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11 things you need to know about the World Economic Outlook

11 things you need to know about the World Economic Outlook

The International Monetary Fund’s World Economic Outlook is the most widely-regarded assessment of how the global economy is doing. Here are a few highlights (NB you can click on any of the graphics to see a bigger version).

1. Growth is now pretty widely spread
Screen Shot 2014-04-08 at 11.19.10

2. Britain had the biggest single growth upgrade of a major economy. Russia had a pretty chunky downgrade.
WEOsummary

3. Growth is pretty resilient. Here’s what would happen in the event of a global economic shock:
Screen Shot 2014-04-08 at 11.21.41

4. Interest rates are going up in the UK first.
Screen Shot 2014-04-08 at 10.49.55

But the increases will be far more gradual there than in the US, according to market expectations

5. Real house prices are rebounding fast in the US.
Screen Shot 2014-04-08 at 10.51.08
But in Japan they’re still 25% lower today than they were in 2000.

 

6. What QE looks like

Screen Shot 2014-04-08 at 10.50.26
The size of Japan’s central bank balance sheet is now closing in on 50% of the country’s total GDP. Note how fast it’s increased since Abenomics came into play.

7. The Western world’s total levels of government debt are now higher than at any time since comparable records began in 1950
Screen Shot 2014-04-08 at 10.52.22
Note how high they are in comparison with emerging and developing economies’.

8. The imbalances story is starting to diminish.
Screen Shot 2014-04-08 at 10.54.08
But the same countries are still in the same places (eg the US borrowing, China saving).

9. The worst of austerity is over.
Screen Shot 2014-04-08 at 10.52.05

Note how the biggest budget adjustments made by these countries happened in 2012 and 2013. This year Governments have undone their belts again. What this chart doesn’t show you is the extent of austerity leftover for years beyond 2015 (in Britain’s case that’s when the real pain begins).

 

10. Borrowing binge in Asia intensifies
Screen Shot 2014-04-08 at 11.45.18
Curious about how many Asian buyers are financing their purchases of London property? This chart might hold a clue. Lending has gone through the roof in Hong Kong and Singapore. Much of that will be financing purchases internationally, including property in the UK capital.

11. UK (kind of) has most exposure to Emerging markets
Screen Shot 2014-04-08 at 11.39.42
The Fund has done some work mapping out the implications of an emerging market economic slump. Turns out much of the emerging market debt is held in the UK. However, the vast majority of this is held by two banks (presumably HSBC and Standard Chartered) which are really British by name only. If there were an emerging market slump it would be bad news for them, but the IMF reckons the UK’s economy would remain pretty healthy.

 

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