill Premiums in European Economies
	Figure 2.1.3. Nominal Wage Growth by Sector and Skill Group
	Figure 2.1.4. Employment Shares by Skill
	Figure 2.1.5. Employment Shares by Skill and Changes in Hours per Worker
	Figure 2.2.1. Changes in Employment Shares
	Figure 2.2.2. Changes in Employment Shares, 2007–14
	Figure 2.2.3. Wage Cuts and Freezes, 2014
	Figure 2.3.1. Estimated Nominal Wage Growth and Employment Growth Differences Based on Uncertainty and Growth Expectations
	Figure 2.3.2. Wage and Employment Growth by Debt Maturity in 2008
	Annex Figure 2.2.1. Distribution of Real Compensation Growth Measures
	Annex Figure 2.2.2. Growth of Real Compensation per Hour and Unemployment Rates
	Annex Figure 2.2.3. Factors Associated with Nominal Wage Growth
	Annex Figure 2.2.4. Effects of Involuntary Part-Time Employment on Compensation and Wages, 2000–16
	Annex Figure 2.2.5. Correlations between Aggregate Wage Growth and Two-Quarter-Lagged Public Wage Growth
	Annex Figure 2.3.1. Decomposition of Wage Dynamics, 2000–16
	Annex Figure 2.3.2. Decomposition of Sectoral Wage Dynamics, 2000–15
	Annex Figure 2.3.3. Effects on Part-Time Employment Share, Sectoral Analysis
	Figure 3.1. Average Global Temperature
	Figure 3.2. Increase in Average Global Temperature and Contributions of Key Factors
	Figure 3.3. Temperature and Precipitation across Broad Country Groups
	Figure 3.4. Annual CO[Sub(2)] Emissions across Broad Country Groups
	Figure 3.5. Temperature and Precipitation Projections under the RCP 8.5 Scenario
	Figure 3.6. Natural Disasters: Historical and Projected Monthly Probability of Occurrence
	Figure 3.7. Effect of Temperature Increase on Real per Capita Output
	Figure 3.8. Effect of Temperature Increase on Real per Capita Output across the Globe
	Figure 3.9. Effect of Temperature Increase on Sectoral Output Estimated at the Temperature of the Median Low-Income Developing Country
	Figure 3.10. Effect of Temperature Increase on Productivity, Capital, and Labor Input Estimated at the Temperature of the Median Low-Income Developing Country
	Figure 3.11. Effect of Temperature Increase on Real per Capita Output Estimated at the Temperature of the Median Low-Income Developing Country over Time
	Figure 3.12. Coping with Weather Shocks and Climate Change: A Toolkit
	Figure 3.13. Role of Policy Buffers
	Figure 3.14. Role of Structural Policies and Institutions
	Figure 3.15. Role of Development: Evidence from Subnational Data
	Figure 3.16. Effect of Temperature and Natural Disasters on International Migration
	Figure 3.17. Long-Term Impact of Temperature Increase for a Representative Low-Income Developing Country: Model Simulations
	Figure 3.18. Vulnerability to Temperature Increase and Adaption Prospects
	Figure 3.1.1. Effect of Tropical Cyclone Exposure on Real GDP per Capita
	Figure 3.1.2. Cumulative Effect of Average Tropical Cyclone on Real GDP per Capita after Seven Years
	Figure 3.2.1. Role of Policies: A Model-Based Analysis
	Figure 3.4.1. Insurance Penetration: Non-Life Insurance Premium
	Figure 3.4.2. Catastrophe Bond Market
	Figure 3.4.3. Temperature Shocks and Stock Price Predictability: Food and Beverages Sector
	Figure 3.6.1. Effectiveness of Mitigation Policies in China
	Annex Figure 3.3.1. Effect of Temperature Increase on Real per Capita Output across the Globe, with Countries Rescaled in Proportion to Their Projected Population as of 2100
	Annex Figure 3.6.1. The Long-Term Impact of Temperature Increase on Real per Capita Output across the Globe
	Figure 4.1. Output Gap in Selected Countries
	Figure 4.2. The Transmission of a Fiscal Shock
	Figure 4.3. Tracking Tax Shocks in the United States
	Figure 4.4. Dynamic Responses of Recipient Countries’ Output to Fiscal Shocks
	Figure 4.5. Spillovers of Fiscal Shocks on Recipient Countries’ Output
	Figure 4.6. Dynamic Responses of Components of Recipient Countries’ Output to a Fiscal Shock
	Figure 4.7. Spillovers under Various Economic and Policy Conditions
	Figure 4.8. Dynamic Responses of Components of Recipient Countries’ Output under Normal Times and Effective Lower Bound in Recipient Countries
	Figure 4.9. Dynamic Responses of Recipient Countries’ Output to US Spending Shock under Various Exchange Rate Regimes
	Figure 4.10. Impact of Fiscal Shocks on Global GDP Based on Various Instruments
	Figure 4.11. Spillovers from US Fiscal Shocks with and without Monetary Accommodation
	Figure 4.12. Regional GDP Impact of Government Spending Shocks from the United States, Europe, and China
	Figure 4.13. Dynamic Responses to a US Government Spending Shock
	Figure 4.14. Spillovers from US Spending Shock with and without a US Term-Premium Increase
	Figure 4.15. Spillovers from Corporate Income Tax Reduction Financed by an Offsetting Increase in Value-Added Tax
	Figure 4.16. Spillovers from Increase in Government Investment in Five Major Economies
	Figure 4.1.1. Response of Recipient Countries’ Trade Balance and Real Exchange Rate vis-à-vis US Dollar
	Annex Figure 4.3.1. Effects of Spending Shock and Tax Shock on Recipient Countries’ Output: Comparison with Panel Vector Autoregression
	Annex Figure 4.3.2. Effects of Spending and Tax Shock on Recipient Countries’ Output: Forecast Errors
	Annex Figure 4.3.3. Effects of US Tax Shock on Recipient Countries’ Output: Comparison with US Narrative Tax Shock, 1995–2007