This post is a summary of the book with the title of, "World Economic Outlook - April 2018 - Cyclical Upswing, Structural Change." Published in April of 2018 at http://www.imf.org/en/Publications/WEO/Issues/2018/03/20/world-economic-outlook-april-2018
The global economic upswing that began around mid-2016 has become broader and stronger. For most countries, current favorable growth rates will not last. Policymakers should seize this opportunity to bolster growth, make it more durable, and equip their governments better to counter the next downturn. Global growth seems on track to reach 3.9% this year. Helping to drive this output acceleration is faster growth in the Euro area, Japan, China, and the U.S., all of which grew above expectations last year, along with some recovery in commodity exporters. Along with China, several other developing economies will also do better this year than in our past projections, that group includes Brazil, Mexico, and emerging Europe. Growth this broad based and strong has not been seen since the 2010 bounce back. The expansion will help to dispel some remaining legacies of the crisis. Other aftereffects of the crisis seem more durable, however, including higher debt levels and widespread public skepticism about policymakers' capacity and willingness to generate robust and inclusive growth. That skepticism will only be reinforced, with negative political consequences, if economic policy does not rise to the challenge of enacting reforms and building fiscal buffers. Success in such efforts would strengthen medium-term growth, spread its benefits lower in the income distribution, and build resilience to the hazards that lie ahead. Monetary policy might tighten sooner than expected if excess demand emerges, a notable possibility in the U.S., where fiscal policy has turned much more expansive even as the economy has neared full employment. Financial tightening will stress highly indebted countries, firms, and households, including in emerging economies. Population growth, age distribution, and other structural employment trends are critical for understanding growth, investment, and productivity. Chapter 2 focuses on labor force in advanced economies. Chapter 3 focuses on the declining share of manufacturing employment globally and, most dramatically in advanced economies. This structural transformation, driven by technology advances as well as globalization. Chapter 4 studies the process through which innovative activity and technological know-how spread across national borders. Cross-border knowledge flows from technological leaders to poorer countries have historically been drivers of income convergence. Now, the emergence of China and Korea as leaders in some sectors offers the promise of positive repercussions for others. International trade and competition, this chapter suggests, promote global knowledge diffusion and thus provide an important channel through which all countries can benefit. Global growth is on an upswing, but favorable conditions will not last forever, and now is the moment to get ready for leaner times. Readiness requires not only cautious and forward-looking management of monetary and fiscal policy, but also careful attention to financial stability. Also necessary are structural and tax policies that raise potential output, including by investing in people and ensuring that the fruits of growth are widely shared. In many developing economies, recent currency stability have helped keep a lid on core inflation. Inflation is around historical lows in Brazil and Russia, where demand has been recovering from the deep contractions of 2015-16, while it has picked up in India. In brazil, legislating social security reform remains a priority to ensure that spending is consistent with the constitutional fiscal rule and to guarantee long-term fiscal sustainability. Making use of the recent strengthening of activity to improve the primary balance over the short term would complement the overall consolidation strategy. Following a deep recession in 2015-16, Brazil's economy returned to growth in 2017 ( 1% ) and is expected to improve to 2.3% in 2018 and 2.5% in 2019 on the track of stronger private consumption and investment. Inflation in Brazil is expected to remain subdued in the range 3-4% in 2018 as output gaps gradually close, with growth continuing to recover from recession. Inflation is expected to rise over the medium term, with firmer core inflation and the projected modest pickup in commodity prices, but to remain at levels well below the average of the past decade. While the negative side effects of globalization have received much attention in public debates, the chapter highlights that there are upsides too: globalization helps the diffusion of knowledge and technology. From a policy perspective, greater global interconnectedness is thus key to maximizing inward technology diffusion and boosting economies' growth potential. But assimilating and productively using foreign knowledge often requires investments in R&D and in human capital. Below the GDP growth in 2017 from the greatest growth to the lowest of each list. The first list is for countries in the Americas and the other is for the rest of the world.
GDP 2017 in PanAmerican countries Rest of the World
Panama 5.4% Ethiopia 10.9%
Nicaragua 4.9% Ireland 7.8%
Honduras 4.8% Senegal 7.2%
Paraguay 4.3% Romania 7.0%
Bolivia 4.2% China 6.9%
Costa Rica 3.2% India 6.7%
Uruguay 3.1% Tanzania 6.0%
Canada 3.0% Pakistan 5.3%
Argentina 2.9% Indonesia 5.1%
Ecuador 2.7% Poland 4.6%
Peru 2.5% Spain 3.1%
Mexico 2.0% Portugal 2.7%
Colombia 1.8% Germany 2.5%
Chile 1.5% Australia 2.3%
Brazil 1.0% France 1.8%
Trinidad Tob. -2.6% U.K. 1.8%
Venezuela -14.0% Italy 1.5%
Russia 1.5%
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