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Chapter I. Global economic outlook
Figure I.1 Growth of world gross product, 2007-2015a Percentage change 5 4
4.0
4.0
3.0
3
3.3
2.8 2
2.4
1.5
2.1
1 0
2007
2008
2009
2010
2011
2012
2013
2014
2015
-1 -2 -2.1 -3
Box I.1. Major assumptions for the baseline forecast This box summarizes key assumptions underlying the baseline forecast, including monetary and fiscal policies for major economies, exchange rates for major currencies, international prices of oil and other primary commodities. Policy assumptions for other countries can be found in the text of chapter IV.
Monetary policy The United States Federal Reserve (Fed) is expected to continue its accommodative stance in the outlook for 2014-2015. In accordance with the forward monetary policy guidance of the Fed, it is assumed that in the forecasting period of 2014-2015 the federal funds interest rate will remain within the range of 0.0 to 0.25 per cent until mid-2015, followed by a gradual increase starting in the third quarter of 2015. The adjustment of long-term assets on the Fed balance sheet will be implemented in three phases: the Fed will taper the amount of its purchases beginning in December of 2013, from the current level of $85 billion per month, and gradually reach zero by mid-2014; assets will be held on its balance sheet for the period until mid-2015; assets will then be unloaded gradually, beginning in the third quarter of 2015. The European Central Bank is assumed not to cut its policy interest rates further, but to keep policy rates at the current levels through the end of 2015, followed by a gradual path of increases. The outright monetary transaction programme will remain in place and refinancing operations will continue to meet the needs of the banking sector. The Bank of Japan (BoJ) is assumed to continue its Quantitative and Qualitative Monetary Easing programme as it was originally designed until the end of 2014. The policy rate for BoJ is also assumed to stay within the range of 0.0 to 0.1 per cent through the end of 2015, to accommodate the second hike of the consumption tax rate that is assumed to be implemented in October 2015. The People’s Bank of China is expected to maintain its prudent monetary policy stance, while making some adjustments to ensure a balance between growth and economic restructuring. Interest rates are likely to remain unchanged over the next few quarters. Money supply growth is expected to moderate slightly in 2014-2015. Meanwhile, continued financial reform—especially further liberalization of interest rates—and increased regulations in the shadow banking sector will have significant impacts on the liquidity conditions in the economy, on top of conventional monetary policy.
Source: UN/DESA. a Growth rate for 2013 is partially estimated; rates for 2014 and 2015 are forecast.