Back Matter

Back Matter

Author(s):
International Monetary Fund. Research Dept.
Published Date:
May 1995
    Share
    • ShareShare
    Show Summary Details
    Annex I Factors Behind the Financial Crisis in Mexico

    On December 20, 1994, in the face of heavy losses of international reserves, the Mexican authorities widened the exchange rate intervention band that had been in place since late 1991. Two days later, as capital flight from Mexico persisted, the exchange rate was allowed to float and the value of the peso plummeted. This annex describes the economic developments that preceded the Mexican financial crisis and discusses three complementary views that have been advanced to help explain how and why the crisis erupted.

    Developments During 1988–93

    From 1988 to 1993, Mexico followed a strategy of economic adjustment and reform that strengthened the process of fiscal consolidation and structural transformation initiated after the onset of the 1982 debt crisis. The strategy aimed at restoring macroeconomic stability, attaining external viability, reducing the role of the public sector in the economy, and laying the foundations for private sector led growth. The key elements of the strategy were the maintenance of tight financial policies, a major external debt restructuring, and a comprehensive program of structural reforms including, notably, privatization and trade liberalization.

    The main objective of the December 1987 stabilization program was to reduce inflation—which was running at an annual rate of 160 percent. This program marked the start of a new phase in Mexico’s adjustment strategy. The program centered around a further tightening of fiscal and monetary policies, a fixed exchange rate, a temporary freezing of public sector prices and wages, and further liberalization of the trade and financial sectors. A key element of the program was an explicit agreement on policies between labor, business, and the government—the Pacto—which provided the framework for revising and updating the main guidelines for economic policy. The Pacto, renewed periodically, remained in effect over the period 1988–94.

    The exchange rate was the main nominal anchor of the system throughout the period, with incomes policies playing an important supportive role. The Mexican peso was fixed to the U.S. dollar from March to December 1988 and allowed to depreciate during the following three years at a preannounced rate. In November 1991, the authorities added some more flexibility to exchange rate management by creating a publicly announced intervention band. As the floor of the band was kept constant while the ceiling depreciated at a predetermined rate, the band widened gradually from less than 1½ percent at the end of 1991 to about 9 percent at the end of 1993.

    Fiscal policy was tightened through a combination of revenue-enhancing and expenditure-restraining measures. The major tax reform of 1987 was supplemented by measures aimed at broadening the tax base, reducing marginal tax rates, and increasing tax compliance; public sector prices were maintained at competitive levels; the pace of privatization of large public enterprises was accelerated; and strict control was exercised over noninterest expenditures. A crucial element in the process of fiscal consolidation was the lowering of interest payments as a result of the successful rescheduling of official external debt and the completion of an innovative debt-reduction agreement with foreign commercial banks in 1989–90. This agreement was the first implemented under the Brady initiative and was financed in part with resources from the IMF, the World Bank, and Japan.

    The main goals of monetary policy throughout the period were to bring down inflation and stabilize the value of the peso. The other objectives of the authorities were to foster financial deepening and facilitate the private sector’s access to bank credit. To meet its primary goals, the monetary authorities intervened in the foreign exchange market and adopted a policy of partial sterilization of capital flows—using a variety of government-issued instruments—aimed at keeping growth in the monetary base broadly in line with the growth of nominal income consistent with the inflation target. To address the secondary goals, the authorities undertook a rapid liberalization of the financial system in 1988–89: interest rates were freed, credit controls and lending restrictions were removed, and reserve requirements and compulsory liquidity ratios were abolished. A further push to the liberalization process occurred from mid-1990 to mid-1992, when Mexico’s 18 commercial banks, which had been nationalized in 1982, were sold back to the private sector.

    In addition to the privatization of large public enterprises and commercial banks and the liberalization of the financial system, Mexico embarked on an ambitious trade reform comprising further unilateral cuts in import tariffs and the negotiation of free trade agreements with several Western Hemisphere countries, including the NAFTA with the United States and Canada. Restrictions on foreign investment and foreign ownership were eased, and a number of key sectors, such as agriculture, mining, telecommunications, and transportation, were deregulated. Overall, these reforms signaled a strong commitment by the authorities to deepen Mexico’s transformation into a market-based economy.

    The December 1987 program and those that followed produced encouraging results. Real GDP growth recovered from an average of ½ of 1 percent a year over the period 1985–88 to 3½ percent in the period 1989–92; inflation fell from 160 percent in 1987 to 12 percent in 1992 and reached single-digit levels in 1993 for the first time in over two decades; real interest rates turned positive; the overall economic balance and the operational balance of the public sector improved by about 13 and 6 percentage points of GDP, respectively, between 1988 and 1992; and the total public external debt dropped relative to GDP from 50 percent in 1988 to 22 percent in 1992 (Table 12).

    The successful restructuring of the external debt paved the way for a resumption of access to international financial markets. Private capital inflows surged to an average of over 6 percent of GDP in the period 1990–93. About one fifth of the inflows were in the form of foreign direct investment, while the rest—some $60 billion over the four-year period—consisted of foreign portfolio investment in the domestic capital market, direct foreign borrowing by private sector firms and financial entities, and repatriation of flight capital. The inflows resulted in a marked strengthening of Mexico’s international reserves position: by the end of 1993, the Bank of Mexico’s gross international reserves stood at $25½ billion, up from $6½ billion at the end of 1989.

    The sharp drop in inflation, in conjunction with the increased access to domestic and foreign credit and the demands for resource reallocation brought about by the structural reforms, contributed to a rise in private sector spending. Private consumption and investment recovered strongly—albeit from relatively low levels—from 1988 to 1992, while private saving fell by 10 percentage points of GDP. Total imports (measured in U.S. dollars) grew at an average annual rate of 24 percent during 1989–92, outpacing the increase of non-oil exports—14 percent on average—over the same period. The combination of these forces led to a gradual widening of the current account deficit from 2½ percent of GDP in the period 1988–89 to 6¾ percent of GDP in 1992. These factors, together with the maintenance of the exchange rate anchor policy, led to a real effective appreciation of the peso of over 60 percent from the end of 1987 to the end of 1992. A good part of the appreciation took place under the fixed exchange rate system adopted in the initial stages of the stabilization program, but the real appreciation of the peso continued under the preannounced crawling peg and after the introduction of the band system in November 1991.

    The behavior of money and credit aggregates reflected the process of reintermediation in the domestic financial system and, more generally, the improved outlook for Mexico over the period. The combined effects of financial sector reform, lower inflation, fiscal adjustment, and less-than-full sterilization of capital flows led to a sharp rise in financial deepening and eased the private sector’s access to credit. From 1989 to 1992, broad money (M4) increased at an average annual rate of 40 percent in nominal terms (14 percent in real terms), whereas nominal narrow money (M1) rose at a yearly average rate of 60 percent (30 percent in real terms). During the same period, net credit to the private sector from the financial system expanded at an average annual rate of 66 percent in nominal terms, largely offsetting the decline in credit to the public sector allowed by the much-improved fiscal position.

    A number of developments in 1993 contrasted with some of the broad underlying trends observed in the period 1988–92. Specifically, output growth slowed to ½ of 1 percent, private consumption and investment fell in real terms, import growth flattened out, the primary and operational surpluses of the public sector declined by about 1½ percentage points of GDP, and the deterioration in the external current account was arrested. The main factors contributing to these developments appear to have been the ongoing restructuring of firms in the manufacturing sector, a tightening of credit conditions by the monetary authorities, a credit squeeze resulting from the deterioration in the quality of banks’ loan portfolios, and uncertainty about the approval of NAFTA, which was only cleared up in November. In the event, the exchange rate regime turned out to be resilient enough to withstand the pressures that arose in the financial and foreign exchange markets—especially around the start of the fourth quarter—and by year-end the peso had fallen back into the bottom half of the intervention band, and private capital inflows had resumed.

    Developments in 1994

    Macroeconomic policy in 1994 was expected to continue in the same general vein as in previous years. The preannounced ceiling of the exchange rate band was allowed to depreciate at an annual rate of about 4 percent, which implied that the intervention band would widen to 14 percent by the end of December, while inflation was expected to remain in single digits. In the face of the output slowdown that had taken place in 1993 and the impending elections, the authorities envisaged some relaxation of the fiscal position, essentially involving tax cuts and increases in social spending, while preserving overall economic balance in the public sector. With the approval of NAFTA in November 1993, foreign investment was expected to grow strongly and bring an added impetus to exports and output growth.

    Table 12.Mexico: Selected Economic Indicators
    19871988198919901991199219931994
    Real sector
    Real GDP growth (percent change)1.71.23.54.53.62.80.63.5
    In percent of GDP
    National saving21.618.218.518.717.616.014.113.7
    Private114.318.816.112.110.08.78.99.1
    Public17.3-0.72.46.67.67.35.24.6
    Gross domestic investment19.320.421.421.922.422.820.621.6
    External current account balance2.2-2.3-2.9-3.2-4.8-6.8-6.4-8.0
    Prices, exchange rates and interest rates
    Consumer price inflation (end-period)159.251.719.729.918.811.98.37.1
    Nominal exchange rate (pesos per U.S. dollar, end-period)2.1992.2572.6372.9393.0753.1183.1064.990
    Real effective exchange rate index (end-period)256.373.173.377.485.993.399.390.6
    Interest rates on 28-day Cetes (annual rates: end-period)122.052.340.626.016.716.911.830.0
    In percent of GDP
    Public sector
    Primary balance5.06.07.97.85.55.43.92.6
    Operational balance2.0-3.0-1.11.22.83.31.50.4
    Overall economic balance-15.0-11.6-5.2-3.60.41.50.7
    Public sector debt
    Foreign debt (excluding IMF)61.549.740.531.726.122.223.024.2
    Domestic debt16.518.723.923.519.712.912.013.2
    Twelve-month rates of growth, end of period
    Monetary sector
    Currency in circulation139.279.836.736.731.717.313.722.2
    Narrow money (M1)129.858.140.762.6119.817.317.75.7
    Broad money (M4)161.258.950.846.430.919.925.017.1
    Net domestic assets of the financial system112.839.332.922.631.620.815.532.0
    Net credit to public sector113.428.615.93.9-1.6-31.7-46.225.3
    Net credit to private sector154.679.877.963.253.357.126.431.9
    Net domestic credit of commercial banks141.442.956.649.448.620.924.3
    Net domestic credit of development banks157.64.37.7-10.118.823.447.442.2
    In billions of U.S. dollars
    External sector
    Current account balance2.9-3.8-6.1-7.5-14.9-24.8-23.4-29.5
    Capital account balance3.8-2.95.110.922.526.730.511.6
    Public sector, net3.61.2-0.7-0.23.01.57.52.5
    Private sector, net0.2-4.15.811.119.525.223.09.1
    Foreign direct investment1.81.72.72.64.84.44.97.9
    Overall balance of payments6.7-6.8-1.13.47.61.97.1-17.9
    Gross international reserves (end-period)8.06.06.510.117.919.425.46.3
    Twelve-month rates of growth, end of period
    Total exports value338.82.812.917.61.74.49.913.6
    Non-oil exports value323.718.711.112.912.15.317.017.0
    Total imports value316.452.425.522.922.126.21.520.3
    Sources: Ministry of Finance; Bank of Mexico; and IMF staff estimates.

    Adjusted for the inflation component of interest payments on the public sector debt denominated in domestic currency.

    1980 = 100; increase means appreciation.

    Expressed in U.S. dollars.

    In the event, economic activity did experience a significant recovery in 1994, amidst a series of episodes of financial turbulence that ended in the December balance of payments crisis. Real GDP growth increased during the year, reaching 4 percent by the second half and 3½ percent for 1994 as a whole; inflation continued its declining trend, averaging about 7 percent, the lowest rate in decades; and manufacturing exports continued growing at an annual rate of 17 percent, accounting for more than 80 percent of total exports (Table 13). However, the improved economic outlook that followed the approval of NAFTA coupled with a strong expansion of credit throughout the year led to a resumption in the growth of private spending and imports, and as a result the external current account deficit increased to 8 percent of GDP.

    Table 13.Mexico: Quarterly Economic Indicators
    19931994
    Q1Q2Q3Q4Q1Q2Q3Q4
    Output and inflation
    Real GDP growth2.40.3-0.8-0.10.53.84.54.0
    Consumer price inflation (end-period)10.49.99.58.07.16.96.77.1
    In percent of GDP
    Public sector
    Primary balance5.05.03.90.73.63.92.70.4
    Overall economic balance2.22.40.1-1.70.51.4-0.1-1.9
    Twelve-month rates of growth, end of month
    Monetary sector
    Liabilities to the private sector21.026.321.818.520.117.524.427.4
    Net domestic credit of the banking system21.025.122.715.519.829.129.732.0
    To the public sector-31.0-32.3-26.8-46.2-30.8-0.811.825.3
    To the private sector45.938.533.226.427.728.227.331.9
    Net credit from commercial banks45.536.232.024.325.426.026.229.6
    Net credit from development banks38.637.533.647.449.548.236.551.6
    In billions of U.S. dollars
    External sector
    Current account balance-5.7-5.7-6.7-5.3-6.9-7.4-7.8-7.4
    Capital account balance8.17.67.07.97.9-1.87.9-2.5
    Public sector, net1.00.5-0.56.42.6-0.91.1-0.3
    Private sector, net17.17.17.51.55.3-1.06.8-2.2
    Foreign direct investment1.51.31.01.21.91.62.42.1
    Overall balance or payments2.41.90.42.51.0-9.20.1-9.9
    Gross international reserves (end-period)21.823.523.625.626.316.916.86.7
    Sources: Ministry of Finance; Bank of Mexico, and IMF staff estimates.

    Includes errors and omissions.

    The series of episodes of financial turbulence experienced by the Mexican economy during 1994 had as their proximate cause both external economic and domestic political shocks. On the external front, the strong growth momentum in the United States and the general pickup in other industrial countries increased the demand for investment funds worldwide. At the same time, financial conditions began to tighten in those industrial countries that were the most advanced in the expansion, especially the United States. Both of these factors prompted international investors to reassess the share of their portfolios invested in emerging markets, including in Mexico. On the domestic front, the sequence of disturbances included the uprising in Chiapas in January, the assassinations of presidential candidate Colosio in March and of the secretary general of the ruling party in September, and a second Chiapas uprising in December. All these events contributed to an environment of considerable political and economic uncertainty.

    The large capital inflows that followed the passage of NAFTA fell abruptly following the assassination of presidential candidate Colosio on March 23. International reserves, which stood at $28¼ billion before the assassination, dropped by $11 billion during April; the exchange rate hit the ceiling of the band; and interest rates on short-term, peso-denominated paper (Cetes) doubled to 18 percent (Charts 35 and 36).

    The monetary authorities’ decision to let interest rates rise, along with the approval of a $6¾ billion short-term credit line from the NAFTA partners to defend the Mexican peso, helped to ease the immediate pressures in financial markets. From the end of April to early November, the stock of international reserves remained fairly stable—at about $16–17 billion—while the exchange rate traded close to the ceiling of the band and interest rates started to decline. At the same time, a sizable amount of Cetes was replaced by Tesobonos, short-term instruments indexed to the U.S. dollar but repayable in pesos. In effect, around $13 billion of private sector holdings of Cetes were swapped for Tesobonos from March to October. Throughout this period, fiscal policy was broadly consistent with the target of overall economic balance in the nonfinancial public sector. However, credit from the Bank of Mexico to the financial system and from commercial and development banks to the private sector expanded rapidly; net credit expansion from trust funds and development banks reached 4½ percent of GDP in 1994, 2 percentage points higher than in the previous year.

    The results of the presidential election in August, together with the renewal of the Pacto in September, seemed to take the pressure off the financial markets. However, as the new administration was about to take office, a new burst of political instability, coupled with increased rumors about possible changes in exchange rate policy, sparked a flight from the Mexican peso and led to a loss of reserves of about $3½ billion. In contrast to the response to the March–April episode, interest rates on 28-day Cetes were maintained at the 13–14 percent range until the second week of December. On December 1, President Zedillo was sworn into office, and days later, tensions in Chiapas resumed. By December 20, international reserves had fallen to $10½ billion and the Mexican authorities attempted in vain to widen the exchange rate intervention band by lifting its ceiling by 15 percent. Two days later, after an additional loss of reserves of $4 billion, the peso was allowed to float. The decision to abandon the commitment to a managed exchange rate regime despite repeated pronouncements to the contrary had strongly adverse effects on financial market expectations. At least in part, this change in market sentiment appears to explain the size and speed of the financial upheaval and sharp peso depreciation of early 1995, as markets questioned Mexico’s ability to service its short-term debt. On January 31, 1995, with a peso worth 40 percent less than in mid-December, the international community announced a financial rescue package in support of Mexico.

    Chart 35.Mexico: Nominal Exchange Rate

    (New Mexican pesos per U.S. dollar; daily quotations)

    Sources: Bank of Mexico; and Bloomberg Financial Markets.

    Factors Behind the Crisis

    As the crisis in Mexico unfolded and its wide-ranging consequences became increasingly apparent, a debate on the factors that contributed to its occurrence emerged. Analytically, the various factors advanced as causes of the crisis can be grouped into three broad and complementary views. The first considers Mexico as having been hit by a set of adverse shocks, which turned out to be more severe and persistent than appeared at the time and served to undermine the authorities’ economic strategy. The second argues that the size of Mexico’s current account deficits in recent years was not sustainable and needed to be addressed by major changes in the stance of macroeconomic policy, including a realignment of the nominal exchange rate. Finally, the third view claims that, while the overall direction of macroeconomic policy was sound, the Mexican authorities allowed inconsistencies in macroeconomic policy to arise during 1994, which ultimately eroded the confidence of domestic and foreign investors in the authorities’ commitment to maintain a coherent medium-term economic strategy.

    It is useful to consider briefly the merits and drawbacks of these three views. Since they are not necessarily competing explanations of the crisis, the discussion simply lays out their main elements. Furthermore, in all likelihood, future and more comprehensive analyses of this episode will find that many, if not all, of the factors emphasized by these views played a role in the crisis.

    The “Adverse Shocks” View

    Mexico was indeed subject to a large number of adverse domestic political and external economic shocks during 1994. It has been argued that it was very difficult, if not plainly impossible, for the authorities to gauge the size or anticipate the recurrent nature of these shocks. Moreover, the relative calm in foreign exchange and financial markets from May to November—signaled by the stable level of international reserves and the falling interest rates on Cetes and Tesobonos—and the absence of inflationary pressures may have suggested to the Mexican authorities that their reaction to the March events sufficed to restore foreign investors’ confidence in the exchange rate regime. Under these conditions, it may well have appeared reasonable to continue with the policy of sterilizing the monetary impact of international reserve losses to offset the effects of what were perceived as temporary political shocks, which would be resolved quickly once the elections took place and the new administration was in office.

    The main problem with this view is that there were certain developments in the economy that suggested that at least some of the shocks were not transitory. Specifically, the persistent rise in foreign interest rates would be expected to provide a higher floor for rates on both peso- and dollar-indexed paper. This development, combined with the ongoing substitution from Cetes to Tesobonos and the drop in stock market prices from mid-September on, should have raised questions about the assumed stability of the demand for domestic money and the likely continuation of the process of financial deepening, and, thus, led to a tightening of monetary conditions.

    The “Unsustainable External Position” View

    This view can be summarized as follows. Typically, an exchange-rate-based stabilization under capital mobility leads to a fall in the real interest rate and an expansion in aggregate demand that cause protracted current account deficits and a real exchange rate appreciation. The appreciation reflects not only a different speed of adjustment of traded and nontraded goods prices, but also, and more important, the effects on aggregate spending of the implied increase in private sector wealth. The removal of credit constraints resulting from financial liberalization and other structural reforms tend to amplify these trends. Even though they are driven by private sector behavior, rather than an inadequate fiscal position, the current account deficit and the real appreciation can eventually become unsustainable. Therefore, at some point a real exchange rate depreciation is needed to restore the initial level of competitiveness and current account equilibrium. In the case of Mexico, supporters of this view point to the size of the current account deficit—over 7 percent of GDP in 1992–94 and 8 percent of GDP projected in the budget for 1995—the substantial decline in the rates of national and private saving since 1988, and the large real appreciation of the peso, as clear signs of the unsustainability of the external position and of the need for a nominal exchange rate realignment.

    Chart 36.Mexico: Inflation, Interest Rates, and Public Debt

    Source: Bank of Mexico.

    1 Monthly average of weekly auctions.

    2 End-of-period holdings at market value. Excludes monetary regulation deposits.

    It can be argued, however, that large current account deficits and real exchange rate appreciation are, at least to some extent, the equilibrium response to the process of stabilization and structural reforms. This response will involve a slow growth of real income, owing to adjustment costs associated with investment and the sectoral reallocation of resources, while consumption of domestic and foreign goods is boosted by the expected rise in permanent income and wealth. Under this framework, the ensuing external deficit would subside over time, as improvements in productivity lead to gradual increases in competitiveness and exports, with no need for a devaluation. In the case of Mexico, this somewhat optimistic interpretation receives some support from the behavior of investment and exports. Investment rose gradually but steadily up to 1992; the trend was interrupted in 1993, owing in part to uncertainties about NAFTA and tighter credit policies, but resumed strongly in 1994—as evidenced, in particular, by a sharp increase in foreign direct investment. Similarly, manufacturing exports grew at a fairly rapid pace during 1988–94, while the peso was appreciating in real terms, owing in part to the increases in total factor productivity resulting from the rapid trade liberalization and wide-ranging deregulation of previous years.

    The “Policy Slippages” View

    This view would argue that the large number of adverse shocks that hit Mexico in 1994, added to the potential vulnerability stemming from weakness in the external accounts, called for a much tighter monetary policy than the one followed, and probably also for an early widening of the intervention band, so as to reassure the markets that the authorities were fully committed to sustaining the exchange rate regime. The behavior of interest rates, the management of government short-term debt, and the expansion of credit from the financial system during the year appear to provide support to this view. The policy of partial sterilization of reserve losses followed by the monetary authorities required placing part of the burden of adjustment on interest rates. However, except for the rise that followed the Colosio incident, interest rates in Mexico in 1994 do not appear to have conformed to this requirement. Indeed, the gradual decline of the interest rate differential between Mexican government securities (Cetes and Tesobonos) and U.S. dollar instruments from May to November suggests that the authorities were attempting to accelerate the convergence of domestic interest rates to international levels. Moreover, the authorities seem to have been reluctant to raise interest rates as the crisis resumed in November and December: interest rates on Cetes fluctuated around the 13–14 percent range until the second week of December, although, since the end of October, international reserves had been falling at about $ 1 billion a week. The vulnerability of the financial system seems to have been compounded by the decision to accommodate a dollar-indexation of short-term debt—which reduced interest payments in the short run but raised de facto the cost of an eventual funding crisis—and to leave unchecked the substantial expansion of credit from commercial and development banks in the run up to, and immediate aftermath of, the presidential elections.

    At least two arguments can be made against the policy slippages view. First, as noted before, it was very difficult to gauge the size and nature of the shocks, even as they started to emerge. Second, it is not clear at the outset what a tightened monetary policy stance would have involved in terms of output and employment losses, or whether it would have sufficed to avert the crisis. Regarding the latter, evidence from similar episodes elsewhere suggests that a substantial hike in interest rates late in the day probably would have been insufficient to preclude the crisis, although it is arguable that such actions may have helped to convince financial markets that Mexico remained committed to a consistent medium-term economic strategy. Thus, it would seem that a much earlier tightening of credit supported by a more restrictive fiscal stance might have been needed to stave off the pressures on the exchange rate regime. In principle, however, the effects of the credit tightening on output and on the solvency of the banking system may not have been qualitatively different from those that seem to have arisen in the aftermath of the December crisis.

    The various factors behind the crisis that have been discussed in this annex probably all played a role. Domestic and external shocks undoubtedly contributed to a reassessment of Mexico’s economic and financial situation by domestic and foreign investors. The accommodating stance of monetary policy during 1994 led to a strong expansion of liquidity that was incompatible with the exchange rate regime. In this situation, markets became increasingly concerned about the sustainability of the large current account deficit. In retrospect, such concerns do appear to have been warranted in the light of the fact that the large capital inflows since 1990 had a much larger impact on consumption than on investment, resulting in a sharp decline in the national saving rate.

    The program that has now been adopted by the Mexican authorities, with strong support from multilateral and bilateral creditors, will need to tackle the root causes of the crisis. The chief objectives of the program are to restore confidence and reduce the dependence on foreign saving through a strong stabilization effort. In addition, the program will need to sustain the substantial progress made by Mexico in recent years in the areas of structural reform and the liberalization of trade and capital flows. The immediate adjustment efforts will undoubtedly involve weaker economic activity for some time. However, the successful implementation of the stabilization program will help to restore investors’ confidence and put Mexico back on a higher medium-term growth path. Mexico’s increased openness and membership in NAFTA underscore the country’s considerable economic potential, as illustrated by its relatively strong economic performance from 1989 to 1992.

    Annex II Adjustment in Sub-Saharan Africa

    Economic performance in sub-Saharan Africa during the past decade and a half has been unsatisfactory. Real per capita incomes continued to decline, thus widening the gap in living standards relative to other developing countries.1 The poor aggregate performance, however, masks the important progress made by an increasing number of African countries, particularly since the mid-1980s, in lowering internal and external imbalances and addressing structural rigidities. The countries that effectively implemented broadly appropriate macroeconomic policies and structural reforms during this period, for the most part under programs supported by the IMF, have performed much better than the nonadjusting countries. Average real per capita incomes in the group of adjusting countries have risen since the mid-1980s. The continuation of these efforts and the adoption of growth-oriented adjustment programs by the CFA franc countries in support of the exchange rate adjustment of January 1994, in the context of an improved external environment, have strengthened the medium term growth prospects for sub-Saharan Africa. The main challenge remains the effective implementation of appropriate reform policies, entailing in particular a strengthening of government revenue mobilization and the encouragement of private sector development; the latter requires, inter alia, improved economic incentives and governance, the reduction of dissavings of public enterprises, the restructuring of financial institutions in distress, and the alleviation of other structural and institutional impediments to growth.

    Overview, 1980–94

    In contrast to the strong gains recorded by other developing countries, particularly in Asia, sub-Saharan Africa experienced further losses in per capita real GDP of almost 1 percent a year during 1980–85; these losses continued during 1986–94, but at a somewhat lower rate of ½ of 1 percent (Table 14). The declining trend in per capita real incomes coincided with widening domestic and external imbalances, mounting external debt burdens and debt-servicing difficulties, and a worsening in the plight of economically and socially vulnerable groups. A number of factors, both exogenous and policy related, have contributed to the disappointing overall economic performance.

    The external environment has been generally unfavorable, with sharp declines in world commodity prices and substantial losses in the terms of trade of sub-Saharan African countries (Table 15). The deterioration in the terms of trade has been particularly pronounced since 1985. While the decline in commodity prices has also affected other developing countries, the impact on sub-Saharan African countries has been far more serious, as the structure of their economies makes them especially vulnerable to terms of trade losses. The export earnings of virtually all African countries are heavily concentrated on one or two commodities while, for some countries, government revenue relies heavily on export taxes.

    For many countries, the adverse effects of the terms of trade losses have been compounded by unfavorable weather in some years. Recurring severe droughts in the Sahel, the Horn of Africa, and other parts of western and southern Africa have taken their toll on food production and export crops. In view of the large share of GDP typically accounted for by agriculture and the high proportion of the population living in rural areas, unfavorable weather tends to have a pronounced effect on output growth and the plight of the rural population.

    Virtually all sub-Saharan African countries are confronted with deep-rooted developmental constraints—rapid population growth, low human capital development, inadequate economic and social infrastructure, and structural rigidities—which are both a cause and consequence of poor economic performance. These factors constitute major impediments to the development of the private sector and the supply response of the economy.

    Moreover, political factors have severely worsened and, in some cases, devastated the economic environment. Ethnic conflicts, political instability, adverse security conditions, or protracted civil wars have held back economic performance in a number of countries—Angola, Burundi, Ethiopia, Liberia, Mozambique, Nigeria, Rwanda, Sierra Leone, Togo, and Zaïre—for at least part of the period since 1980. In addition, concerns about governance have been compounded by the legacy of repressive regimes in several African countries and the associated lack of effective systems of political checks and balances, as well as by bloated and inefficient public administrations, ineffective judicial systems, and complex administrative and institutional frameworks.

    Table 14.Sub-Saharan Africa: Growth, Inflation, and Fiscal Performance
    AverageEstimatesProjections
    1980–851986–9419861993199419951996
    Annual percent change
    Real GDP growth
    Sub-Saharan Africa2.32.53.71.50.65.05.3
    Strong adjusters1.54.04.04.03.85.25.4
    Slow adjusters2.71.73.5-1.45.05.2
    CFA franc countries4.90.23.7-1.51.74.95.2
    Real per capita GDP growth
    Sub-Sabaran Africa-0.9-0.50.6-1.5-2.41.92.2
    Strong adjusters-1.60.91.01.00.82.22.4
    Slow adjusters-0.6-1.30.4-3.0-4.31.82.0
    CFA franc countries1.6-2.70.6-4.4-1.31.82.2
    Consumer price inflation
    Sub-Sabaran Africa22.4246.617.2144.51428.339.711.7
    Excluding Zäire20.024.414.132.936.429.911.9
    Strong adjusters26.624.425.421.425.414.27.1
    Slow adjusters20.3379.513.0217.22281.055.314.6
    Excluding Zäire16.224.57.240.343.840.515.1
    CFA franc countries10.24.53.4-0.930.412.13.9
    In percent of GDP
    Overall fiscal balance1
    Sub-Saharan Africa-6.0-8.7-6.6-11.4-8.9-7.0-5.8
    Strong adjusters-6.3-6.2-7.2-7.5-6.7-5.2-4.5
    Slow adjusters-5.9-10.0-6.2-13.3-10.0-7.8-6.6
    CFA franc countries-6.4-9.2-5.8-10.3-9.4-6.5-4.5
    Primary fiscal balance1
    Sub-Saharan Africa-3.6-3.3-2.7-5.4-2.8-1.70.2
    Strong adjusters-4.3-2.7-4.1-3.7-2.2-1.1-0.7
    Slow adjusters-3.2-3.6-2.1-6.3-3.2-2.00.9
    CFA franc countries-3.1-4.4-2.4-4.6-3.0-0.70.8
    Total government revenue1
    Sub-Saharan Africa15.217.918.016.416.717.219.9
    Strong adjusters11.721.819.222.323.923.523.9
    Slow adjusters17.015.817.513.512.614.017.2
    CFA franc countries22.518.323.516.115.916.717.5
    Total government expenditure
    Sub-Saharan Africa21.226.524.627.825.524.125.7
    Strong adjusters18.028.026.329.730.628.728.3
    Slow adjusters22.925.823.726.822.621.823.8
    CFA franc countries28.827.529.326.425.223.322.0

    Excluding grants.

    Inappropriate economic policies still being pursued by several African countries, including three of the largest countries in terms of real GDP and population, Cameroon, Nigeria, and Zaïre, have also contributed to the weak aggregate economic performance. The overall performance, however, disguises the considerable diversity in institutional arrangements and economic policies pursued by individual countries. Despite the existing formidable constraints, the countries that have effectively implemented structural adjustment programs have significantly improved their economic fundamentals, permitting an increase of real GDP growth and gains in real per capita incomes in many cases. The reform efforts of many African countries have been supported by the IMF, mainly in the context of the enhanced structural adjustment facility. The number of sub-Saharan African countries implementing broadly appropriate policies has risen markedly since the late 1980s, reaching about two thirds of the total by 1994, which augurs well for Africa’s performance in the period ahead. Progress in removing structural and institutional rigidities and in strengthening the supply response of the private sector, while positive, has been uneven across countries and has fallen short of initial expectations. In particular, only modest progress has been made in reforming the public enterprise and financial sectors and the legal and administrative frameworks, owing in part to the weak management and implementation capacity of the public sector and the severity of the initial macroeconomic imbalances.

    Table 15.Sub-Saharan Africa: External Sector Performance
    AverageEstimatesProjections
    1980–851986–9419861993199419951996
    In percent of GDP
    External current account1
    Sub-Saharan Africa-5.3-6.6-7.7-7.0-6.3-5.2-5.8
    Strong adjusters-5.4-7.1-5.0-8.3-7.4-7.0-5.5
    Slow adjusters-5.3-6.4-8.9-6.3-5.6-4.3-5.9
    CFA franc countries-8.6-8.3-10.6-7.4-5.5-4.5-3.8
    In percent of exports
    External debt
    Sub-Saharan Africa196.1350.7321.3388.8392.0354.9334.5
    Strong adjusters257.3338.9306.4388.2360.5342.5323.8
    Slow adjusters177.2356.0327.9389.1409.8361.3340.1
    CFA franc countries187.6320.6227.7395.6377.0329.0297.5
    1985 = 100
    Nominal effective exchange rate
    Sub-Saharan Africa191.153.377.549.535.1
    Strong adjusters276.856.280.146.935.2
    Slow adjusters148.951.776.251.035.1
    CFA franc countries99.1131.8108.1173.696.4
    Real effective exchange rate
    Sub-Saharan Africa105.657.282.146.842.4
    Strong adjusters125.464.287.953.149.5
    Slow adjusters96.053.379.143.138.2
    CFA franc countries105.099.2108.894.859.6
    Terms of trade
    Sub-Saharan Africa98.472.683.065.466.367.067.0
    Strong adjusters98.489.8103.179.886.386.285.1
    Slow adjusters98.263.072.656.954.255.255.8
    CFA franc countries96.268.486.958.859.764.564.8

    Excluding grants.

    Overall, notwithstanding the progress achieved so far, saving and investment rates in sub-Saharan Africa, particularly of the private sector, remain significantly lower than in other developing countries, and too low to support satisfactory sustainable growth (Table 16).2 Moreover, human capital development and administrative inefficiencies have also substantially impeded the efficiency of capital and the growth in total factor productivity, which in some sub-Saharan African countries has been negative. Low productivity has contributed to the lack of convergence to the performance of other developing countries.3

    Table 16.Sub-Saharan Africa: Saving and Investment(In percent of GDP)
    AverageEstimatesProjections
    1980–851986–9419861993199419951996
    Gross investment
    Sub-Saharan Africa16.517.717.916.019.922.322.0
    Strong adjusters11.319.914.920.123.024.224.3
    Slow adjusters19.216.619.313.818.121.320.4
    CFA franc countries23.017.021.314.416.318.118.8
    Government investment
    Sub-Saharan Africa8.26.77.56.76.97.97.5
    Strong adjusters4.57.16.27.48.27.77.8
    Slow adjusters10.26.58.26.36.18.17.4
    CFA franc countries10.45.98.84.35.45.55.7
    Private investment1
    Sub-Saharan Africa8.211.010.49.313.014.314.5
    Strong adjusters6.812.88.712.714.716.516.6
    Slow adjusters9.010.011.27.512.213.213.0
    CFA franc countries12.611.112.510.111.012.613.1
    Gross national savings2
    Sub-Saharan Africa11.611.110.29.013.617.116.2
    Strong adjusters5.812.89.911.715.517.218.7
    Slow adjusters14.710.210.47.612.517.114.5
    CFA franc countries15.18.710.77.010.813.715.0
    Government savings2
    Sub-Saharan Africa2.2-1.91.0-4.7-12.01.01.8
    Strong adjusters-1.80.9-1.01.52.53.3
    Slow adjusters4.3-3.41.9-7.0-3.90.30.8
    CFA franc countries4.0-3.33.0-6.0-4.0-1.01.2
    Private savings1
    Sub-Saharan Africa9.413.09.313.715.516.114.4
    Strong adjusters7.712.010.911.814.014.715.4
    Slow adjusters10.313.68.514.616.416.813.7
    CFA franc countries11.012.07.713.014.814.713.8

    The private sector includes public enterprises.

    Excluding grants.

    Adjustment, 1986–94

    The considerable diversity in the performance of individual countries or country groups during 1986–94 reflected mainly differences in policy response to the worsening external environment (Chart 37). The countries that have implemented broadly appropriate policies (the strong adjusters)—cushioning the impact of large cumulative losses in their terms of trade by improving their external competitiveness and implementing a range of structural reforms—have done much better than others. The strong adjusters achieved higher rates of savings and investment, and lower inflation, as well as positive growth in per capita real GDP (Chart 38).4 This experience contrasts markedly with the performance of the more slowly adjusting countries, which followed generally inappropriate policies during this period, although terms of trade losses for this group of countries were much larger during 1986–94 than for the strong adjusters.5 Looked at from the point of view of institutional arrangements, the economic performance of the CFA franc countries was also very poor in relation to that of the non-CFA franc countries. Given their adherence to a fixed nominal exchange rate peg, the CFA franc countries relied until January 1994 entirely on internal adjustment measures to address their intensifying adjustment needs in the face of a protracted decline in their terms of trade.

    Chart 37.Sub-Saharan Africa: Terms of Trade and Real Effective Exchange Rates1

    (1985 = 100)

    1 Blue shaded areas indicate IMF staff projections.

    Real GDP growth for sub-Saharan African countries as a group averaged 2½ percent a year during 1986–94, well short of average population growth; as a consequence, per capita real GDP declined further, by ½ of 1 percent a year. Aggregate inflation has been high because of hyperinflation in Zaïre, where annual inflation rose to 23,900 percent in 1994. Excluding Zaïre, consumer price inflation in sub-Saharan Africa remained within a range of 14–36 percent, without any clear trend, and averaged 24 percent a year during 1986–94. The variability of inflation largely reflected changes in the stance of monetary policy and the impact of adverse weather on food prices,6 as well as the impact of nominal exchange rate adjustments in countries with flexible exchange rate arrangements and inadequately restrictive monetary conditions.

    In broad terms, however, financial policies in sub-Saharan African countries as a group fell short of bringing inflation under control and reducing external imbalances. Although some countries and country groups have made varying degrees of progress toward macroeconomic stability, the attainment of this objective has eluded most sub-Saharan African countries. The stance of fiscal policy, as measured by changes in the primary government budget balance (excluding grants) as a ratio to GDP, fluctuated from year to year. With increasing interest payments on public debt, the overall budget deficit (excluding grants) widened markedly, to about 9 percent of GDP by 1994, a level still significantly higher than that required to stabilize the ratio of public debt to GDP. The growth in (broad) money supply also fluctuated from year to year, reflecting in part a sizable variability in the velocity of circulation. While some progress was made by several countries to establish positive real interest rates, they remain negative for sub-Saharan Africa as a group.

    External sector developments since 1986 have been characterized by large current account deficits (excluding official transfers) as a ratio to GDP and a steep expansion in the external public debt in relation to both GDP and export earnings, thus underscoring the unsustainable nature of the external imbalances. In annual average terms, the external performance worsened substantially during 1986–94 relative to the first half of the 1980s. Movements in the current account balance reflected developments in the external environment, the stance of domestic financial policies, and the impact of exogenous supply-side developments induced mainly by changes in the weather. In the early 1990s, the external environment of sub-Saharan African countries worsened sharply as a result of a marked weakening in economic activity in industrial countries, which constitute the main destination of the primary commodity exports of African countries, and a collapse of economic activity in the countries in transition. These events exacerbated the long-term downward trend in real commodity prices and resulted in large cumulative losses in the terms of trade of African countries, amounting to about 34 percent between 1985 and 1994 for sub-Saharan Africa as a whole. There were, however, some notable differences in the magnitude of terms of trade changes among countries or country groups; a small number of countries actually had significant gains in their terms of trade.

    The widening external financing requirements of sub-Saharan African countries were covered mainly by increasing inflows of foreign assistance in the form of grants and concessional long-term loans and by debt reschedulings by Paris Club and other creditors. Several countries also accumulated external debt-service payments arrears. Inflows of foreign direct investment remained very modest and were exceeded by short-term private capital outflows.7 Despite sizable debt forgiveness provided by several official creditors, the external public debt burden of sub-Saharan African countries as a group increased markedly during 1986–94. The debt-to-GDP ratio rose from an annual average of 33 percent during 1980–85 to an estimated 98 percent by 1994, a level substantially higher than that of other developing countries. Moreover, with the stagnation of export earnings and major nominal exchange rate adjustments since 1990, the ratio of debt to exports increased sharply to about 390 percent by 1994, almost twice its level during 1980–85.

    A clearer indication of the progress made by sub-Saharan African countries in reducing their domestic and external imbalances on a durable basis and attaining a viable balance of payments position is provided by the evolution of aggregate and sectoral savings and investment ratios.8 Developments in savings and investment balances reflect not only the stance of financial policies but, more important, the impact of structural and institutional factors, particularly on the evolution of private saving and investment. In virtually all of sub-Saharan Africa, private sector activity has been strongly impeded by a broad range of structural, legal, administrative, and other institutional constraints. These impediments, combined with inappropriate domestic policies and the impact of external shocks, contributed to the emergence of major imbalances and declines in real incomes prior to 1986.

    Chart 38.Sub-Saharan Africa: Real GDP and Per Capita Income1

    (Annual percent change)

    1 Blue shaded areas indicate IMF staff projections.

    In recent years, as an integral part of their adjustment programs, many countries have implemented a number of structural reforms aimed at alleviating these impediments and stimulating the development of the private sector. These measures have included the lifting of controls on retail and producer prices and on marketing arrangements for agricultural products; the liberalization of exchange and trade systems; the lifting of interest rate controls, the introduction of government financial instruments, the restructuring of commercial banks, and other monetary policy and financial sector reforms; the broadening of the tax base and other tax reforms to strengthen economic incentives and promote equity; the restructuring and privatization of public enterprises; the implementation of civil service and other administrative reforms to improve efficiency and enhance the economic management capacity of the public sector; and the introduction of legal and institutional reforms. The range and effectiveness of the various reform measures have varied significantly from country to country.

    For sub-Saharan Africa as a whole, private saving rose markedly between 1986 and 1994, facilitating both a modest increase in private investment and a strong improvement in the private sector net financial balance. This improvement offset a widening in the government net financial deficit, caused by a decline in government saving that was only in part compensated by a decline in government investment, and allowed a modest narrowing of the external current account deficit.

    Strong Adjusters

    While a rather heterogeneous set of countries, the strong adjusters generally pursued fairly comprehensive programs of macroeconomic adjustment and structural reforms during 1986–94. What differentiates the performance of these countries from that of the slow adjusters is the significantly greater progress toward establishing macroeconomic stability and effectively implementing a broad range of structural reforms. For the most part, they have also managed to sustain the gains from these reforms. An improvement in their external competitiveness was a crucial beneficial effect of these policies. The decline in their real effective exchange rates came about through nominal exchange rate adjustments, domestic cost containment, or both, which markedly exceeded the cumulative losses in their terms of trade during 1986–94. The resulting strengthening of economic incentives and the alleviation of structural and institutional impediments to growth have strengthened the supply response of these countries. The lifting of interest rate controls and the other far-reaching financial sector reforms introduced by several strong adjusters, such as Ghana and Kenya, have improved the flexibility of macroeconomic policies and the capacity of these countries to more adequately respond to domestic and external shocks.

    The broadening of the tax bases and the tax reforms implemented by the strong adjusters facilitated a steep increase in government revenue and expenditure, while allowing also for a narrowing of fiscal imbalances, in sharp contrast to the experience of the other sub-Saharan African countries. Government savings and investment rose relative to GDP between 1986 and 1994, as well as relative to the first half of the 1980s, fostering private sector development. Private investment increased twice as fast as private savings. The counterpart to this was a modest widening of the external current account deficit. However, the larger current account imbalances were covered fully by larger inflows of official grants, reflecting the increasing support provided by bilateral and multilateral donors to the reform efforts of the strong adjusters.

    As a consequence, despite the impact of the severe drought in southern Africa in the early 1990s, real GDP growth of the strong adjusters accelerated from 1½ percent a year during the first half of the 1980s to an annual average rate of 4 percent during 1986–94, a rate substantially higher than that of sub-Saharan Africa as a whole. The decline in per capita real GDP of 1½ percent a year during 1980–85 was reversed, with gains of 1 percent a year during 1986–94.

    Slow Adjusters

    Until 1993, the slowly adjusting countries were characterized by too modest progress toward macroeconomic stability, as well as by more timid efforts in implementing structural reforms. The policy effort was weak compared with other sub-Saharan African countries and disappointing relative to the seriousness of the distortions in these economies. The overall and the primary budget deficits of the slowly adjusting countries more than doubled in relation to GDP between 1986 and 1993 because of declining government revenue and increasing government expenditure. With the adoption of corrective measures in 1994 by several of these countries, fiscal imbalances narrowed sharply, but on average fiscal deficits during 1986–94 remained significantly larger than in the first half of the 1980s. For the 1986–94 period as a whole, government saving declined sharply, inducing both a significant reduction in government investment and a widening of the government net financial deficit. Private saving almost doubled relative to GDP during the period; private investment declined markedly during 1986–93 but is estimated to have recovered in 1994. Overall, and reflecting financing constraints, the slow adjusters recorded a narrowing of their external current account deficit. Until 1993, however, this was the result of a sharper reduction in aggregate investment than in total saving, indicative of the poor investment climate and generally weak economic incentives in this group of countries.

    As a consequence, real GDP growth of the slow adjusters decelerated and turned negative by 1994. The annual average declines in per capita real GDP steepened from ½ of 1 percent during 1980–85 to over 1 percent during 1986–94. Average inflation also rose steeply, even after excluding the impact of hyperinflation in Zaïre.

    CFA Franc Countries

    The CFA franc countries, some of which are included in the group of slowly adjusting countries, were the only country group in sub-Saharan Africa to record positive gains in real per capita incomes during the first half of the 1980s. Nonetheless, their broadly in adequate policy responses to the worsening in their terms of trade after 1985 resulted in stagnation in real GDP and accelerating losses in real per capita incomes during the period to 1993. The fixed value of the CFA franc vis-à-vis the French franc and the sharp reduction in inflation in France resulted in exceptionally low inflation in the CFA franc countries during 1986–93, amounting on average to a mere 1½ percent a year. However, the strong value of the French franc and real effective depreciations of the currencies of the main trading partners contributed to an appreciation of the CFA franc in nominal effective terms. This appreciation, notwithstanding the excellent inflation performance, limited the gains in the CFA franc countries’ external competitiveness during 1986–93 to only 5 percent—a too modest improvement, given the cumulative decline in their terms of trade of 41 percent.

    As a result of the real appreciation and the decline in export prices, export earnings declined, disposable incomes fell, and the government revenue base narrowed sharply. In the face of declining government saving, government investment was cut. This did not, however, prevent a large widening of fiscal imbalances and the emergence of domestic and external government payments arrears, undermining the financial health of commercial banks. The inappropriate mix of fiscal and monetary policies gave rise to increasing real interest rates. Combined with the structural and institutional rigidities, the inappropriate stance of policies stifled private sector activity and contributed to a decline in private investment. Total investment and, to a lesser extent, aggregate saving declined relative to GDP during 1986–93, which reduced the external current account deficit somewhat.

    The attempt to contain the external imbalances of the CFA franc countries largely through internal adjustment policies was clearly deflationary and unsustainable, as evidenced by the marked losses in real per capita incomes and the difficulties experienced in implementing cuts in public expenditures and wages. The internal adjustment measures that several CFA franc countries implemented, while necessary, were not sufficient to adequately address the impact of the worsening terms of trade. In response to this realization, CFA franc countries devalued by 50 percent (Comoros, by 33 percent) the external value of their currency in early January 1994 and have since begun to implement comprehensive, growth-oriented adjustment strategies.9

    The first results from the implementation of the stepped-up reform efforts since early 1994 are broadly encouraging. The removal of most of the distortions in the structure of relative prices, including agricultural producer prices, combined with a recovery in world commodity prices, strengthened economic incentives and boosted output growth despite a sharp reduction in real domestic demand. Real GDP is estimated to have increased 1½ percent in 1994 after a decline of the same magnitude in 1993. The inflationary impact of the devaluation was contained through a marked moderation of wage increases in both the government and private sectors. After an initial large adjustment in consumer prices in the first quarter of 1994, price increases slowed sharply, containing average inflation for the year as a whole to about 30 percent.

    Difficulties arose, however, in effectively implementing tax and other structural reforms, particularly among the six countries that are members of the Central African Economic and Monetary Community. Government revenues did not pick up, owing largely to difficulties in implementing customs reforms, a weakening in tax administration, and a modest expansion in taxable imports. Nonetheless, cuts in government consumption have helped to raise government saving and reduce fiscal deficits. The private sector is estimated to have responded to the new policy environment by raising saving and, to a lesser extent, investment. Overall, the external current account deficit declined, contributing to a significant improvement in the gross official reserve position of the CFA franc countries as a group. This improvement reflected also the resumption of external assistance, including sizable debt relief by Paris Club and other creditors, as well as a reversal of private capital flight.

    Challenges for the Period Ahead

    While the overall economic performance of sub-Saharan Africa in recent years has been less than satisfactory, a number of positive developments have taken place that augur well for an improved performance in the period ahead.

    Virtually all African countries have come to accept that a reversal of existing imbalances and the establishment of a foundation for sustainable growth require the maintenance of macroeconomic stability and the removal of structural rigidities to strengthen and realize growth potential. This requires increased reliance on market-based instruments of policy, improved transparency and governance, and the establishment of a supportive environment for the development of the private sector, the main engine of growth. Consequently, an increasing number of sub-Saharan African countries have embarked on growth oriented adjustment programs, with support from the IMF and the World Bank as well as from bilateral and multilateral donors. The increasing “ownership” of these programs by individual countries has been a crucial factor behind their successful implementation. Owing primarily to a number of political, social, and security difficulties, the remaining countries have not yet mustered the domestic political consensus and commitment needed to adopt comprehensive adjustment programs.

    While much remains to be done to achieve macroeconomic stability and remove structural and institutional impediments to growth, virtually all sub-Saharan African countries, including the slow adjusters, have already removed the bulk of the distortions in relative prices. With the recent exchange rate parity adjustment by the CFA franc countries, existing exchange rates in sub-Saharan African countries are considered to have been brought close to their equilibrium levels, a major achievement in comparison with the sizable misalignments of the early 1980s. In addition, far-reaching reforms have been introduced in the exchange and trade systems of all sub-Saharan African countries. Several countries have by now fully liberalized their payments and transfers for current international transactions. Moreover, while the external imbalances remain large, several African countries—including most of the strong adjusters and, more recently, several CFA franc countries—have strengthened their gross official reserve positions, thus providing a much-needed cushion against potential future shocks.

    Nonetheless, a number of key policy challenges remain, which need to be addressed with determination in the period ahead.

    • First, adjustment efforts need to be consolidated or intensified in countries that have already embarked on comprehensive adjustment programs, while appropriate adjustment programs need to be adopted by the remaining sub-Saharan African countries as a matter of urgency. The adoption and effective implementation of reform programs by Cameroon, Nigeria, and Zaïre, the three largest African countries, would play a crucial role in improving the economic performance of sub-Saharan Africa as a whole.

    • Second, fiscal imbalances are still unduly large. The progress made so far in lowering or containing these imbalances is often fragile or precarious. Deficit reduction has relied often on government expenditure restraint, because government revenues have declined in recent years in relation to GDP in several sub-Saharan African countries. Accordingly, intensified efforts are needed to strengthen government revenue mobilization and government saving, so as to finance the needed expansion in the economic and social infrastructure while allowing a further reduction in fiscal imbalances. Budgeting and control procedures for government expenditure should also be strengthened through public expenditure reviews to eliminate unproductive expenditure and increase efficiency. In many countries, there is a need to press ahead with the restructuring of public spending, through reform of the civil service and the scaling down of budgetary transfers and subsidies.

    • Third, an acceleration of per capita real GDP growth will require a significant further increase in saving and investment by both the government and the private sector, as well as improvements in the efficiency of capital and labor and gains in total factor productivity. Stronger efforts to boost domestic and foreign private investment will be critically important. To this end, the restructuring of public enterprises, and structural and institutional reforms in general, would need to be intensified.

    • Finally, stepped-up efforts are also needed to enhance the economic management and monitoring capacity of the public sector and to improve governance more generally. Political liberalization efforts in recent years in several sub-Saharan African countries—including the lifting of restrictions on the formation of political parties and on freedom of the press, as well as the holding of multiparty parliamentary and presidential elections—constitute a major step toward strengthening governance. The increased public debate, and improved accountability and transparency in the application of economic decisions, likely to result from this process should enhance governance and help foster political consensus on the need for economic reforms.

    Against the background of a significant improvement in the external environment, the short-term outlook for sub-Saharan Africa is better than it has been in decades. Real GDP growth is expected to average a robust 5 percent a year during 1995–96, allowing gains in real per capita incomes of 2 percent a year. At the same time, average inflation is projected to slow to 12 percent by 1996, and the external current account deficit is expected to narrow. The improved growth prospects largely reflect the expected pursuit of appropriate reform efforts by most of the sub-Saharan African countries. The pickup in world demand has already raised world commodity prices, including the prices of the agricultural, mineral, and other primary commodities exported by African countries. However, the overall gains in the terms of trade are expected to be very modest, except for the CFA franc countries.

    Over the medium term, prospects for exports will be favorably influenced by the completion of the Uruguay Round and the associated liberalization of trade in agricultural products and improved access to industrial country markets.10 The reduction in protection by industrial countries will support the outward oriented trade policies pursued by sub-Saharan African countries and help stimulate output growth. The economic liberalization and restructuring efforts being undertaken in South Africa will facilitate closer integration of that country into the regional and world economy, thus giving a potential additional boost to trade and productivity for the region. Overall, these factors should help sustain medium-term growth in sub-Saharan Africa at a level substantially higher than the poor performance of the past couple of decades.

    It should be recognized, however, that the above projections, while potentially well within reach, are subject to sizable downside risks. First, they are crucially dependent on effective implementation of the adjustment programs adopted by individual countries, including the countries that have so far been slow to embark on sufficiently ambitious reform programs. The risk of slippages or deviations from the announced programs is particularly high for some of the largest African countries, given their weak record of policy implementation. The prospects for reduced inflation, for example, hinge critically on a successful implementation of the anti-inflation program adopted by the new government in Zaïre. Second, the projected real GDP growth assumes normal weather. Finally, the attainment of external objectives is conditional on the timely provision of adequate foreign financial and technical assistance. Given their heavy external debt-servicing burden, sub-Saharan African countries will continue to rely in the foreseeable future on concessional assistance from bilateral and multilateral donors, as well as on additional debt relief from Paris Club and other creditors. In this context, the recent decision by Paris Club creditors to increase the level of concessionality of their debt relief would contribute to meeting the still large exceptional financing needs of sub-Saharan African countries.

    Annex III Structural Fiscal Balances in Smaller Industrial Countries

    Faced with large fiscal deficits and, in many instances, heavy and growing public debt burdens, most industrial countries are engaged in medium-term efforts at fiscal consolidation. Volatile short-term macroeconomic conditions, however, often make it difficult to assess the need for consolidation, as they introduce temporary changes in deficits that obscure the permanent or structural stance of fiscal policies. For these reasons, previous issues of the World Economic Outlook have made extensive use of staff estimates of structural fiscal balances for the major industrial economies. The current issue extends the use of this indicator, which abstracts from cyclical variations, to a number of smaller industrial countries. While data problems in some countries require that the results be interpreted with caution, the figures are useful indicators of underlying fiscal developments.

    Estimates of the structural fiscal balance result from a decomposition of fiscal revenues, expenditures, and balances into structural and cyclical elements.1 By construction, the structural component of each aggregate is the estimated level that would obtain in a given year if output were at its potential level. The cyclical component of each is the difference between the actual and structural levels. To do these calculations, it is necessary to have estimates of potential GDP, the percentage deviation or “gap” of actual output with respect to potential, and estimates of the responsiveness of revenues and expenditures to these cyclical output gaps. Estimates of the responsiveness of revenues are based primarily on estimates of the cyclical elasticities of national revenue systems. The responsiveness of expenditures reflects the responsiveness of unemployment insurance to cyclical variations of unemployment around the level estimated to be consistent with nonaccelerating inflation.

    A useful means of approximating the staff’s estimates of the responses of fiscal aggregates to changes in the output gap is through cyclical response coefficients. These coefficients show the likely sensitivities of the ratios of aggregate revenues and expenditures to GDP with respect to a 1 percentage point increase in the output gap. The coefficients allow the cyclical element of each fiscal aggregate to be computed as the product of the output gap and the corresponding cyclical response coefficient in each year. The structural component of each fiscal aggregate is then derived by subtracting the estimated cyclical element from the observed level.

    Conceptually, potential GDP is the level of output that would be predicted by an aggregate production function if multifactor productivity and labor force participation were at their noncyclical trend levels and if the unemployment rate were equal to the nonaccelerating inflation rate of unemployment (NAIRU). For a number of countries, the estimates of potential output are based on estimated production functions embodying these considerations. In other cases, the estimates are based on statistical estimates of trend output. In some countries, such as Finland, Ireland, New Zealand, and Norway, the staff has adjusted the estimates to account for the influences of divergent sectoral developments, structural changes, volatile labor markets, and other shocks; in these cases, the results must be regarded as highly tentative and should be interpreted with particular care.2 For the group of smaller industrial countries considered here, the estimates suggest that the annual growth of potential output has been about 2½ percent during the 1980s and the early 1990s (Table 17). This overall behavior masks considerable variation among countries. In the first half of the 1990s, potential output growth was estimated to be the most rapid in Ireland, owing to rapid growth of the capital stock and, to a lesser extent, increases in the labor force, and in Australia, reflecting productivity improvements from structural reforms. In the middle years of the decade, estimated potential growth in New Zealand accelerates strongly as a result of structural reforms in that country.

    Table 17.Selected Smaller Industrial Countries: Potential Output(Average annual percent change)
    1971–791980–891990–95
    Australia3.73.23.2
    Austria3.62.12.8
    Belgium3.22.22.1
    Denmark2.52.02.3
    Finland3.01.3
    Ireland4.13.55.0
    Netherlands3.32.12.4
    New Zealand12.31.81.6
    Norway23.42.11.5
    Spain3.82.52.9
    Sweden2.92.11.3
    Average of above countries3.42.42.5
    Source: IMF staff estimates.

    Potential output growth is estimated to average 2.9 percent during 1993–95.

    Mainland Norway; excludes oil sector.

    Estimates of the responsiveness of revenues and expenditures to cyclical output gaps reflect both observed ratios of these aggregates to GDP and the estimated elasticities of revenues and expenditures with respect to cyclical fluctuations in GDP.3 Revenues are particularly sensitive to the cycle in countries whose revenue structures depend heavily on cyclically elastic taxes, such as corporate or progressive personal income taxes. The cyclical responsiveness of expenditures depends on the level of unemployment benefits and on the response of unemployment to cyclical fluctuations in output. The staff has used OECD estimates of revenue elasticities and its own estimates of the responsiveness of unemployment rates to cyclical variations in output in different countries.4

    The separate coefficient estimates for revenues and expenditures are combined to generate a response coefficient for the fiscal balance. For example, a response coefficient of 1 indicates that a 1 percentage point increase in the output gap leads to a cyclical deterioration of 1 percentage point in the ratio of the fiscal balance to GDP. Using this, it is possible to infer how much the actual balance changes as a result of movements in the output gap. The coefficient estimates show wide variation in the cyclical sensitivity of the ratios of revenues and expenditures to GDP across countries (Table 18). Particularly on the revenue side, the variation among countries far exceeds that among the major industrial countries, largely because of the high cyclical sensitivity for countries such as Sweden, the Netherlands, and Norway. The strong cyclical responsiveness in these countries reflects the high ratios of revenue to GDP (about 60 percent in all three countries) and revenue systems that are very elastic with respect to cyclical changes in the economy. While the ratio of expenditures to GDP is much less sensitive to the cycle in all countries, there is significant cyclical responsiveness in some, especially Belgium, Denmark, and Sweden. This sensitivity largely reflects high current levels of unemployment and unemployment benefits.

    The estimates of structural budget balances suggest that in a number of countries significant fiscal consolidation efforts will be necessary to reduce the large structural deficits expected in 1995–96 (Table 19). These estimates should be interpreted as broadly indicative of the structural component of budget balances rather than precise estimates because of the margin of uncertainty that attaches to estimates of potential output and to tax and expenditure elasticities with respect to national income, particularly during periods of structural change. Moreover, it is important to note that changes in structural budget balances are not necessarily attributable to policy changes, but may also reflect the built-in momentum of existing expenditure programs.

    Table 18.Selected Smaller Industrial Countries: Cyclical Responsiveness of General Government Budget1
    RevenuesExpendituresBalance
    Australia0.34-0.100.43
    Austria0.45-0.130.58
    Belgium0.520.240.75
    Denmark0.49-0.190.68
    Finland0.50-0.080.58
    Ireland0.51-0.090.60
    Netherlands0.65-0.140.79
    Norway0.70-0.080.78
    New Zealand0.40-0.100.50
    Spain0.45-0.160.61
    Sweden0.76-0.210.98
    Source: IMF staff estimates.

    Percentage point change in the ratio of fiscal aggregate to GDP for a 1 percentage point change in the output gap. Figures consolidate current and lagged effects.

    Table 19.Selected Smaller Industrial Countries: General Government Structural Balances, Actual Balances, and Output Gaps1
    198719881989199019911992199319941995–96
    Australia
    Structural balance-0.90.40.4-0.2-1.6-2.7-1.7-1.4-1.1
    Output gap1.42.33.61.7-2.7-3.8-3.3-1.9-0.5
    Actual balance-0.71.01.60.5-2.6-4.6-3.6-2.7-1.6
    Austria
    Structural balance-3.1-2.8-4.0-3.6-3.5-2.5-3.3-3.5-4.2
    Output gap-1.8-0.31.22.01.3-2.2-1.7-0.7
    Actual balance-4.3-3.0-2.8-2.2-2.4-2.0-4.1-4.0-4.1
    Belgium
    Structural balance-4.9-6.0-6.7-6.8-7.9-7.7-5.1-3.9-3.8
    Output gap-3.1-0.60.61.61.61.3-2.3-2.0-0.7
    Actual balance-7.4-6.6-6.2-5.4-6.5-6.7-6.6-5.4-4.3
    Denmark
    Structural balance1.1-0.2-0.5-1.3-1.3-0.4-0.8-2.4-1.8
    Output gap1.71.0-0.3-0.7-1.4-3.3-5.3-2.0-0.3
    Actual balance2.40.6-0.5-1.5-2.1-2.6-4.4-4.3-2.0
    Finland
    Structural balance0.72.63.32.4-1.2-1.2-1.9
    Output gap0.83.06.25.4-2.5-6.6-9.0-7.6-4.2
    Actual balance1.14.16.35.4-1.5-5.9-7.8-5.5-4.8
    Ireland
    Structural balance-6.7-0.2-2.0-3.4-2.7-2.8-2.4-2.5-2.6
    Output gap-4.3-4.2-1.50.8-0.6-0.5-0.1
    Actual balance-9.8-3.3-2.6-2.5-2.9-2.9-2.7-2.5-2.5
    Netherlands
    Structural balance-4.8-3.5-5.1-6.7-4.5-4.7-2.5-2.6-2.9
    Output gap-1.6-1.50.62.22.00.8-1.3-1.1-0.2
    Actual balance-5.9-4.6-4.7-5.1-2.9-3.9-3.3-3.5-3.1
    New Zealand
    Structural balance2-2.5-1.6-0.7-1.1-0.8-0.30.11.22.5
    Output gap-0.70.2-1.0-1.7-4.1-5.3-3.2-1.20.4
    Actual balance2-2.4-1.6-1.3-2.4-3.4-3.6-1.90.32.5
    Norway
    Structural balance3.83.64.96.21.9-0.4-2.3-1.9-1.8
    Excluding oil revenues3.83.81.80.4-4.6-6.6-7.8-6.7-9.2
    Output gap4.91.7-1.8-1.9-3.7-3.0-2.6-0.90.3
    Actual balance7.35.34.04.6-0.9-3.2-4.7-3.1-1.5
    Spain
    Structural balance-3.0-4.0-4.2-5.1-5.6-3.6-4.2-3.0-2.9
    Output gap0.31.82.21.30.3-1.7-4.6-5.0-4.0
    Actual balance-3.1-3.3-2.8-3.9-5.0-4.5-7.5-6.7-5.9
    Sweden
    Structural balance0.5-0.11.90.9-1.9-5.48.1-7.5-6.2
    Output gap5.14.64.22.7-2.2-4.7-3.7-2.5
    Actual balance4.23.55.44.2-1.1-7.4-13.3-11.4-8.4
    Smaller industrial countries3
    Structural balance-2.2-2.0-2.2-3.0-3.7-3.6-3.3-2.8-2.8
    Output gap0.31.11.91.6-0.3-1.6-3.5-2.9-1.6
    Actual balance-2.1-1.5-1.2-2.0-3.7-4.8-6.1-5.2-4.3

    The structural budget balance is the budgetary position that would be observed if the level of actual output coincided with potential output. Changes in the structural budget balance consequently include effects of temporary fiscal measures, the impact of fluctuations in interest rates and debt-service costs, and other noncyclical fluctuations in the budget balance. The computations of structural budget balances are based on staff estimates of potential GDP and revenue and expenditure elasticities (see the text). Structural balances are expressed as a percent of potential output, and the output gap is defined as actual output minus potential output, as a percent of potential output.

    Excludes privatization receipts.

    Averages for countries listed above.

    While most smaller industrial countries have experienced significant fiscal deficits during the first half of the 1990s, the structural component of these imbalances has varied considerably.5 Recent deficits in Australia, Denmark, Finland, and New Zealand are estimated to have been largely cyclical. In Finland, the deterioration in the structural balance between 1994 and 1995–96 is caused mainly by the direct fiscal impact of accession to the European Union. By contrast, while recent economic recoveries have brought about some reductions in overall deficits, a significant structural component has remained in several European countries. This is particularly true in Austria, Belgium, and Sweden; and, to a lesser extent, in Ireland, the Netherlands, and Spain. In some of these countries, the scope for further cyclical improvements in the deficit appears to have been largely exhausted. In Norway, the relatively small structural deficit reflects substantial oil revenues, amounting to roughly 6 percent of mainland GDP in recent years, that have been used to finance mainland fiscal expenditure.

    Statistical Appendix

    Assumptions

    The statistical tables in this appendix have been compiled on the basis of information available on April 10, 1995. The estimates and projections for 1995 and 1996, as well as those for the 1997–2000 medium term scenario, are based on a number of assumptions and working hypotheses.

    • For the industrial countries, real effective exchange rates are assumed to remain constant at their average level during March 1–24, 1995, except for the bilateral exchange rates among the ERM currencies, which are assumed to remain constant in nominal terms. For 1995 and 1996, these assumptions imply average U.S. dollar/SDR conversion rates of 1.522 and 1.535, respectively.

    • “Established” policies of national authorities will be maintained.

    • The price of oil will average $16.90 a barrel in 1995 and 1996. In the medium term, the oil price is assumed to remain unchanged in real terms.

    • Interest rates, as represented by the London interbank offered rate (LIBOR) on six-month U.S. dollar deposits, will average 6¾ percent in 1995 and 7 percent in 1996; the three-month certificate of deposit rate in Japan will average 1¾ percent in 1995 and 2¾ percent in 1996; and the three-month interbank deposit rate in Germany will average 5¼ percent in 1995 and 6 percent in 1996.

    Data and Conventions

    Data and projections for more than 180 countries form the statistical basis for the World Economic Outlook (the World Economic Outlook data base). The data are maintained jointly by the IMF’s Research Department and area departments, with the latter regularly preparing country projections based on consistent global assumptions, such as those summarized above.

    Although national statistical agencies are the ultimate providers of historical data and definitions, international organizations are also involved in statistical issues, with the aim of harmonizing differences among national statistical systems, of setting international standards with respect to definitions, and of providing conceptual frameworks for measurement and presentation of economic statistics. As regards the World Economic Outlook data base, updates and revisions by both national source agencies and international organizations are used.

    Over the past several years, two developments of major importance for improving the standards of economic statistics and analysis have been the comprehensive work to revise the United Nations’ standardized System of National Accounts (SNA) and the IMF’s Balance of Payments Manual (BPM). Work on both projects was completed in late 1993, and the System of National Accounts 1993 as well as the fifth edition of the Balance of Payments Manual have been issued.1 The IMF was actively involved in both projects, particularly the new Balance of Payments Manual, which is central to the IMF’s interest in countries’ external positions. Key changes introduced with the new Manual were summarized in the May 1994 World Economic Outlook (Box 13).

    Beginning with this World Economic Outlook, a process of adapting country balance of payments data to the definitions of the new Balance of Payments Manual has begun. However, full concordance with the BPM is ultimately dependent on national statistical compilers providing revised country data, and hence the World Economic Outlook estimates are now only partly adapted to the BPM. In accordance with BPM, trade in goods and services exclude net factor income. Hence, in Statistical Appendix Tables A36, A38, A42, and A43, ratios to goods and services will tend to be higher than in previous World Economic Outlooks. Also beginning with this World Economic Outlook, estimates for foreign trade in goods and for trade prices are drawn as far as possible from national accounts data. For countries lacking national accounts data on exports and imports of goods, balance of payments data on trade values are used; trade unit values are used to generate foreign trade in constant prices.

    Composite data for country groups in the World Economic Outlook are either sums or weighted averages of data for individual countries. Arithmetic weighted averages are used for all data except inflation and money growth for nonindustrial country groups, for which geometric averages are used. The following conventions apply.

    • Country group composites for interest rates, exchange rates, and the growth of monetary aggregates are weighted by GDP converted to U.S. dollars at market exchange rates (averaged over the preceding three years) as a share of world or group GDP.

    • Composites for other data relating to the domestic economy, whether growth rates or ratios, are weighted by GDP valued at purchasing power parities (PPPs) as a share of total world or group GDP.2

    • Composite unemployment rates and employment growth are weighted by labor force as a share of group labor force.

    • For data relating to the external economy, composites are sums of individual country data after conversion to U.S. dollars, for balance of payments at the average exchange rates in the years indicated, and for debt denominated in other currencies than U.S. dollars, at end of period exchange rates. Composites of foreign trade prices, however, are arithmetic averages of percentage changes for individual countries weighted by the U.S. dollar value of exports or imports as a share of total world or group exports or imports (in the preceding year). Group composites of trade volumes are derived as sums of trade values deflated by corresponding group composites of prices.

    For central and eastern European countries in existence before 1991, external transactions in nonconvertible currencies (through 1990) are converted to U.S. dollars at the implicit U.S. dollar/ruble conversion rates obtained from each country’s national currency exchange rate for the U.S. dollar and for the ruble. Trade among the Baltic states, Russia, and other countries of the former Soviet Union is not yet included in the data for these countries’ external transactions because of insufficient information.

    Unless otherwise indicated, multiyear averages of growth rates are expressed as compound annual rates of change.

    Classification of Countries

    Summary of the Country Classification

    The country classification in the World Economic Outlook divides the world into three major groups: industrial countries, developing countries, and countries in transition.3 Rather than being based on strict criteria, economic or otherwise, this classification has evolved over time and is intended only to facilitate the analysis and provide a reasonably meaningful organization of data. Each of the three main country groups is further divided into a number of subgroups. Tables A and B provide an overview by these standard groups in the World Economic Outlook, showing the number of countries in each group and the average 1994 shares of groups in aggregate PPP-valued GDP, total exports of goods and services, and total debt outstanding.

    Table A.Industrial Countries: Classification by Standard World Economic Outlook Groups, and Their Shares in Aggregate GDP and Exports of Goods and Services, 19941
    Percentage of
    Number of
    Countries Included
    in Group
    Total GDP ofTotal exports of
    goods and services of
    Industrial
    countries
    WorldIndustrial
    countries
    World
    Industrial countries23100.054.6100.070.8
    United States38.821.218.713.2
    Japan15.48.411.98.4
    Germany9.25.012.99.1
    France6.63.69.36.6
    Italy6.23.47.55.3
    United Kingdom6.13.37.15.0
    Canada3.41.94.93.5
    Other industrial countries1614.37.827.719.6
    Industrial country groups
    Seven major industrial countries785.746.872.351.2
    European Union1538.621.157.540.7
    Industrial countries except the United States, Japan, and Germany2036.620.056.540.0
    Industrial countries except the United States, the European Union and Japan69.55.217.012.1
    Major European industrial countries428.015.336.826.1

    The GDP shares are based on the purchasing power parity (PPP) valuation of country GDPs.

    Table B.Developing Countries and Countries in Transition: Classification by Standard World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Total Debt Outstanding, 19941
    Percentage of
    Number of Countries
    Included in Group
    Total GDP ofTotal exports of
    goods and services of
    Total debt of
    Developing
    countries
    Developing
    countries
    WorldDeveloping
    countries
    World
    Developing countries132100.040.1100.025.9100.0
    By region
    Africa508.23.36.81.815.1
    Asia3057.623.163.016.333.9
    Middle East and Europe1812.04.815.24.018.7
    Western Hemisphere3422.28.915.03.932.3
    Sub-Saharan Africa453.31.32.30.68.5
    Four newly industrializing Asian economies47.73.136.79.55.2
    By predominant export
    Fuel1921.38.519.75.128.7
    Nonfuel exports11378.731.680.320.871.3
    Manufactures1155.722.359.815.535.2
    Primary products549.83.97.11.918.4
    Agricultural products407.63.05.21.312.8
    Minerals142.20.92.00.55.6
    Services, income, and private transfers355.92.43.71.08.0
    Diversified export base137.43.09.52.59.7
    By financial criteria
    Net creditor countries87.83.116.64.33.9
    Net debtor countries12492.237.083.421.696.1
    Market borrowers2254.722.061.215.947.7
    Diversified borrowers3325.610.315.64.130.1
    Official borrowers6911.94.86.61.718.4
    Countries with recent debt-servicing difficulties7231.012.422.05.754.5
    Countries without debt-servicing difficulties5261.224.661.415.941.6
    Other groups
    Small low-income economics457.32.92.90.710.2
    Least developed countries464.11.71.50.48.1
    Fifteen heavily indebted countries1524.69.916.94.436.7
    Countries in transition285.33.2
    Central and eastern Europe182.71.6
    Excluding Belarus and Ukraine162.01.5
    Russia12.11.4
    Transcancasus and central Asia90.50.2

    The GDP shares are based on the purchasing power parity (PPP) valuation of country GDPs.

    The general features and the compositions of groups in the World Economic Outlook classification are as follows.4

    The group of industrial countries (23 countries) comprises Australia Austria Belgium Canada Denmark Finland France Germany

    Australia

    Austria

    Belgium

    Canada

    Denmark

    Finland

    France

    Germany

    Greece

    Iceland

    Ireland

    Italy

    Japan

    Luxembourg

    Netherlands

    New Zealand

    Norway

    Portugal

    Spain

    Sweden

    Switzerland

    United Kingdom

    United States

    The seven largest countries in this group in terms of GDP—the United States, Japan, Germany, France, Italy, the United Kingdom, and Canada—are collectively referred to as the major industrial countries.

    The current members of the European Union (15 countries) are also distinguished as a subgroup.5 They are

    Austria

    Belgium

    Denmark

    Finland

    France

    Germany

    Greece

    Ireland

    Italy

    Luxembourg

    Netherlands

    Portugal

    Spain

    Sweden

    United Kingdom

    In 1991 and subsequent years, data for Germany refer to west Germany and the new eastern Länder (that is, the former German Democratic Republic). Before 1991, economic data are not available on a unified basis or in a consistent manner. In general, data on national accounts and domestic economic and financial activity through 1990 cover west Germany only, whereas data for the central government, foreign trade, and balance of payments apply to west Germany through June 1990 and to unified Germany thereafter.

    The group of developing countries (132 countries) includes all countries that are not classified as industrial countries or as countries in transition, together with a few dependent territories for which adequate statistics are available.

    The regional breakdowns of developing countries in the World Economic Outlook conform to the IMF’s International Financial Statistics (IFS) classification, with one important exception. Because all of the developing countries in Europe except Cyprus, Malta, and Turkey are included in the group of countries in transition, the World Economic Outlook classification places these three countries in a combined Middle East and Europe region. It should also be noted that in both classifications, Egypt and the Libyan Arab Jamahiriya are included in this region, not in Africa. Two additional regional groupings are included in the World Economic Outlook because of their analytical significance. These are sub-Saharan Africa6 and four newly industrializing Asian economies.7

    The developing countries are also grouped according to analytical criteria: predominant export, financial criteria, and other groups. The export criteria are based on countries’ export composition in 1984–86, whereas the financial criteria reflect net creditor and debtor positions as of 1987, sources of borrowing as of the end of 1989, and experience with debt servicing during 1986–90.

    The first analytical criterion, by predominant export, distinguishes among five groups: fuel (Standard International Trade Classification—SITC 3); manufactures (SITC 5 to 8, less diamonds and gemstones); nonfuel primary products (SITC 0, 1, 2, 4, and diamonds and gemstones); services, factor income, and private transfers; and diversified export base. A further distinction is made among the exporters of nonfuel primary products on the basis of whether countries’ exports of primary commodities consist primarily of agricultural commodities (SITC 0, 1, 2 except 27, 28, and 4) or minerals (SITC 27 and 28, and diamonds and gemstones).

    The financial criteria first distinguish between net creditor and net debtor countries. Countries in the latter, much larger group are then differentiated on the basis of two additional financial criteria: by predominant type of creditor and by experience with debt servicing.

    The country groups shown under other groups constitute the small low-income economies, the least developed countries, and 15 heavily indebted countries.

    The group of countries in transition (28 countries) comprises central and eastern European countries, Russia, non-European states of the former Soviet Union, and Mongolia. A common characteristic of these countries is the transitional state of their economies from a centrally administered system to one based on market principles. The group of countries in transition comprises

    Albania

    Armenia

    Azerbaijan

    Belarus

    Bosnia and Herzegovina

    Bulgaria

    Croatia

    Czech Republic

    Estonia

    Georgia

    Hungary

    Kazakhstan

    Kyrgyz Republic

    Latvia

    Lithuania

    Macedonia, former

    Moldova

    Mongolia

    Poland

    Romania

    Russia

    Slovak Republic

    Slovenia

    Tajikistan

    Turkmenistan

    Ukraine

    Uzbekistan

    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)

    The countries in transition are classified in three subgroups: central and eastern Europe, Russia, and Transcaucasus and central Asia. The Transcaucasian and central Asian countries include Kazakhstan for purposes of the World Economic Outlook. The countries in central and eastern Europe (18 countries) are

    Albania

    Belarus

    Bosnia and

    Herzegovina

    Bulgaria

    Croatia

    Czech Republic

    Estonia

    Hungary

    Latvia

    Lithuania

    Macedonia, former

    Moldova

    Poland

    Romania

    Slovak Republic

    Slovenia

    Ukraine

    Yugoslavia, Fed. Rep. of

    (Serbia/Montenegro)

    The countries in the Transcaucasian and central Asian group (9 countries) are

    Armenia

    Azerbaijan

    Georgia

    Kazakhstan

    Kyrgyz Republic

    Mongolia

    Tajikistan

    Turkmenistan

    Uzbekistan

    Detailed Description of the Developing Country Classification by Analytical Group

    Countries Classified by Predominant Export

    Fuel exporters (19 countries) are countries whose average ratio of fuel exports to total exports in 1984–86 exceeded 50 percent. The group comprises

    Angola

    Algeria

    Cameroon

    Congo

    Ecuador

    Gabon

    Indonesia

    Iran, Islamic Rep. of

    Iraq

    Kuwait

    Libya

    Mexico

    Nigeria

    Oman

    Qatar

    Saudi Arabia

    Trinidad and Tobago

    United Arab Emirates

    Venezuela

    Nonfuel exporters (113 countries) are countries with total exports of goods and services including a substantial share of (a) manufactures, (b) primary products, or (c) services and private transfers. However, those countries whose export structure is so diversified that they do not fall clearly into any one of these three groups are assigned to a fourth group, (d) diversified export base.

    (a) Economies whose exports of manufactures accounted for over 50 percent of their total exports on average in 1984–86 are included in the group of exporters of manufactures (11 countries). This group includes

    Brazil

    China

    Hong Kong

    India

    Israel

    Korea

    Singapore

    Taiwan Province of China

    Thailand

    Tunisia

    Turkey

    (b) The group of exporters of primary products (54 countries) consists of those countries whose exports of agricultural and mineral primary products (SITC 0, 1, 2, 4, and diamonds and gemstones) accounted for at least half of their total exports on average in 1984–86. These countries are

    Afghanistan, Islamic State of

    Argentina

    Bhutan

    Bolivia

    Botswana

    Burundi

    Central African Rep.

    Chad

    Chile

    Colombia

    Comoros

    Costa Rica

    Côte d’Ivoire

    Djibouti

    Dominica

    El Salvador

    Equatorial Guinea

    Gambia, The

    Ghana

    Guatemala

    Guinea

    Guinea-Bissau

    Guyana

    Honduras

    Kenya

    Lao People’s Dem. Rep.

    Liberia

    Madagascar

    Malawi

    Mali

    Mauritania

    Mauritius

    Myanmar

    Namibia

    Nicaragua

    Niger

    Papua New Guinea

    Paraguay

    Peru

    Rwanda

    Sao Tome and Principe

    Solomon Islands

    Somalia

    Sri Lanka

    St. Vincent and the Grenadines

    Sudan

    Suriname

    Swaziland

    Togo

    Uganda

    Uruguay

    Viet Nam

    Zaïre

    Zambia

    Among exporters of primary products, a further distinction is made between exporters of agricultural products and minerals. The group of mineral exporters (14 countries) comprises

    Bolivia

    Botswana

    Chile

    Guinea

    Guyana

    Liberia

    Mauritania

    Namibia

    Niger

    Peru

    Suriname

    Togo

    Zaïre

    Zambia

    All other exporters of primary products are classified as agricultural exporters (40 countries).

    (c) The exporters of services and recipients of factor income and private transfers (35 countries) are defined as those countries whose average income from services, factor income, and private transfers accounted for more than half of total average export earnings in 1984–86. This group comprises

    Antigua and Barbuda

    Aruba

    Bahamas, The

    Barbados

    Burkina Faso

    Cambodia

    Cape Verde

    Cyprus

    Dominican Rep.

    Egypt

    Ethiopia

    Fiji

    Grenada

    Jamaica

    Jordan

    Kiribati

    Lebanon

    Lesotho

    Maldives

    Malta

    Marshall Islands

    Micronesia, Federated States of

    Mozambique, Rep. of

    Nepal

    Netherlands Antilles

    Pakistan

    Panama

    Seychelles

    St. Kitts and Nevis

    St. Lucia

    Tanzania

    Tonga

    Vanuatu

    Western Samoa

    Yemen, Rep. of

    (d) Countries with a diversified export base (13 countries) are those whose export earnings in 1984–86 were not dominated by any one of the categories mentioned under (a) through (c) above. This group comprises

    Bahrain

    Bangladesh

    Belize

    Benin

    Haiti

    Malaysia

    Morocco

    Philippines

    Senegal

    Sierra Leone

    South Africa

    Syrian Arab Rep.

    Zimbabwe

    Countries Classified by Financial Criteria

    Net creditor countries (8 countries) are defined as developing countries that were net external creditors in 1987 or that experienced substantial cumulated current account surpluses between 1967–68 (the beginning of most balance of payments series in the World Economic Outlook data base) and 1987. The net creditor group consists of the following economies:

    Iran, Islamic Rep. of

    Kuwait

    Libya

    Oman

    Qatar

    Saudi Arabia

    Taiwan Province of China

    United Arab Emirates

    Net debtor countries (124 countries) are disaggregated according to two criteria: (a) predominant type of creditor and (b) experience with debt servicing.

    (a) Within the classification by predominant type of creditor (sources of borrowing), three subgroups are identified: market borrowers, official borrowers, and diversified borrowers.

    Market borrowers (22 countries) are defined as net debtor countries with more than two thirds of their total liabilities outstanding at the end of 1989 owed to commercial creditors. This group comprises

    Algeria

    Antigua and Barbuda

    Argentina

    Bahamas, The

    Brazil

    Chile

    China

    Hong Kong

    Israel

    Kiribati

    Korea

    Malaysia

    Mexico

    Panama

    Papua New Guinea

    Peru

    Singapore

    Suriname

    Thailand

    Trinidad and Tobago

    Uruguay

    Venezuela

    Official borrowers (69 countries) are defined as net debtor countries with more than two thirds of their total liabilities outstanding at the end of 1989 owed to official creditors. This group comprises

    Afghanistan, Islamic State of

    Aruba

    Bangladesh

    Belize

    Bhutan

    Bolivia

    Botswana

    Burkina Faso

    Burundi

    Cambodia

    Cameroon

    Cape Verde

    Central African Rep.

    Chad

    Comoros

    Djibouti

    Dominica

    Dominican Rep.

    Egypt

    El Salvador

    Equatorial Guinea

    Ethiopia

    Gabon

    Gambia, The

    Ghana

    Grenada

    Guinea

    Guinea-Bissau

    Guyana

    Haiti

    Honduras

    Jamaica

    Lao People’s

    Dem. Rep.

    Lesotho

    Madagascar

    Malawi

    Maldives

    Mali

    Malta

    Mauritania

    Mauritius

    Morocco

    Mozambique, Rep. of

    Myanmar

    Namibia

    Nepal

    Netherlands Antilles

    Nicaragua

    Niger

    Nigeria

    Pakistan

    Rwanda

    Sao Tome and Principe

    Somalia

    St. Kitts and Nevis

    St. Lucia

    St. Vincent and the

    Grenadines

    Sudan

    Swaziland

    Tanzania

    Togo

    Tonga

    Tunisia

    Uganda

    Viet Nam

    Western Samoa

    Yemen, Rep. of

    Zaïre

    Zambia

    Diversified borrowers (33 countries) consist of those net debtor developing countries that are classified neither as market nor as official borrowers.

    (b) Within the classification by experience with debt servicing, a further distinction is made. Countries with recent debt-servicing difficulties (72 countries) are defined as those countries that incurred external payments arrears or entered into official or commercial bank debt-rescheduling agreements during 1986–90. Information on these developments is taken from relevant issues of the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions.

    All other net debtor countries are classified as countries without debt-servicing difficulties (52 countries).

    Other Groups

    The group of small low-income economies (45 countries) include those IM F members—excluding China and India—whose GDP per capita, as estimated by the World Bank, did not exceed the equivalent of $425 in 1986. This group comprises

    Afghanistan, Islamic State of

    Bangladesh

    Benin

    Bhutan

    Burkina Faso

    Burundi

    Cambodia

    Central African Rep.

    Chad

    Comoros

    Equatorial Guinea

    Ethiopia

    Gambia, The

    Ghana

    Guinea

    Guinea-Bissau

    Guyana 8

    Haiti

    Kenya

    Lao People’s

    Dem. Rep.

    Lesotho

    Madagascar

    Malawi

    Maldives

    Mali

    Mauritania

    Mozambique, Rep. of

    Myanmar

    Nepal

    Niger

    Pakistan

    Rwanda

    Sao Tome and Principe

    Senegal

    Sierra Leone

    Somalia

    Sri Lanka

    Sudan

    Tanzania

    Togo

    Uganda

    Vanuatu

    Viet Nam

    Zaïre

    Zambia

    The countries currently classified by the United Nations as the least developed countries (46 countries) are9

    Afghanistan, Islamic State of

    Bangladesh

    Benin

    Bhutan

    Botswana

    Burkina Faso

    Burundi

    Cambodia

    Cape Verde

    Central African Rep.

    Chad

    Comoros

    Djibouti

    Equatorial Guinea

    Ethiopia

    Gambia, The

    Guinea

    Guinea-Bissau

    Haiti

    Kiribati

    Lao People’s

    Dem. Rep.

    Lesotho

    Liberia

    Madagascar

    Malawi

    Maldives

    Mali

    Mauritania

    Mozambique, Rep. of

    Myanmar

    Nepal

    Niger

    Rwanda

    Sao Tome and Principe

    Sierra Leone

    Solomon Islands

    Somalia

    Sudan

    Tanzania

    Togo

    Uganda

    Vanuatu

    Western Samoa

    Yemen, Rep. of

    Zaïre

    Zambia

    The group of 15 heavily indebted countries 10 (the Baker Plan countries) includes those countries associated with the “Program for Sustained Growth” proposed by the Governor for the United States at the 1985 IMF-World Bank Annual Meetings in Seoul. This group comprises

    Argentina

    Bolivia

    Brazil

    Chile

    Colombia

    Côte d’Ivoire

    Ecuador

    Mexico

    Morocco

    Nigeria

    Peru

    Philippines

    Uruguay

    Venezuela

    Yugoslavia, former

    Table A1.Summary of World Output1(Annual percent change)
    Average
    1977–86
    1987198819891990199119921993199419951996
    World3.44.04.63.42.41.32.02.53.73.84.2
    Industrial countries2.73.24.43.32.40.81.51.23.03.02.7
    United States2.73.13.92.51.2-0.62.33.14.13.21.9
    European Union22.12.94.23.53.01.11.0-0.42.83.23.1
    Japan4.04.16.24.74.84.31.1-0.20.61.83.5
    Other industrial countries2.73.43.93.11.0-1.10.61.43.93.83.0
    Developing countries4.65.75.23.93.94.95.96.16.35.66.1
    By region
    Africa2.11.63.63.42.01.90.80.72.73.75.3
    Asia6.98.19.16.05.66.48.28.78.67.67.3
    Middle East and Europe2.55.0-0.80.54.83.15.53.70.72.94.7
    Western Hemisphere3.23.31.11.60.63.52.73.24.62.33.7
    By analytical criteria
    Fuel exporters2.62.11.03.14.74.54.62.32.92.55.1
    Non fuel exporters5.36.96.44.23.75.06.37.27.26.46.4
    Net creditor countries1.91.3-0.81.96.96.86.33.63.04.05.5
    Net debtor countries4.86.15.74.13.74.75.96.46.55.86.2
    Market borrowers5.56.96.23.73.36.37.58.28.46.26.5
    Official borrowers4.04.03.73.63.63.72.72.43.64.35.3
    Countries with recent debt-servicing difficulties3.03.81.82.00.52.52.22.74.12.64.1
    Countries without debt-servicing difficulties6.47.88.25.45.66.08.08.37.87.37.2
    Countries in transition3.32.64.02.0-3.9-11.6-15.3-9.2-9.4-3.83.5
    Central and eastern Europe-11.1-11.4-6.2-3.80.43.5
    Excluding Belarus and Ukraine-11.9-9.4-2.02.73.64.3
    Russia-13.0-19.0-12.0-15.0-9.04.5
    Transcaucasus and central Asia-7.7-17.6-11.9-14.9-5.7
    Memorandum
    Median growth rate
    Industrial countries2.63.14.13.62.11.31.2-0.12.83.23.0
    Developing countries3.73.63.53.53.22.93.73.23.54.54.8
    Countries in transition3.62.85.33.0-2.3-11.8-15.5-9.7-1.31.64.0
    Output per capita
    Industrial countries2.02.63.72.51.60.80.62.42.42.0
    Developing countries2.13.44.70.62.23.13.64.34.33.64.1
    Countries in transition2.61.93.41.5-4.5-11.8-15.6-9.4-9.5-4.03.3

    Real GDP. For most countries included in the group “countries in transition,” total output is measured by real net material product (NMP) or by NMP-based estimates of GDP.

    In this table and the tables that follow the European Union includes the 15 current members. See “Classification of Countries” in the introduction to this Statistical Appendix.

    Table A2.Industrial Countries: Real GDP and Total Domestic Demand(Annual percent change)
    AverageFourth Quarter1
    1977–861987198819891990199119921993199419951996199419951996
    Real GDP
    Industrial countries2.73.24.43.32.40.81.51.23.03.02.7
    Major industrial countries2.83.24.53.22.40.81.61.43.13.02.63.52.82.5
    United States2.73.13.92.51.2-0.62.33.14.13.21.94.12.31.9
    Japan4.04.16.24.74.84.31.1-0.20.61.83.50.93.33.6
    Germany2.82.2-1.12.93.23.33.93.33.1
    West Germany1.91.53.73.65.75.01.8-1.72.32.62.83.32.52.7
    France2.22.34.44.32.50.81.2-1.02.53.23.03.63.32.8
    Italy2.73.14.12.92.11.20.7-0.72.53.03.03.63.13.1
    United Kingdom22.14.85.02.20.4-2.0-0.52.23.83.22.83.93.12.7
    Canada3.14.25.02.4-0.2-1.80.62.24.54.32.65.63.22.5
    Other industrial countries2.13.23.84.02.71.01.00.22.83.33.1
    Spain1.75.75.24.73.62.20.8-1.01.93.03.0
    Netherlands1.61.22.64.74.12.31.30.42.43.02.7
    Belgium1.22.04.93.53.22.31.9-1.72.33.02.9
    Sweden1.73.12.32.41.4-1.1-1.9-2.12.22.42.6
    Austria2.01.74.13.84.23.01.8-0.12.83.02.8
    Denmark2.30.31.20.61.41.01.31.44.63.62.5
    Finland5.24.14.95.7-7.1-3.6-1.63.95.24.8
    Greece32.4-0.54.53.5-1.03.20.8-0.51.5-1.82.3
    Portugal2.81.15.45.54.22.21.5-1.01.03.54.5
    Ire land3.24.64.57.48.62.95.04.05.26.24.9
    Luxembourg3.14.26.47.84.62.72.82.82.83.03.3
    Switzerland2.02.02.93.92.3-0.3-0.92.02.33.2
    Norway3.82.0-0.50.61.71.63.42.35.53.61.7
    Iceland4.88.6-0.10.31.11.3-3.30.92.02.11.5
    Australia2.94.74.14.51.3-1.32.13.74.74.43.8
    New Zealand1.6-1.73.0-0.5-0.1-2.1-0.24.14.84.43.3
    Memorandum
    European Union2.12.94.23.53.01.11.0-0.42.83.23.1
    Real total domestic demand
    Industrial countries2.63.64.53.42.20.51.51.03.22.32.7
    Major industrial countries2.73.54.55.12.10.51.61.43.32.82.63.62.72.6
    United States3.02.73.01.80.8-1.32.63.94.72.91.64.51.91.6
    Japan3.55.17.65.85.02.90.31.02.84.51.04.54.3
    Germany6.13.0-1.22.63.03.3
    West Germany1.62.43.62.95.24.91.3-2.21.72.33.02.92.43.1
    France2.03.34.65.92.80.60.2-1.82.93.03.04.43.12.9
    Italy2.44.24.42.82.51.90.8-5.02.32.63.04.22.43.1
    United Kingdom2.05.37.92.9-0.6-3.10.32.23.02.62.73.02.22.8
    Canada2.95.35.54.5-0.5-1.00.31.82.93.02.52.53.32.1
    Other industrial countries1.73.84.35.12.60.60.6-1.22.53.33.2
    Memorandum
    European Union1.83.94.93.83.01.71.1-1.62.42.93.0

    From fourth quarter of preceding year.

    Average of expenditure, income, and output estimates of GDP at market prices.

    Based on revised national accounts for 1988 onward.

    Table A3.Industrial Countries: Components of Real GDP(Annual percent change)
    Average
    1977–86
    1987198819891990199119921993199419951996
    Private consumer expenditure
    Industrial countries2.83.54.02.92.51.12.01.52.62.72.8
    Major industrial countries2.93.54.22.82.40.92.11.82.72.72.8
    United States3.02.83.61.91.5-0.42.83.33.52.91.8
    Japan3.64.25.24.33.92.21.71.02.22.74.7
    Germany5.43.00.51.31.63.0
    West Germany1.93.42.72.85.45.72.20.20.81.22.8
    France2.42.93.33.02.71.41.30.61.62.62.6
    Italy3.24.24.23.52.52.71.4-2.12.03.23.6
    United Kingdom2.75.37.53.20.6-2.22.72.62.32.5
    Canada2.94.44.53.41.0-1.51.31.63.13.22.9
    Other industrial countries1.83.43.23.72.72.11.7-0.42.12.62.8
    Memorandum
    European Union2.33.94.13.33.02.31.61.72.42.9
    Public consumption
    Industrial countries2.62.41.71.72.61.71.10.10.60.60.9
    Major industrial countries2.62.31.61.52.51.51.00.50.60.8
    United States2.63.00.62.03.11.2-0.7-0.8-0.70.30.7
    Japan3.50.42.22.01.91.62.71.72.82.62.8
    Germany0.14.5-1.21.21.01.0
    West Germany1.91.52.1-1.62.20.34.0-1.21.11.01.0
    France2.72.83.40.52.12.63.00.51.61.00.5
    Italy2.83.42.80.81.21.61.00.80.2-2.3-0.1
    United Kingdom1.01.00.71.42.52.61.01.60.80.4
    Canada2.21.74.14.01.22.81.20.5-2.1-1.2-3.2
    Other industrial countries2.93.32.53.43.12.91.60.81.70.51.3
    Memorandum
    European Union2.32.62.31.12.22.02.20.31.30.30.8
    Gross fixed capital formation
    Industrial countries2.73.97.44.61.8-2.41.52.05.85.74.1
    Major industrial countries2.93.67.24.01.8-2.42.13.16.25.63.8
    United Stales3.9-0.54.20.1-1.7-7.65.511.312.37.32.5
    Japan3.29.611.99.38.83.7-1.1-1.8-2.32.34.6
    Germany9.64.2-4.54.36.14.2
    West Germany1.11.84.46.38.55.80.3-8.31.23.93.6
    France0.44.89.67.92.8-0.7-2.5-5.01.55.76.2
    Italy1.35.06.94.33.80.6-2.0-11.13.13.1
    United Kingdom1.410.214.06.0-3.5-9.5-1.20.33.24.35.8
    Canada3.910.810.36.1-3.5-2.2-2.8-0.26.05.96.6
    Other industrial countries1.05.68.78.81.8-2.6-2.4-4.43.26.65.6
    Memorandum
    European Union0.95.58.77.23.80.4-0.7-5.62.15.35.0
    Final domestic demand
    Industrial countries2.73.54.43.22.50.61.61.12.62.92.7
    Major industrial countries2.83.44.43.02.50.61.71.42.72.82.6
    United States3.12.33.11.71.3-1.22.53.74.13.21.8
    Japan3.55.47.05.75.32.60.80.10.82.64.5
    Germany5.23.6-1.02.02.52.9
    West Germany1.82.73.02.65.44.72.1-2.01.01.72.6
    France2.03.34.63.62.61.10.8-0.61.62.92.9
    Italy2.74.24.53.32.62.10.6-3.51.32.32.9
    United Kingdom2.15.27.23.40.2-2.6-0.21.92.52.42.7
    Canada2.95.15.64.10.4-0.80.41.02.72.92.5
    Other industrial countries1.73.84.24.82.51.20.8-1.12.33.13.1
    Memorandum
    European Union1.93.94.63.73.01.81.2-1.21.72.62.9
    Stock building1
    Industrial countries-0.10.10.10.2-0.3-0.1-0.1-0.10.6
    Major industrial countries-0.10.10.10.1-0.4-0.1-0.10.6
    United States0.4-0.10.2-0.5-0.10.10.30.6-0.3-0.2
    Japan-0.30.60.2-0.30.3-0.5-0.20.20.20.1
    Germany0.9-0.6-0.20.70.50.4
    West Germany-0.1-0.20.60.3-0.10.2-0.8-0.20.70.50.4
    France0.10.40.2-0.6-0.6-1.21.30.10.1
    Italy-0.3-0.4-0.10.3-1.61.00.30.1
    United Kingdom0.10.7-0.4-0.8-0.50.50.30.50.2
    Canada0.1-0.10.2-1.0-0.2-0.10.80.20.1-0.1
    Other industrial countries0.10.30.2-0.6-0.1-0.10.20.20.1
    Memorandum
    European Union-0.10.30.1-0.1-0.1-0.1-0.50.70.30.1
    Foreign balance1
    Industrial countries-0.4-0.2-0.10.20.30.2-0.20.1
    Major industrial countries-0.1-0.3-0.10.10.20.2-0.30.1
    United States-0.40.30.90.60.40.7-0.3-0.8-0.70.30.3
    Japan0.5-0.9-1.2-1.1-0.21.30.8-0.2-0.4-1.0-1.0
    Germany-3.1-0.80.20.1
    West Germany0.3-0.80.30.90.80.40.60.40.70.5
    France0.1-1.1-0.30.3-0.30.21.00.9-0.30.2
    Italy-1.1-0.5-0.5-0.8-0.14.60.20.5
    United Kingdom-0.1-0.5-2.9-0.81.01.3-0.90.60.60.1
    Canada0.2-0.9-1.2-1.60.6-0.70.40.31.41.20.1
    Other industrial countries0.3-0.7-0.6-1.30.20.50.31.30.4
    Memorandum
    European Union0.2-0.9-0.7-0.30.1-0.6-0.11.30.40.3

    Changes expressed as percent of GDP in the preceding period.

    Table A4.Industrial Countries: Employment, Unemployment, and Real Per Capita GDP(In percent)
    Average1
    1977–86
    1987198819891990199119921993199419951996
    Unemployment rate
    Industrial countries6.77.36.86.26.06.87.78.18.17.67.4
    Major industrial countries6.46.86.25.75.66.47.27.37.26.76.6
    United States27.56.25.55.35.56.77.46.86.15.55.7
    Japan2.42.82.52.32.12.12.22.52.92.92.8
    Germany6.67.78.89.69.18.6
    West Germany5.87.97.86.86.25.55.87.38.38.17.7
    France7.610.510.09.48.99.410.311.612.612.111.4
    Italy38.310.510.710.59.48.810.710.211.311.310.6
    United Kingdom7.810.08.06.35.88.19.710.39.38.38.1
    Canada9.38.87.87.58.110.411.311.210.49.29.0
    Other industrial countries8.09.89.58.48.28.910.212.212.612.111.6
    Spain14.520.519.517.316.316.318.422.724.224.023.5
    Netherlands6.68.48.47.77.06.66.77.78.88.88.5
    Belgium9.811.510.18.57.67.58.29.410.19.89.3
    Sweden2.61.91.61.41.52.95.38.27.97.36.9
    Austria3.35.65.33.03.33.73.84.34.14.04.0
    Denmark8.37.88.69.39.610.511.312.212.110.310.0
    Finland5.54.74.53.53.57.613.117.918.516.514.0
    Greece6.57.47.77.57.07.78.79.810.010.310.2
    Portugal8.17.17.05.04.74.14.15.56.85.85.7
    Ireland11.616.716.114.713.414.715.515.714.813.813.5
    Luxembourg1.21.71.51.41.31.41.62.12.83.02.6
    Switzerland0.60.70.60.50.51.12.64.64.84.33.4
    Norway2.32.13.24.95.25.55.96.05.55.04.5
    Iceland0.60.40.61.71.81.53.14.44.84.64.9
    Australia7.38.17.26.26.99.610.810.99.98.98.3
    New Zealand4.34.46.87.39.210.810.49.48.27.26.8
    Memorandum
    European Union7.810.29.68.57.98.59.811.011.611.110.6
    Growth in employment
    Industrial countries1.01.71.91.91.2-0.5-0.3-0.21.11.31.1
    Major industrial countries1.21.72.01.81.1-0.5-0.10.11.21.31.0
    United States2.12.62.32.00.5-0.90.61.53.12.01.0
    Japan1.11.01.71.92.01.91.10.20.10.20.7
    Germany-2.2-1.6-1.8-0.90.80.8
    West Germany0.40.70.81.53.02.50.9-1.6-1.30.40.6
    France0.40.91.51.10.2-0.7-1.10.71.61.5
    Italy0.5-0.30.6-0.11.30.8-0.9-2.8-1.71.0
    United Kingdom-0.12.34.22.70.4-3.1-2.5-1.00.51.40.9
    Canada2.12.73.22.10.6-1.9-0.61.42.13.02.0
    Other industrial countries0.31.61.72.21.7-0.4-1.3-1.70.51.61.6
    Memorandum
    European Union0.11.11.71.71.6-0.9-1.5-1.9-0.21.11.2
    Growth in real per capita GDP
    Industrial countries2.02.63.72.51.60.80.62.42.42.0
    Major industrial countries2.12.63.82.41.50.90.72.42.31.9
    United States1.72.23.01.60.2-1.71.22.03.01.20.9
    Japan3.23.65.84.34.53.90.8-0.50.31.53.2
    Germany2.01.4-1.82.62.62.7
    West Germany2.01.53.12.63.83.70.5-2.71.91.92.1
    France1.71.84.03.82.00.40.8-1.42.12.82.6
    Italy2.53.03.92.82.00.91.10.72.42.93.0
    United Kingdom2.04.54.81.90.1-2.6-0.82.03.53.02.6
    Canada2.02.93.60.7-1.7-3.0-0.51.13.23.31.5
    Other industrial countries1.62.73.53.42.10.30.4-0.52.22.72.6
    Memorandum
    European Union1.92.73.93.12.30.60.7-0.52.52.82.7

    Compound annual rate of change for employment and per capita GDP; arithmetic average for unemployment rate.

    The projections for unemployment have been adjusted to reflect the new survey techniques adopted by the U.S. Bureau of Labor Statistics in January 1994.

    New series starting in 1993, reflecting revisions in the labor force surveys and the definition of unemployment to bring data in line with those of other industrial countries.

    Table A5.Developing Countries: Real GDP(Annual percent change)
    Average
    1977–86
    1987198819891990199119921993199419951996
    Developing countries4.65.75.23.93.94.95.96.16.35.66.1
    By region
    Africa2.11.63.63.42.01.90.80.72.73.75.3
    Asia6.98.19.16.05.66.48.28.78.67.67.3
    Middle East and Europe2.55.0-0.80.54.83.15.53.70.72.94.7
    Western Hemisphere3.23.31.11.60.63.52.75.24.62.33.7
    Sub-Saharan Africa2.83.22.52.21.31.61.01.62.35.25.4
    Four newly industrializing
    Asian economies8.111.99.56.37.17.85.76.07.26.86.6
    By predominant export
    Fuel2.62.11.03.14.74.54.62.32.92.55.1
    Nonfuel exports5.36.96.44.23.75.06.37.27.26.46.4
    Manufactures6.38.28.05.24.15.47.58.78.17.26.8
    Primary products2.53.81.20.71.94.14.94.85.15.04.7
    Agricultural products2.43.01.30.82.54.15.44.54.85.04.7
    Minerals2.56.10.70.50.34.03.54.56.24.94.9
    Services, income, and
    private transfers5.17.12.92.22.94.93.42.73.54.25.1
    Diversified export base4.32.86.83.84.13.42.33.45.84.56.0
    By financial criteria
    Net creditor countries1.91.3-0.81.96.96.86.33.63.04.05.5
    Net debtor countries4.86.15.74.13.74.75.96.46.55.86.2
    Market borrowers5.56.96.23.73.36.37.58.28.46.26.5
    Diversified borrowers4.15.75.65.04.52.24.24.54.05.55.8
    Official borrowers4.04.03.73.63.63.72.72.43.64.35.3
    Countries with recent debt-
    servicing difficulties3.03.81.82.00.52.52.22.74.12.64.1
    Countries without debt-
    servicing difficulties6.47.88.25.45.66.08.08.37.87.37.2
    Other groups
    Small low-income economies4.93.83.33.53.84.43.63.13.95.95.6
    Least developed countries4.62.72.52.92.62.23.13.33.75.94.9
    Fifteen heavily indebted countries3.02.81.92.00.72.71.32.54.52.34.0
    Memorandum
    Real per capita GDP
    Developing countries2.15.44.70.62.23.13.64.34.33.64.1
    By region
    Africa-0.8-1.30.90.6-0.6-0.8-1.9-1.8-0.31.62.2
    Asia4.96.210.51.84.04.76.57.17.05.95.7
    Middle East and Europe-1.11.2-3.6-1.23.31.9-0.31.7-2.10.41.0
    Western Hemisphere0.91.3-0.7-0.8-1.41.50.71.32.6-0.31.9
    Table A6.Developing Countries—By Country: Real GDP1(Annual percent change)
    Average
    1977–86
    19871988198919901991199219931994
    Africa2.11.63.63.42.01.90.80.72.7
    Algeria2.5-0.7-1.94.9-0.60.21.6-2.2-0.2
    Angola9.4-8.44.4-5.3-1.61.3-23.82.7
    Benin3.9-1.52.1-2.53.14.74.13.23.4
    Botswana10.812.214.19.27.37.62.30.42.8
    Burkina Faso3.6-1.46.60.9-1.510.02.5-0.81.2
    Burundi3.65.55.01.33.55.02.7-5.7-11.9
    Cameroon8.00.512.9-3.5-4.5-6.7-4.8-2.2-3.8
    Cape Verde4.67.67.66.92.41.02.94.34.5
    Central African Republic2.0-2.91.92.31.0-1.6-2.4-3.05.8
    Chad0.9-1.813.85.8-2.313.28.1-12.04.1
    Comoros4.51.62.7-3.22.52.11.61.30.8
    Congo7.10.21.82.61.01.52.6-1.5
    Côte d’Ivoire2.9-1.6-2.0-1.1-2.1-0.8-0.81.7
    Djibouti0.40.51.2-0.9-0.61.32.4-2.3-3.3
    Equatorial Guinea1.54.42.7-1.23.3-1.113.07.12.5
    Ethiopia1.69.92.41.2-2.2-1.0-3.2-12.31.3
    Gabon-4.5-15.43.57.04.06.7-3.43.70.3
    Gambia, The3.52.81.74.35.72.24.42.1
    Ghana1.14.85.65.13.35.33.95.03.8
    Guinea1.83.36.34.04.32.43.04.74.0
    Guinea-Bissau6.55.66.94.53.23.02.82.76.3
    Kenya5.15.96.04.54.32.30.30.13.0
    Lesotho-0.75.112.911.94.61.72.65.616.7
    Liberia0.51.33.1-10.80.32.91.92.22.2
    Madagascar2.51.23.44.13.1-6.31.11.93.3
    Malawi2.91.63.21.35.78.7-7.39.4-7.9
    Mali1.61.2-0.211.80.4-2.57.8-0.82.4
    Mauritania4.22.93.12.2-1.82.61.74.94.2
    Mauritius3.110.88.75.74.76.34.76.74.7
    Morocco4.2-2.710.42.53.96.8-4.4-1.111.8
    Mozambique, Rep, of-1.414.78.26.51.04.9-0.819.35.4
    Namibia3.17.00.71.05.76.4-2.23.8
    Niger2.1-3.66.90.9-1.32.5-6.51.44.0
    Nigeria-1.2-0.79.97.28.24.83.51.60.6
    Rwanda3.8-0.33.81.00.40.30.4-10.9
    Sao Tome and Principe0.5-1.52.03.1-2.21.51.51.31.5
    Senegal2.04.05.1-1.44.50.72.9-2.02.0
    Seychelles3.54.95.310.37.52.76.95.8-1.1
    Sierra Leone0.34.02.52.4-0.10.7-0.81.53.5
    Somalia2.94.1-5.02.4-0.2
    South Africa2.02.14.22.4-0.3-1.0-2.21.12.3
    Sudan1.01.31.41.56.18.67.65.5
    Swaziland3.816.910.03.58.83.83.84.13.5
    Tanzania1.86.14.23.03.53.84.55.15.0
    Togo1.80.56.23.90.1-0.9-3.7-13.510.7
    Tunisia4.56.70.13.75.93.98.02.14.4
    Uganda0.87.56.16.05.43.68.65.17.0
    Zaïre1.02.70.5-1.4-2.3-7.2-11.2-16.6-11.0
    Zambia0.32.81.91.0-0.5-0.2-5.29.21.4
    Zimbabwe2.5-0.57.34.52.24.3-6.22.14.5
    Asia6.98.19.16.05.66.48.28.78.6
    Afghanistan, Islamic Stale of0.5-10.3-8.3-7.1-2.60.81.0-3.1-3.0
    Bangladesh9.44.33.55.05.14.14.84.95.0
    Bhutan6.917.81.04.76.63.53.75.25.0
    Cambodia9.93.51.27.67.03.95.2
    China9.010.911.34.33.88.213.113.712.0
    Fiji2.1-5.93.513.45.6-0.24.42.73.3
    Hong Kong8.313.08.02.63.45.16.05.85.7
    India4.84.88.77.45.51.83.83.84.9
    Indonesia5.64.95.87.57.26.96.56.57.0
    Kiribati-5.80.310.2-2.2-2.92.83.12.93.5
    Korea7.811.511.36.49.59.15.15.58.3
    Lao P.D. Republic4.9-1.0-2.19.96.74.07.06.18.4
    Malaysia5.85.48.99.29.78.77.88.38.5
    Maldives8.48.98.79.316.27.66.36.25.7
    Marshall Islands15.45.1-1.73.20.10.12.52.0
    Micronesia, Fed. States of9.612.4-1.7-2.74.3-1.25.2-0.4
    Myanmar4.9-3.3-9.5-0.45.00.26.86.76.3
    Nepal3.23.97.23.98.04.62.14.85.1
    Pakistan6.36.44.84.75.68.24.82.54.1
    Papua New Guinea1.52.82.9-1.4-3.09.511.816.61.2
    Philippines2.04.36.86.22.7-0.20.32.14.5
    Singapore6.89.511.19.28.86.76.09.97.0
    Solomon Islands2.58.41.34.31431.710.50.53.7
    Sri Lanka5.21.52.72.36.24.64.36.95.4
    Taiwan Province of China8.412.37.37.64.97.26.56.16.2
    Thailand6.29.513.312.211.68.47.98.28.5
    Vanuatu3.50.40.64.55.26.50.61.73.7
    Viet Nam5.62.55.17.84.96.08.68.18.7
    Western Samoa2.30.50.31.9-9.4-1.9-1.35.3-5.5
    Middle East and Europe2.55.0-0.80.54.83.15.53.70.7
    Bahrain4.8-1.210.91.21.34.67.75.65.1
    Cyprus7.07.08.78.07.31.210.31.34.0
    Egypt6.28.73.52.72.31.20.41.51.3
    Iran, Islamic Republic of-0.8-2.2-9.7-7.711.711.45.71.81.9
    Iraq1.128.3-10.212.0-26.0-61.31.0
    Israel3.06.13.11.35.86.26.63.56.8
    Jordan7.22.9-1.9-13.41.01.816.15.85.7
    Kuwait-2.28.1-10.025.0-30.2-47.694.633.67.8
    Lebanon11.716.7-28.2-42.2-13.438.24.57.07.0
    Libya-2.6-23.6-10.27.27.02.9-2.9-4.7-3.0
    Malta4.34.18.48.26.36.24.74.54.3
    Oman7.7-3.76.13.37.39.26.87.05.0
    Qatar-0.80.94.75.32.1-0.85.61.5-0.1
    Saudi Arabia3.2-1.46.66.59.39.92.20.50.3
    Syrian Arab Republic3.11.913.3-9.07.67.110.53.95.5
    Turkey3.99.61.90.69.30.86.17.5-5.6
    United Arab Emirates-1.25.5-2.613.317.50.22.8-1.51.1
    Yemen Arab Republic, former7.94.46.73.41.7
    Yemen, former P.D. Republic of0.81.41.02.53.0
    Yemen, Republic of-4.24.25.96.0
    Western Hemisphere3.23.31.11.60.63.52.73.24.6
    Antigua and Barbuda6.99.07.76.33.44.31.72.62.9
    Argentina0.52.6-1.9-6.20.18.9-8.76.07.1
    Aruba15.916.79.111.73.83.83.83.8
    Bahamas, The5.03.72.32.31.2-3.10.12.02.3
    Barbados2.83.83.13.7-3.3-5.2-5.31.32.4
    Belize3.912.69.612.98.04.74.94.22.3
    Bolivia-0.42.63.03.64.44.62.84.14.2
    Brazil3.83.60.33.3-4.41.1-0.94.35.7
    Chile3.76.67.39.93.37.311.06.34.2
    Colombia3.95.44.13.44.32.03.85.35.3
    Costa Rica3.04.83.45.63.62.27.36.03.5
    Dominica3.76.87.4-1.16.32.32.81.81.0
    Dominican Republic2.97.91.64.1-5.0-0.97.83.05.0
    Ecuador3.7-5.910.40.33.04.93.51.73.2
    El Salvador-0.82.71.61.03.43.55.05.35.8
    Grenada4.57.76.85.06.82.4-1.01.00.8
    Guatemala1.53.54.03.93.13.74.84.05.0
    Guyana-2.60.9-2.6-3.3-5.36.07.88.36.0
    Haiti1.50.6-1.5-1.5-3.0-4.0-10.8-4.02.0
    Honduras3.56.14.54.30.13.35.66.0-1.5
    Jamaica1.67.7-4.04.74.10.81.82.03.0
    Mexico3.81.91.23.34.43.62.80.63.5
    Netherlands Antilles1.40.22.63.10.65.85.2-1.83.0
    Nicaragua-2.4-0.7-12.5-1.7-0.1-0.20.5-1.02.0
    Panama4.72.4-15.6-0.44.69.68.65.95.0
    Paraguay5.74.36.45.83.12.51.83.73.5
    Peru1.98.3-8.2-11.8-4.22.8-2.36.512.9
    St. Kitts and Nevis4.87.49.86.73.03.93.04.53.2
    St. Lucia6.61.912.29.14.12.37.13.12.8
    St. Vincent and the Grenadines5.96.38.96.55.43.14.91.41.6
    Suriname0.2-7.38.54.00.12.94.3-3.0-0.8
    Trinidad and Tobago-0.9-4.7-4.0-0.91.52.7-1.7-1.74.0
    Uruguay1.37.91.30.92.97.41.72.1
    Venezuela1.03.65.8-8.66.59.76.1-0.4-3.3

    For many countries, figures for recent years are IMF staff estimates. Data for some countries are for fiscal years.

    Table A7.Countries in Transition: Real GDP1(Annual percent change)
    Average
    1977–86
    19871988198919901991199219931994
    Central and eastern Europe-11.1-11.4-6.2-3.8
    Albania1.6-0.8-1.49.8-10.0-27.7-9.711.07.4
    Belarus-1.2-9.6-9.5-21.7
    Bulgaria5.75.72.4-0.5-9.1-11.7-5.7-4.2
    Croatia-3.21.8
    Czech Republic-0.92.6
    Czechoslovakia, former2.72.12.54.5-0.4-15.9-8.5
    Estonia-7.9-21.6-6.66.0
    Hungary2.54.1-0.10.7-3.5-11.9-4.3-2.32.6
    Latvia-11.1-35.2-14.82.0
    Lithuania-13.1-56.6-16.51.5
    Macedonia, former Yugoslav Rep. of-15.5-7.2
    Moldova-18.1-20.6-8.7-22.1
    Poland1.42.04.10.2-11.6-7.02.63.86.0
    Romania4.00.8-0.5-5.8-5.6-12.9-10.11.33.4
    Slovak Republic-4.15.3
    Slovenia1.35.0
    Ukraine-11.9-17.0-17.1-23.0
    Yugoslavia, former3.1-1.0-2.00.8-7.5-17.0-34.0
    Russia-13.0-19.0-12.0-15.0
    Transcaucasus and central Asia-7.7-17.6-11.9-14.9
    Armenia-11.8-52.4-14.8
    Azerbaijan-0.7-22.1-23.3-21.9
    Georgia-20.6-42.7-39.2-10.0
    Kazakhstan-13.0-14.0-12.0-25.0
    Kyrgyz Republic-5.0-19.1-16.0-26.5
    Mongolia6.93.58.54.2-2.0-9.9-7.6-1.22.5
    Tajikistan-8.7-30.0-27.6-16.3
    Turkmenistan-4.7-5.3-10.0-19.5
    Uzbekistan-0.9-11.1-2.4-2.6

    Data for many countries refer to real net material product (NMP) or are estimates based on NMP. For many countries, figures for recent years are IMF staff estimates. The figures should be interpreted only as indicative of broad orders of magnitude because reliable, comparable data are not generally available. In particular, the growth of output of new private enterprises or of the informal economy is not fully reflected in the recent figures.

    Table A8.Summary of Inflation(In percent)
    Average
    1977–86
    1987198819891990199119921993199419951996
    GDP deflators
    Industrial countries7.13.23.74.44.44.23.22.51.92.32.7
    United States6.43.13.94.64.33.82.82.22.12.53.1
    European Union9.14.04.34.95.35.64.53.72.63.02.8
    Japan3.10.41.82.22.01.50.90.20.31.1
    Other industrial countries7.25.35.45.74.63.41.71.81.62.42.6
    Consumer prices
    Industrial countries7.33.13.44.45.04.53.33.02.42.62.7
    United Stales6.83.74.14.85.44.23.03.02.63.13.5
    European Union8.93.23.54.75.45.34.53.83.13.12.8
    Japan3.80.10.72.32.83.31.71.30.70.30.7
    Other industrial countries7.65.34.85.25.95.02.12.51.32.72.4
    Developing countries26.133.652.559.461.733.435.943.048.017.58.9
    By region
    Africa15.714.717.519.616.324.729.726.833.621.410.0
    Asia7.57.011.511.16.67.77.19.413.59.96.6
    Middle East and Europe20.423.027.122.222.025.825.424.532.322.510.9
    Western Hemisphere69.3122.2243.9337.4440.8128.8152.6212.3225.836.114.2
    By analytical criteria
    Fuel exporters20.337.536.618.516.717.917.116.217.922.511.9
    Nonfuel exporters28.632.457.774.178.238.442.051.657.416.38.1
    Market borrowers39.653.894.2113.4118.847.254.670.977.120.28.9
    Official borrowers16.917.722.523.521.225.922.020.623.115.78.5
    Countries with recent debt-servicing difficulties49.484.2149.7194.6240.991.7106.2140.1150.230.612.6
    Countries without debt-servicing difficulties11.39.614.813.79.510.910.912.517.412.67.7
    Countries in transition6.49.413.637.144.194.8722.3675.1295.2126.918.9
    Central and eastern Europe96.5368.4458.8203.2109.921.2
    Excluding Belarus and Ukraine100.0183.2139.287.160.420.8
    Russia92.71,353.0896.0302.0143.012.3
    Transcaucasus and central Asia95.7915.01,241.21.337.6163.434.0
    Memorandum
    Median inflation rate
    Industrial countries7.94.14.64.85.44.23.13.02.42.52.5
    Developing countries10.67.58.29.29.711.79.89.010.18.05.0
    Countries in transition1.01.30.62.05.696.5883.6685.5207.760.418.3
    Table A9.Industrial Countries: GDP Deflators and Consumer Prices(Annual percent change)
    AverageFourth Quarter1
    1977–861987198819891990199119921993199419951996199419951996
    GDP deflators
    Industrial countries7.13.23.74.44.44.23.22.51.92.32.7
    Major industrial countries6.72.93.44.14.14.03.02.31.72.12.61.62.62.5
    United States6.43.13.94.64.33.82.82.22.12.53.12.33.03.2
    Japan3.10.41.82.22.01.50.90.20.31.1-0.71.21.1
    Germany4.95.53.92.22.02.1
    West Germany3.61.81.62.43.23.94.43.22.01.92.01.82.12.1
    France9.23.02.83.03.13.12.32.41.41.92.01.72.02.0
    Italy14.46.06.66.27.67.74.54.43.54.84.03.75.33.3
    United Kingdom9.65.06.07.16.46.54.33.42.02.72.91.92.92.7
    Canada6.54.74.64.83.12.71.41.10.61.51.90.32.01.9
    Other industrial countries9.55.15.46.16.05.34.23.53.13.43.1
    Spain14.25.85.77.07.47.06.54.54.54.23.5
    Netherlands3.8-0.51.21.22.32.72.51.61.43.12.1
    Belgium5.32.31.84.83.12.73.44.42.22.52.5
    Sweden8.84.86.58.08.87.61.42.92.53.43.3
    Austria4.92.41.72.93.34.04.23.63.02.72.9
    Denmark7.84.73.44.22.72.52.01.81.32.52.5
    Finland8.34.77.06.15.82.50.72.42.52.02.8
    Greece18.114.315.512.720.518.414.213.611.09.07.1
    Portugal21.711.311.311.814.514.013.06.56.05.04.5
    Ireland11.92.23.14.4-1.71.11.33.63.22.31.7
    Luxembourg6.0-3.11.00.21.33.83.80.63.22.12.3
    Switzerland3.52.62.44.25.75.52.62.11.81.41.6
    Norway7.57.14.55.94.52.5-1.02.1-0.32.53.0
    Iceland32.420.223.420.414.37.33.31.02.41.42.2
    Australia8.57.48.47.44.62.01.51.22.13.73.8
    New Zealand14.914.17.78.04.22.73.82.22.53.01.5
    Memorandum
    European Union9.14.04.34.95.35.64.53.72.63.02.8
    Consumer prices
    Industrial countries7.33.13.44.45.04.53.33.02.42.62.7
    Major industrial countries7.02.83.24.34.84.43.22.82.22.52.72.22.62.7
    United States6.83.74.14.85.44.23.03.02.63.13.52.63.33.6
    Japan3.80.10.72.32.83.31.71.30.70.30.70.90.11.0
    Germany4.64.94.73.12.02.0
    West Germany3.50.21.32.82.73.54.04.13.02.02.02.81.72.0
    France9.33.32.73.55.43.22.42.11.72.02.01.42.22.2
    Italy14.24.75.06.36.56.35.34.44.05.24.24.05.83.3
    United Kingdom29.24.14.65.98.16.84.73.02.42.92.82.23.12.7
    Canada7.54.44.05.04.85.61.51.80.22.01.92.31.7
    Other industrial countries9.14.94.75.66.45.44.23.73.23.43.0
    Memorandum
    European Union8.93.23.54.75.45.34.53.83.13.12.8

    From fourth quarter of preceding year.

    Retail price index excluding mortgage interest.

    Table A10.Industrial Countries: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing(Annual percent change)
    Average
    1977–86
    1987198819891990199119921993199419951996
    Hourly earnings
    Industrial countries8.63.84.75.56.36.55.13.83.02.93.8
    Major industrial countries8.13.44.45.46.06.34.93.72.82.73.8
    United States7.12.24.03.95.25.54.13.32.92.63.3
    Japan4.41.03.26.76.55.94.62.62.71.34.1
    West Germany5.95.23.94.25.77.37.16.11.64.44.2
    France11.64.63.94.84.85.34.63.32.52.73.5
    Italy16.17.67.59.78.69.47.04.53.13.64.9
    United Kingdom11.87.47.99.09.69.36.45.34.44.44.8
    Canada7.63.43.95.35.24.73.52.11.61.32.8
    Other industrial countries11.36.56.16.27.97.66.14.44.34.24.1
    Memorandum
    European Union11.16.25.86.67.47.86.65.03.24.04.3
    Productivity
    Industrial countries2.94.84.22.31.92.21.92.74.42.42.6
    Major industrial countries2.75.34.32.32.12.21.82.54.72.42.7
    United States1.76.42.40.61.72.42.03.24.92.32.2
    Japan3.34.17.44.52.81.5-3.7-1.63.42.14.2
    West Germany2.91.94.23.43.52.91.32.48.23.22.5
    France5.67.88.84.20.43.08.45.62.01.21.8
    Italy3.65.05.62.81.51.83.83.14.73.02.5
    United Kingdom2.94.95.14.42.22.24.44.74.53.63.9
    Canada2.02.50.50.53.41.13.73.42.82.41.7
    Other industrial countries4.21.93.82.21.01.72.53.43.11.91.8
    Memorandum
    European Union4.04.05.33.41.72.33.83.84.82.62.4
    Unit labor costs
    Industrial countries5.6-0.90.53.24.34.23.31.1-1.40.61.2
    Major industrial countries5.3-1.80.13.03.94.03.21.1-1.80.31.0
    United States5.3-3.91.63.33.43.02.10.1-2.00.31.0
    Japan1.5-3.0-3.92.03.54.38.64.3-0.7-0.8
    West Germany2.93.3-0.20.82.14.25.73.6-6.11.21.7
    France5.6-3.0-4.60.64.42.3-3.5-2.20.51.41.7
    Italy12.22.41.86.76.97.53.11.4-1.60.62.3
    United Kingdom8.62.52.74.47.37.01.90.6-0.10.80.9
    Canada5.50.83.44.81.83.6-0.3-1.2-1.2-1.01.1
    Other industrial countries6.94.52.33.96.95.83.61.01.22.22.2
    Memorandum
    European Union6.92.20.53.25.65.42.81.1-1.41.41.8
    Table A11.Developing Countries: Consumer Prices(Annual percent change)
    Average
    1977–86
    1987198819891990199119921993199419951996
    Developing countries26.133.652.559.461.733.435.943.048.017.58.9
    By region
    Africa15.714.717.519.616.324.729.726.833.621.410.0
    Asia7.57.011.511.16.67.77.19.413.59.96.6
    Middle East and Europe20.423.027.122.222.025.825.424.532.322.510.9
    Western Hemisphere69.3122.2243.9337.4440.8128.8152.6212.3225.836.114.2
    Sub-Saharan Africa20.422.524.222.823.239.039.935.150.820.28.4
    Four newly industrializing Asian economies8.42.55.05.87.07.55.94.65.75.14.9
    By predominant export
    Fuel20.337.536.618.516.717.917.116.217.922.511.9
    Non fuel exports28.632.457.774.178.238.442.051.657.416.38.1
    Manufactures27.534.363.377.482.239.253.270.178.718.88.3
    Primary products57.251.3111.6190.8201.576.332.525.624.213.49.4
    Agricultural products58.449.784.8175.3165.762.624.520.717.812.79.3
    Minerals53.356.2226.8247.3358.5131.264.144.048.915.89.6
    Services, income, and private transfers12.016.513.715.616.518.015.812.912.89.87.1
    Diversified export base11.910.69.78.810.011.18.46.67.96.86.3
    By financial criteria
    Net creditor countries9.89.610.07.55.310.510.09.613.69.24.2
    Net debtor countries27.936.056.764.667.735.738.546.351.418.29.3
    Market borrowers39.653.894.2113.4118.847.254.670.977.120.28.9
    Diversified borrowers15.115.717.915.218.219.718.116.419.215.110.5
    Official borrowers16.917.722.523.521.225.922.020.623.115.78.5
    Countries with recent debt-servicing difficulties49.484.2149.7194.6240.991.7106.2140.1150.230.612.6
    Countries without debt-servicing difficulties11.39.614.813.79.510.910.912.517.412.67.7
    Other groups
    Small low-income economies15.817.518.718.921.127.424.121.325.812.97.0
    Least developed countries16.922.023.925.826.840.837.129.537.516.19.6
    Fifteen heavily indebted countries62.0109.2209.3315.4369.0112.0159.1209.9214.942.415.5
    Memorandum
    Median
    Developing countries10.67.58.29.29.711.79.89.010.18.05.0
    By region
    Africa11.27.07.69.48.99.59.79.523.99.45.0
    Asia8.26.98.47.28.69.68.87.08.06.55.0
    Middle East and Europe9.05.05.86.99.510.48.97.96.86.53.9
    Western Hemisphere12.514.612.114.321.822.712.110.77.75.05.0
    Table A12.Developing Countries—By Country: Consumer Prices1(Annual percent change)
    Average
    1977–86
    19871988198919901991199219931994
    Africa15.714.717.519.616.324.729.726.833.6
    Algeria11.05.95.99.216.725.931.720.529.0
    Angola80.1299.01,379.0950.0
    Benin8.93.24.30.51.12.15.90.538.6
    Botswana11.99.88.410.011.511.613.815.112.5
    Burkina Faso8.3-2.94.2-0.3-0.82.5-2.00.624.7
    Burundi10.07.14.511.77.09.04.59.712.8
    Cameroon11.02.81.71.61.5-0.61.9-3.712.7
    Cape Verde14.24.03.76.96.67.05.24.44.6
    Central African Republic10.70.8-4.00.7-0.2-2.8-0.8-2.924.6
    Chad6.7-2.714.9-4.90.54.0-3.8-7.041.3
    Comoros7.44.01.15.71.61.7-1.41.925.0
    Congo9.81.24.04.12.00.12.10.740.3
    Côte d’Ivoire11.07.06.91.0-0.71.64.22.125.8
    Djibouti8.94.26.43.07.86.85.05.81.7
    Equatorial Guinea18.1-9.0-3.45.22.7-0.90.91.640.6
    Ethiopia9.5-9.52.29.65.220.921.010.01.5
    Gabon10.0-1.0-9.86.66.01.91.52.235.2
    Gambia, The13.046.212.410.810.29.112.05.94.0
    Ghana58.239.831.415.237.218.010.125.024.8
    Guinea25.636.727.428.319.419.616.67.14.1
    Guinea-Bissau30.286.860.380.833.057.669.648.115.2
    Kenya12.45.18.39.915.719.627.346.028.8
    Lesotho14.411.614.914.415.814.018.812.09.5
    Liberia5.95.09.725.310.010.010.010.010.0
    Madagascar15.715.526.39.011.88.515.313.218.0
    Malawi12.026.828.07.514.08.336.118.437.2
    Mali11.4-15.08.5-0.21.61.5-4.20.932.0
    Mauritania4.48.26.39.06.45.610.19.34.1
    Mauritius12.30.71.516.010.712.82.98.99.4
    Morocco9.82.72.43.17.08.05.75.25.0
    Mozambique, Rep. of13.3163.350.142.049.233.245.142.463.1
    Namibia12.612.915.112.011.917.78.68.0
    Niger1.8-6.60.6-0.8-2.0-1.9-1.7-0.435.6
    Nigeria15.810.234.550.57.413.044.657.257.5
    Rwanda8.04.13.01.04.219.69.512.564.0
    Sao Tome and Principe5.723.841.244.840.536.127.421.837.7
    Senegal9.8-4.1-1.80.40.3-1.8-0.732.0
    Seychelles7.22.61.81.63.92.03.21.31.0
    Sierra Leone36.9178.732.762.8111.0102.765.517.618.4
    Somalia35.528.182.0111.0216.8
    South Africa13.916.212.714.714.415.313.99.79.0
    Sudan27.921.562.965.365.2123.5117.6111.0101.0
    Swaziland15.413.212.212.913.513.09.08.08.0
    Tanzania24.729.931.225.819.722.322.123.525.1
    Togo8.00.10.2-1.21.00.43.7-3.641.4
    Tunisia8.38.27.27.76.58.25.84.04.7
    Uganda79.6256.0180.161.533.163.0-0.616.17.5
    Zaire52.589.882.8104.381.32,153.84,130.01,893.023,913.0
    Zambia22.247.054.0128.3109.693.4191.3187.353.0
    Zimbabwe12.511.97.111.615.523.942.725.423.2
    Asia7.57.011.511.16.67.77.19.413.5
    Afghanistan, Islamic State of10.918.229.289.8157.8166.058.234.020.0
    Bangladesh12.69.59.68.79.16.93.21.62.9
    Bhutan5.911.17.96.46.76.711.49.08.0
    Cambodia90.5152.387.9176.831.026.0
    China3.47.318.517.82.12.95.413.021.7
    Fiji7.15.711.96.18.16.54.95.21.5
    Hong Kong8.65.57.510.19.711.69.38.58.0
    India8.49.08.96.59.913.010.77.910.1
    Indonesia11.39.38.16.48.19.47.69.78.5
    Kiribati7.46.53.15.33.85.74.06.54.0
    Korea10.83.07.15.78.69.36.24.86.3
    Lao P.D. Republic55.96.114.859.735.713.49.86.36.8
    Malaysia4.40.82.52.83.14.44.73.64.1
    Maldives10.511.76.57.23.614.716.820.214.2
    Marshall Islands-0.62.62.20.74.010.35.02.8
    Micronesia. Fed. States of-3.13.74.53.54.05.06.05.0
    Myanmar3.323.317.327.517.632.321.931.722.2
    Nepal10.313.311.08.19.79.820.88.07.0
    Pakistan7.64.93.37.29.711.09.210.512.8
    Papua New Guinea6.63.15.74.77.57.04.35.02.8
    Philippines15.33.89.110.612.718.78.97.69.1
    Singapore3.50.51.52.43.43.52.32.44.0
    Solomon Islands10.311.516.814.98.615.210.79.213.7
    Sri Lanka11.47.714.011.621.512.211.411.78.4
    Taiwan Province of China6.10.51.34.44.13.64.52.94.1
    Thailand7.12.53.95.56.05.74.13.35.0
    Vanuatu7.214.78.47.55.06.54.14.45.0
    Viet Nam62.8316.7394.035.067.068.117.55.214.4
    Western Samoa14.04.68.56.515.2-1.38.51.718.0
    Middle East and Europe20.423.027.122.222.025.825.424.532.3
    Bahrain5.5-1.70.21.21.30.82.02.0
    Cyprus7.22.83.43.84.55.06.54.94.7
    Egypt15.018.818.019.316.719.813.612.08.1
    Iran, Islamic Republic of17.127.728.917.49.020.724.422.935.0
    Iraq16.018.015.015.050.050.050.075.060.0
    Israel121.119.916.320.217.219.011.910.912.3
    Jordan7.3-0.26.725.616.28.24.03.33.6
    Kuwait4.70.61.53.31.816.9-16.00.50.5
    Lebanon30.5487.2155.072.768.851.5120.029.110.6
    Libya10.94.43.11.38.611.715.020.030.0
    Malta5.40.41.00.93.02.61.64.15.4
    Oman3.22.51.61.310.04.61.00.90.5
    Qatar6.34.54.63.33.04.43.03.13.0
    Saudi Arabia2.7-1.60.91.02.14.6-0.40.80.8
    Syrian Arab Republic13.859.534.610.011.19.011.013.215.0
    Turkey45.938.873.763.360.366.070.166.1106.3
    United Arab Emirates8.25.55.03.30.65.56.84.74.6
    Yemen Arab Republic, former14.520.713.919.414.0
    Yemen, former P.D. Republic of6.32.50.52.1
    Yemen, Republic of44.950.662.375.0
    Western Hemisphere69.3122.2243.9337.4440.8128.8152.6212.3225.8
    Antigua and Barbuda10.83.66.83.77.05.73.03.04.5
    Argentina216.7131.3343.03,080.52,314.7171.724.910.64.1
    Aruba3.63.14.05.85.63.95.25.2
    Bahamas, The6.56.04.15.44.67.35.72.73.2
    Barbados8.83.64.76.33.06.36.01.12.4
    Belize4.12.03.22.13.05.62.81.82.0
    Bolivia227.914.616.015.217.121.412.18.57.7
    Brazil109.4224.8684.61,319.92,738.8413.7991.12,103.32,407.3
    Chile31.319.914.717.026.021.815.412.711.4
    Colombia23.623.328.125.929.130.527.022.422.6
    Costa Rica21.616.820.816.519.028.721.89.810.0
    Dominica9.64.72.26.81.96.25.31.37.0
    Dominican Republic13.215.944.445.459.453.94.64.84.6
    Ecuador20.229.558.275.748.448.854.645.025.5
    El Salvador15.825.319.917.624.014.411.218.510.8
    Grenada11.8-4.44.05.62.72.73.82.33.2
    Guatemala12.112.310.811.441.233.210.113.510.0
    Guyana16.028.739.989.763.6101.528.211.314.0
    Haiti8.1-5.12.910.920.619.825.230.721.2
    Honduras8.22.86.66.219.025.412.110.722.4
    Jamaica20.711.28.214.321.951.077.322.130.0
    Mexico46.4131.8114.220.026.722.715.59.87.0
    Netherlands Antilles6.33.82.63.83.73.91.51.93.5
    Nicaragua69.0911.914,315.84,709.37,484.92,945.023.720.47.2
    Panama4.31.00.2-0.20.81.31.80.52.0
    Paraguay17.921.823.026.038.224.915.518.310.0
    Peru78.0114.51,722.32,775.37,649.7409.273.248.623.7
    St. Kitts and Nevis9.30.90.25.14.24.22.91.82.6
    St. Lucia7.17.00.84.43.86.15.70.81.8
    St. Vincent and the Grenadines8.92.90.32.77.36.03.74.30.5
    Suriname10.053.47.30.821.826.043.7143.4357.0
    Trinidad and Tobago12.413.412.19.39.52.38.513.55.9
    Uruguay53.563.662.280.4112.5102.068.554.142.1
    Venezuela11.528.129.484.540.734.231.438.160.8

    For many countries, figures for recent years are IMF staff estimates. Data for some countries are for fiscal years.

    Table A13. Countries in Transition: Consumer Prices1(Annual percent change)
    Average
    1977–86
    19871988198919901991199219931994
    Central and eastern Europe96.5368.4458.8203.2
    Albania36.0225.285.022.6
    Belarus83.5969.01,188.02,220.0
    Bulgaria1.42.72.56.423.9333.582.072.896.0
    Croatia1,516.097.5
    Czech Republic20.810.0
    Czechoslovakia, former1.90.10.21.410.859.011.0
    Estonia210.61,069.089.047.8
    Hungary6.58.615.716.929.034.223.022.518.8
    Latvia124.4951.2109.035.6
    Lithuania224.71,020.5410.472.2
    Macedonia, former Yugoslav Rep. of247.655.0
    Moldova162.01,276.0837.0111.1
    Poland20.425.260.2251.1585.870.343.035.332.2
    Romania2.91.12.60.94.7161.1210.3256.0137.0
    Slovak Republic23.113.4
    Slovenia32.020.0
    Ukraine91.21,209.74,734.9891.2
    Yugoslavia, former39.0120.8194.11,239.9583.1117.46,146.6
    Russia92.71,353.0896.0302.0
    Transcaucasus and central Asia95.7915.01,241.21,337.6
    Armenia100.3824.53,731.85,267.8
    Azerbaijan105.6912.61,129.71,664.4
    Georgia78.5913.03,421.521,068.1
    Kazakhstan91.01,381.01,662.31,879.9
    Kyrgyz Republic85.0854.61,208.7278.4
    Mongolia0.220.2202.6268.487.6
    Tajikistan111.61,156.72,194.9315.6
    Turkmenistan102.5492.93,102.42,397.0
    Uzbekistan105.0645.0534.0723.0

    For some countries, figures for recent years are IMF staff estimates. The figures should be interpreted only as indicative of broad orders of magnitude because reliable, comparable data are not generally available.

    Table A14. Summary Financial Indicators(In percent)
    1987198819891990199119921993199419951996
    Industrial countries
    Central government fiscal balance1
    Industrial countries-3.2-2.6-2.3-2.7-3.1-4.2-4.4-3.7-3.3-3.1
    United States-3.3-2.8-2.3-2.9-3.5-4.7-3.8-2.4-2.3-2.4
    European Union-3.8-3.3-2.9-3.5-3.9-4.8-5.9-5.2-4.2-3.6
    Japan-2.2-1.3-1.2-0.5-0.2-1.6-2.6-4.0-4.2-4.2
    Other industrial countries-1.2-0.7-0.4-1.0-2.9-4.2-5.6-4.3-3.5-2.3
    General government fiscal balance1
    Industrial countries-2.5-1.8-1.2-2.0-2.8-3.8-4.4-3.8-3.4-3.0
    United States-2.5-2.0-1.5-2.5-3.2-4.3-3.4-2.0-1.9-2.1
    European Union-3.8-3.2-2.4-3.6-4.4-5.1-6.4-5.8-4.8-4.0
    Japan0.51.52.52.93.01.5-1.4-3.0-3.4-3.0
    Other industrial countries-0.80.3-0.5-3.6-5.3-6.1-4.8-4.2-3.0
    Growth of broad money
    Industrial countries7.58.28.87.84.13.03.73.4
    United States4.35.34.84.02.91.91.43.0
    European Union9.49.710.511.86.45.66.24.0
    Japan10.810.212.07.42.3-0.22.22.2
    Other industrial countries9.810.910.87.13.82.73.85.1
    Short-term interest rates2
    United States5.86.78.17.55.43.43.04.26.26.6
    Japan3.94.04.76.97.04.12.71.91.72.7
    Germany4.04.37.18.49.29.57.25.35.25.9
    LIBOR7.38.19.38.46.13.93.45.16.87.0
    Developing countries
    Central government fiscal balance1
    Weighted average-6.0-5.4-4.5-3.3-3.3-2.8-3.0-2.7-1.9-1.6
    Median-5.4-5.8-4.9-4.4-4.4-4.2-4.3-4.3-3.3-2.8
    Growth of broad money
    Weighted average46.567.781.577.559.266.670.856.119.016.5
    Median16.218.416.517.417.715.314.015.011.911.6
    Countries in transition
    Central government fiscal balance1,3-2.0-2.0-2.3-4.0-9.1-11.9-7.0-7.6-4.6
    Growth of broad money18.422.934.821.6122.9627.8403.9195.6

    In percent of GDP.

    For the United States, three-month treasury bills; for Japan, three-month certificates of deposit; for Germany, three-month interbank deposits; for LIBOR. London interbank offered rate on six-month U.S. dollar deposits.

    Because of country differences in definition and coverage, the estimates for this group of countries should be interpreted only as indicative of broad orders of magnitude.

    Table A15. Industrial Countries: General and Central Government Fiscal Balances and Balances Excluding Social Security Transactions1(In percent of GDP)
    1987198819891990199119921993199419951996
    General government fiscal balance
    Industrial countries-2.5-1.8-1.2-2.0-2.8-3.8-4.4-3.8-3.4-3.0
    Major industrial countries-2.5-1.8-1.1-2.0-2.6-3.6-4.1-3.5-3.2-2.9
    United States-2.5-2.0-1.5-2.5-3.2-4.3-3.4-2.0-1.9-2.1
    Japan0.51.52.52.93.01.5-1.4-3.0-3.4-3.0
    Germany2-1.9-2.10.1-1.9-3.2-2.6-3.3-2.5-2.2-1.8
    France3-1.9-1.6-1.3-1.6-2.2-3.9-5.8-5.8-4.7-3.7
    Italy4-11.0-10.7-9.9-10.9-10.2-9.5-9.5-9.2-8.5-7.9
    United Kingdom5-1.41.00.9-1.2-2.6-6.1-7.8-6.9-4.0-2.4
    Canada-3.8-2.5-2.9-4.1-6.6-7.1-7.1-5.3-4.4-3.5
    Other industrial countries-2.4-1.8-1.5-2.2-3.7-4.6-6.1-5.3-4.6-3.9
    Spain-3.1-3.3-2.8-3.9-5.0-4.5-7.5-6.7-5.9-5.8
    Netherlands-5.9-4.6-4.7-5.1-2.9-3.9-3.3-3.5-3.2-3.0
    Belgium-7.4-6.6-6.2-5.4-6.5-6.7-6.6-5.4-4.4-4.2
    Sweden4.23.55.44.2-1.1-7.4-13.3-11.4-10.1-6.8
    Austria-4.3-3.0-2.8-2.2-2.4-2.0-4.1-4.0-4.5-3.7
    Denmark2.40.6-0.5-1.5-2.1-2.6-4.4-4.3-2.5-1.6
    Finland1.14.16.35.4-1.5-5.9-7.8-5.5-5.5-4.1
    Greece-11.8-12.9-16.2-15.6-12.9-11.4-13.3-12.9-11.5-10.0
    Portugal-6.8-4.2-3.7-6.5-6.5-3.5-7.3-6.5-6.0-5.5
    Ireland-9.8-3.3-2.6-2.5-2.9-2.9-2.7-2.5-2.5-2.5
    Luxembourg1.01.85.25.7-0.5-0.9-0.50.51.01.0
    Switzerland1.21.00.8-2.1-3.4-4.3-4.5-3.9-3.3
    Norway7.35.34.04.6-0.9-3.2-4.7-3.1-2.1-1.0
    Iceland-0.9-2.1-4.6-3.5-3.4-3.6-4.5-4.0-4.0-4.0
    Australia-0.71.01.60.5-2.6-4.6-3.6-2.7-2.0-1.1
    New Zealand1.82.43.32.9-0.1-3.6-1.90.30.81.6
    Memorandum
    European Union-3.8-3.2-2.4-3.6-4.4-5.1-6.4-5.8-4.8-4.0
    Fiscal balance excluding social
    security transactions
    United States-4.3-4.2-3.8-4.7-5.2-5.9-5.0-4.2-4.1-4.2
    Japan-2.3-1.6-0.7-0.6-0.7-2.3-5.2-6.9-7.1-6.7
    Germany-2.2-2.2-0.6-2.6-3.9-2.5-3.6-2.7-2.3-2.0
    France-2.1-1.9-1.5-1.6-1.9-3.2-4.5-4.7-3.8-3.1
    Italy-6.6-5.8-4.9-5.3-5.1-4.0-4.5-4.6-4.7-4.4
    Canada-2.0-0.7-1.0-2.3-4.6-4.8-4.6-2.7-2.1-1.3
    Central government fiscal balance
    Industrial countries-3.2-2.6-2.3-2.7-3.1-4.2-4.4-3.7-3.3-3.1
    Major industrial countries-3.3-2.7-2.3-2.7-3.1-4.2-4.2-3.6-3.2-3.0
    United States6-3.3-2.8-2.3-2.9-3.5-4.7-3.8-2.4-2.3-2.4
    Japan7-2.2-1.3-1.2-0.5-0.2-1.6-2.6-4.0-4.2-4.2
    Germany8,9-1.4-1.7-0.9-1.8-1.9-1.3-2.1-1.5-1.5-1.6
    France9-1.9-1.7-1.4-1.6-1.7-3.0-4.4-4.6-3.7-3.0
    Italy10-11.2-11.0-10.7-10.1-10.3-10.4-9.9-9.4-7.8-7.2
    United Kingdom-1.11.11.2-1.1-2.3-6.9-7.9-6.7-3.9-2.4
    Canada-3.8-3.2-3.3-3.9-4.6-4.2-4.6-3.4-2.9-1.9
    Other industrial countries-2.6-2.1-1.8-2.2-3.2-4.0-5.7-4.1-4.1-3.3
    Memorandum
    European Union-3.8-3.3-2.9-3.5-3.9-4.8-5.9-5.2-4.2-3.6

    On a national income accounts basis except as indicated in footnotes.

    Data through 1990 apply to west Germany only.

    Adjusted for valuation changes of the foreign exchange stabilization fund.

    Includes imputed interest due on tax refund liabilities not replaced by government bonds.

    Excludes asset sales.

    Data are on a budget basis.

    Data are on a national income basis and exclude social security transactions.

    Data through June 1990 apply to west Germany only.

    Data are on an administrative basis and exclude social security transactions.

    Data refer to the state sector and cover the transactions of the state budget as well as those of several autonomous entities operating at the same level; data do not include the gross transactions of social security institutions, only their deficits. Includes imputed interest due on tax refund liabilities not replaced by government bonds.

    Table A16. Industrial Countries: General Government Structural Balances and Fiscal Impulses1(In percent of GDP)
    1987198819891990199119921993199419951996
    Structural balance2
    Major industrial countries-2.6-2.7-2.3-3.0-2.8-3.1-2.9-2.4-2.4-2.3
    United States-3.0-3.0-2.6-3.2-2.9-3.7-3.0-2.1-2.4-2.4
    Japan0.60.91.82.12.21.70.1-0.7-0.8-0.9
    Germany3-1.2-2.0-0.4-3.5-5.3-3.6-2.0-1.0-1.0-1.0
    France-0.8-1.6-2.1-2.4-2.1-3.1-3.3-3.4-2.9-2.4
    Italy-11.3-11.6-11.4-12.3-11.2-9.6-8.1-8.0-7.7-7.4
    United Kingdom-1.3-0.8-2.0-3.6-2.7-3.7-4.4-4.1-2.2-1.2
    Canada-4.9-4.5-4.8-4.7-4.8-4.3-4.3-3.6-3.8-2.9
    Other industrial countries4-2.2-2.0-2.2-3.0-3.7-3.6-3.3-2.8-2.9-2.6
    Memorandum
    European Union5-3.3-3.6-3.6-5.0-5.1-4.7-4.1-3.6-3.2-2.9
    Fiscal impulse6
    Major industrial countries-0.6-0.50.40.1-0.1-0.3-0.2
    United States7-0.7-0.50.7-0.6-0.8
    Japan7-1.3-0.4-0.9-0.40.91.81.0
    Germany3,70.7-1.72.00.7-1.6-1.3-0.7
    France7-0.90.70.50.9-0.6
    Italy0.50.8-1.3-1.6-1.6
    United Kingdom-1.01.1-0.52.01.7