WORLD ECONOMIC AND FINANCIAL SURVEYS
  World Economic Outlook
   A Survey by the Staff of the International Monetary Fund
October 1996
©1996 International Monetary Fund

The World Economic Outlook presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities.

Contents
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Assumptions and Conventions

Preface

Partnership for Sustainable Global Growth

Chapter I. Global Economic Prospects and Policies
      Overview
      Industrial Countries
      Developing Countries
      Economies in Transition

PDF version of Chapter 1 (233k)

Chapter II. World Economic Situation and Short-Term Prospects
      Economic Activity, Inflation, and Policy Stances in Industrial Countries
      Economic Situation and Prospects in Developing Countries
      Developments and Prospects in Countries in Transition
      Financial and Foreign Exchange Markets
      External Payments, Financing, and Debt

Chapter III. Policy Challenges Facing Industrial Countries in the Late 1990s
      Changes in Transmission of Monetary Policy
      Banking Sector Risks and Economic Performance
      Strengthening the Functioning of Labor Markets

Chapter IV. Financial Market Challenges and Economic Performance in Developing Countries
      Challenges of Capital Market Integration
      Financial System Requirements in Countries Lagging Behind
      Problems Facing the Heavily Indebted Poor Countries

Chapter V. Long-Term Growth Potential in the Countries in Transition
      Growth Lessons of the Transition Process
      Growth Experience in Other Countries
      Illustrative Long-Run Growth Scenarios
      Policy Issues and Challenges to Sustaining Growth

Chapter VI. The Rise and Fall of Inflation—Lessons from the Postwar Experience
      Sources of Inflation: Three Inflation Episodes in Industrial Countries
      Role of the Exchange Rate Regime
      Guideposts for Anti-Inflationary Monetary Policy
      Special Features of Inflation in Developing and Transition Countries
      Stopping High Inflation
      Some Empirical Evidence on Factors Influencing the
            Inflationary Process
      Costs of Inflation
      Costs of Disinflation
      Achieving and Sustaining Price Stability

Annexes

1. The Difficult Art of Forecasting
2. World Oil Market: Recent Developments and Outlook
         Crude Oil Prices
         Consumption
         Production
         Medium-Term Outlook
3. World Current Account Discrepancy
4. Capital Inflows to Developing and Transition Countries—Identifying Causes and Formulating Appropriate Policy Responses
         Identifying the Causes of Capital Inflows
         Policy Responses

Boxes

1. 1. Policy Assumptions Underlying the Projections
   
2. 2. Using the Slope of the Yield Curve to Estimate Lags in Monetary Transmission Mechanism
   
3. 3. Assessing Overheating in Emerging Market Countries
   4. Progress in the Development of Exchange Markets in Africa
   5. Financial Repression
   
4. 6. Trade and Growth in the Countries in Transition
   7. Bank-Restructuring Strategies in the Baltic States, Russia, and Other Countries of the Former Soviet Union: Main Issues and Challenges
   
5. 8. Inflation Targets
   9. Indexed Bonds and Expected Inflation
   10. Effects of High Inflation on Income Distribution
   11. Central Bank Independence and Inflation

      Assumptions
      Data and Conventions
      Classification of Countries
      List of Tables
            Output (Tables A1–A7)
            Inflation (Tables A8–A13)
            Financial Policies (Tables A14–A21)
            Foreign Trade (Tables A22–A26)
            Current Account Transactions (Tables A27–A32)
            Balance of Payments and External Financing (Tables A33–A37)
            External Debt and Debt Service (Tables A38–A43)
            Flow of Funds (Table A44)
            Medium-Term Baseline Scenario (Table A45)

Tables

1. 1. Overview of the World Economic Outlook Projections
   
2. 2. Industrial Countries: Real GDP, Consumer Prices, and Unemployment Rates
   3. European Union: Convergence Indicators for 1995, 1996, and 1997
   4. Major Industrial Countries: Questions About Inflationary Pressures
   5. Industrial Countries: General Government Fiscal Balances and Debt
   6. Selected Developing Countries: Real GDP and Consumer Prices
   7. Selected Developing Countries: General Government Budget Balance
   8. Countries in Transition: Real GDP and Consumer Prices
   9. Selected Countries in Transition: General Government Budget Balance
   10. Changes in Foreign Exchange Reserves
   11. Selected Countries: Current Account Positions
   12. Developing Countries: Capital Flows
   13. Summary of World Medium-Term Baseline Scenario
   
3. 14. Selected Major Industrial Countries: Responsiveness of Bank-Lending Rate to a Change in the Policy Interest Rate
   15. Changes in the Structure of the Financial System
   
4. 16. Selected Emerging Market Countries: Macroeconomic Indicators
   17. Developing Countries: Selected Financial Indicators
   
5. 18. Countries in Transition: Medium-Term Scenario for Output and Inflation
   19. Industrial and Developing Countries: Long-Run Growth of GDP Per Capita
   20. Rapidly Growing Economies and Countries in Transition: Factors Influencing Growth
   21. Postwar Recovery: Sources of Growth in GDP, 1950–73
   22. Developing Countries: Total Factor Productivity Growth
   23. Countries in Transition: Per Capita Income and Selected Demographic Indicators
   24. Countries in Transition: Trends in Educational Attainment of the Population Aged 15 and Over
   25. Countries in Transition: Indicators of the Quality of School Inputs
   26. Countries in Transition: Population Growth
   27. Selected Countries in Transition: Simulated Growth Rates
   28. Selected Countries in Transition: Reform of Social Protection Systems
   29. Selected Countries in Transition: Indicators of Capital Flows
   30. Countries in Transition: Indicators of External Viability, 1995
   31. Countries in Transition: Broad Money
   32. Selected Countries in Transition: Problem Loans
   33. Selected Countries in Transition: Bank Interest Rate Spreads
   
6. 34. Exchange Rate Regime and Inflation
   35. Importance of Seigniorage in Developing Countries
   36. Inflation and Output Growth Before and After Stabilization
   37. Probability of Being Above 100 Percent in Next Year at Different Rates of Inflation in Current Year

2. 38. Consumption of Petroleum by Groups of Countries
   39. Crude Oil Production
   40. Average Growth Rates in Consumption of Petroleum, by Groups of Countries
   
3. 41. Discrepancies on World Current Account
   
4. 42. Potential Indicators for Analyzing Causes of Capital Inflows in Developing and Transition Countries
   43. Symptoms of Causes of Capital Inflows
   44. Macroeconomic Policy Matrix for a Country with Balanced Policies Experiencing Capital Inflows

2. Number of Quarters Between Changes in the Yield Gap and the Maximum Impact on the Growth of Output, Unemployment, and Inflation

5. Developing Countries: Financial Repression and Economic Performance

8. Inflation Targets in Selected Countries

Charts

1. 1. World Indicators
   2. European Union: General Government Budget Positions
   3. Industrial Countries: Real Interest Rates
   
2. 4. Commodity Price Indices
   5. Major Industrial Countries: Output Gaps
   6. Three Major Industrial Countries: Policy-Related Interest Rates and Ten-Year Government Bond Yields
   7. European Union and the United States: Indicators of Consumer Confidence
   8. Major Industrial Countries: Monetary Conditions Indices
   9. Selected Countries More Advanced in Transition: Inflation
   10. Selected Countries Less Advanced in Transition: Inflation
   11. Major Industrial Countries: Nominal Interest Rates
   12. Major Industrial Countries: Effective Exchange Rates
   13. United States and Japan: Equity Yield Gap and Stock Market Prices
   14. Selected Emerging Market Countries: Equity Prices
   15. Emerging Market Countries: Equity Prices
   16. Elasticity of World Trade with Respect to World Output
   17. Developing Countries and Countries in Transition: External Debt and Debt Service
   
3. 18. Major Industrial Countries: Real Short-Term Interest Rate Differential Versus Real Exchange Rates
   19. Major Industrial Countries: Simulated Response of Real Output to a Monetary Policy Tightening
   20. Japan: Investment Spending Over Recovery Cycles, Small and Medium-Sized Enterprises
   21. European Union and the United States: Output, Capital, Employment, and Compensation
   
4. 22. Developing Countries: Net Private Capital Flows, 1990–95
   23. Developing, Industrial, and Transition Countries: Current Account Convertibility
   24. Developing Countries: Openness
   25. Selected Emerging Market Countries: Indicators of Demand Pressure
   26. Developing Countries: Foreign Direct Investment in Selected Countries
   27. Developing Countries: Financial Development and Economic Growth, 1976–94
   28. Developing Countries: Real Interest Rates and Financial Intermediation, 1976–94
   29. Developing Countries: Debt-Export Ratios of Heavily Indebted Poor Countries, Average 1992–94
   30. Developing Countries: Net Resource Transfers to Heavily Indebted Poor Countries, 1990–94
   
5. 31. Economies in Transition: Inflation and Real Output Growth, 1992–95
   32. Economies in Transition: Index of Reform Progress (IRP) and Real Output Growth
   33. Economies in Transition: Unemployment and Real Output Growth
   
6. 34. Inflation
   35. Price Level in the United States and the United Kingdom
   36. Industrial Countries: Inflation and Real Output Growth
   37. Selected Industrial Countries: Inflation
   38. Developing Countries: Inflation Across Regions
   39. Selected Industrial and Developing Countries: Inflation and Money Growth, 1960–95
   40. Influences of Various Factors on Inflation
   41. Response of Inflation to Various Shocks
   42. Industrial Countries: Inflation and Inflation Variability, 1960–95
   43. Industrial Countries: Variability in Inflation and Real Output Growth, 1960–95
   44. Inflation and Real Output Growth, 1965–95
   45. Asymmetric and Symmetric Model Responses to Overheating

1. 46. Industrial Country Real Output Growth: World Economic Outlook Forecast Compared with Actual
   47. Major Industrial Countries: Comparison of World Economic Outlook and Consensus Forecasts Errors
   
2. 48. Crude Petroluem Price in Current and Real Terms
   49. Commercial Stocks of Petroleum
   50. West Texas Oil Prices: Spot and Futures Contracts
   51. Industrial Countries: Consumption of Petroleum
   52. Global Oil Reserves and Consumption
   53. Distribution of Crude Oil Reserves in 1990
   
3. 54. Global Discrepancies on World Current Account and on World Financial Flow

3. Selected Emerging Market Countries: Impact of the Output Gap on Inflation, 1975–95
   

6. Countries in Transition: Trade Volume and Output Growth
   

11. Industrial Countries: Central Bank Independence and Inflation