WORLD ECONOMIC OUTLOOK: REBALANCING GROWTH
Figure 1.2. Global Indicators1 (Annual percent change unless noted otherwise) Real GDP growth picked up starting in 2009:Q2. However, output in most regions of the world remains below or around precrisis levels. The exception is emerging Asia, which accounts for a growing share of world activity. Commodity prices have rebounded in response to expanding activity. Change in GDP (2009:Q4 GDP in percent of 2008:Q2 GDP)
10 Real GDP Growth Emerging and developing economies 8 World
6
115 110
4
105
2
100
0
10 15
Contribution to Global GDP 8 Growth, PPP Basis (percent, three-year moving 6 averages)
Africa and Middle East
2000
CEE and CIS 2
90
Latin America
80
Advanced economies Emerging Asia
-4 1970
95
Advanced economies
-2
Real Commodity Prices (1995 = 100)
Oil prices3
2
Food
-4 1970
Capital Is Again Flowing to Emerging Economies 500
300 200
0 -2
90
400
4
Rest of the world China United States Other advanced economies 80
90
2000
10 15
Metals 1980 85 90 95 2000 05 10 15
100 0
Source: IMF staff estimates. 1Shaded areas indicate IMF staff projections. Aggregates are computed on the basis of purchasing-power-parity (PPP) weights unless noted otherwise. 2CEE: central and eastern Europe; CIS: Commonwealth of Independent States. 3Simple average of spot prices of U.K. Brent, Dubai Fateh, and West Texas Intermediate crude oil.
4
International Monetary Fund | April 2010
ing Europe, credit continues to contract but at a decelerating pace. Nevertheless, financial conditions remain more difficult than before the crisis, especially in advanced economies. In a few advanced economies, rising public deficits and debt have contributed to a sharp increase in sovereign risk premiums, creating spillovers into other economies and markets. At the same time, constraints on bank capital and sluggish nonfinancial credit growth continue to impair the supply of credit, and buoyant corporate bond issues have not taken up the slack. Bank capital is likely to remain a constraint, especially in Europe, as banks seek to lower their leverage multiples. Deleveraging needs in the U.S. banking sector are lower but still significant for regional banks. In general, sectors that have only limited access to capital markets––consumers and small and medium-size enterprises––are likely to continue to face tight limits on their borrowing. So far, public lending programs and guarantees have been vital in channeling credit to these sectors.
Together with real and financial activity, crossborder financial flows from advanced to emerging economies have picked up, primarily reflecting a recovery from deep retrenchment in 2008 (Figure 1.4). Both equity and bond flows have accelerated since the end of 2008, although syndicated loan issuance remains below precrisis levels. The growth in cross-border flows has come mostly from outside the banking sector, as banks continue to retrench their balance sheets. Key drivers behind the renewed capital flows include rapid growth in emerging economies, large yield differentials in their favor, and returning appetite for risk. The renewed flows have eased financial conditions in many emerging economies and prompted some authorities to be watchful of increasing property prices, in some cases taking measures to rein in domestic credit growth. Thus far, evidence for broader asset price overvaluation is limited, according to the April 2010 GFSR. The recovery of cross-border flows has come with some real effective exchange rate changes––