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Global/Regional Economic and Financial Outlook
Odd Per BrekkDirector
IMF Regional Office for Asia and the PacificAPEC SFOM, June 11-12 2015
___________________________________________________________________________
2015/SFOM13/002 Session: 1
Global/Regional Economic and Financial Outlook
Purpose: Information Submitted by: IMF
13th Senior Finance Officials’ Meeting Bagac, Philippines
11-12 June 2015
Complex forces shaping the short-term growth
outlook
Fall in oil prices
Actual and expected changes in monetary policy;
associated exchange rate swings
Less favorable medium-term growth prospects
Advanced countries: crisis legacies; aging; weak
investment
Emerging markets: diminished expectations
Inflation projected to decline in 2015
Main cause: impact of the decline in oil prices
Pass-through of lower oil prices into core inflation is
expected to remain moderate.
2Source: International Monetary Fund, World Economic Outlook, April 2015.
Global Aggregates: Headline Inflation(% yoy)
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014 2015 2016
(% yoy)Real GDP Growth
Emerging Market and Developing EconomiesWorldAdvanced Economies
3
4Source: International Monetary Fund, World Economic Outlook, April 2015.
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Real GDP(descending order by 2015 growth rate projections)
2013 2014 2015 2016
5
Impact of Oil Price Decline on Macro–forecasts
(In percentage points of GDP; growth in percent)Oil Price Windfall: Impact on the Oil Trade Balance in 2015
(In percent of GDP)
Less than 1.5%
Between 1.5-3%
Greater than 3%
Country Oil Price windfall
Australia 0.2
Vietnam 0.4
Malaysia 0.7
New Zealand 0.9
China 0.9
Indonesia 1.1
Japan 1.4
Philippines 1.8
Singapore 1.9
India 2.0
Taiwan Province of China 2.1
Korea 2.7
Hong Kong SAR 2.8
Thailand 5.0
Asia (simple average) 1.7
Asia (weighted average) 1.4
Source: IMF staff estimates.Note: Based on 2014 oil trade balance, assuming unchanged quantities and the April 2015 WEO oil
price projections for 2015.
-4
-3
-2
-1
0
1
2
GDP Growth S-I (public) S-I (private) Current accountbalance
Commodity exporters
Simple average Weighted average
Max
Min
-1
0
1
2
3
GDP Growth S-I (public) S-I (private) Current accountbalance
Net oil importers
Simple average
Weighted averageMax
Min
6
U.S. 5-year Rates
Sources: International Monetary Fund, World Economic Outlook, April 2015, BIS and Bloomberg.
5/29/2015
Advanced Economies REER
Emerging Economies REER
(Jan 1994=100)
(Jan 1994=100)
85
90
95
100
105
110
115
United StatesUnited KingdomJapanEuro area
Policy Interest Rate Expectations
65
70
75
80
85
90
95
100
105
110
115
Indonesia
China
Mexico
Russia1.0
1.5
2.0
2.5
3.0
3.5
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15
5-year 5-year forward inflation swap
5-year government bond yield
(percent; dashed lines are from the October 2014 WEO)
(percent)
7
Sources: Haver Analytics and IMF staff calculations
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
Ja
n-1
0
Apr-
10
Ju
l-1
0
Oct-
10
Ja
n-1
1
Apr-
11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Apr-
12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Apr-
13
Ju
l-1
3
Oct-
13
Ja
n-1
4
Apr-
14
Ju
l-1
4
Oct-
14
Ja
n-1
5
Bond Funds Equity Funds Peak: 2006-07
Mar-15
Note: Includes exchange traded fund flows and mutual fund flows for
emerging Asia, Australia, Hong Kong SAR, Korea, New Zealand, Singapore,
and Taiwan Province of China.
Asia: Equity and Bond Funds—Monthly Net Flows (In billions of U.S. dollars)
60
65
70
75
80
85
90
19
99
20
02
20
04
20
07
20
09
20
12
20
14
Equity Returns Spillover Equity Volatility Spillover
Spillover Plot: Equity Market Returns and Volatility
8
Sources: Haver Analytics; and IMF staff calculations.
CHN
HK IND
IDN
KOR
MYS
PHL
SGP
THL
AUS
NZ
JPN
USA
EUR
-15
-10
-5
0
5
10
15
20
REER appreciation since June vs 2014 external assessment
External position
<-- weaker stronger-->
Ap
pre
cia
tio
n --
>
"moderately" "substantially""moderately"
Sources: IMF Global Data Source; IMF Staff Reports; IMF staff calculations.
Economic policy priorities
Advanced Economies: Demand and Supply
Demand support to the recovery
Boost public infrastructure investment
Structural reform to boost potential output (country-specific)
All Economies: Lower oil prices as an opportunity to reform energy subsidies
and taxes
Emerging and Developing Economies
Address vulnerabilities
Increase potential output and infrastructure investment (country-specific)
Oil exporters:
• Use fiscal space for a gradual adjustment of public spending to lower oil prices
• Allow exchange rate flexibility to cushion the economies
9
Thank you !
APEC SFOMJune 11-12 2015
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