The following remarks by the Acting Chair were made at the conclusion of the Executive Board’s discussion of the World Economic Outlook on September 3, 2004.

Executive Directors noted that the global recovery remains solid, with economic growth in 2004 projected to reach its highest rate in nearly 30 years. The expansion is underpinned by continued accommodative macroeconomic policies, rising corporate profitability, and wealth effects from rising equity and house prices. It has become increasingly broad-based geographically, although some regions continue to grow more vigorously than others. Global growth remains driven by the United States, with strong support from Asia, particularly China and Japan. Activity in Latin America and some other emerging markets has also picked up strongly, while the outlook for Africa has improved. There is growing economic momentum in the euro area, although the strength of the upturn varies across countries and in some cases is heavily dependent on external demand.

While welcoming these developments, Directors noted that risks to the expansion have increased in recent months. First, oil prices rose sharply through mid-August, driven by strong global demand and, increasingly, supply-side concerns. While prices have since fallen back somewhat, they are still significantly higher than in 2003; and with spare capacity near historical lows, the oil market remains highly vulnerable to shocks and speculative pressures. Against this backdrop, Directors urged greater cooperation between consumers and producers toward a more stable global oil market, with some Directors emphasizing the importance of measures to promote more efficient use of oil and other nonrenewable resources. Second, and partly related, second-quarter growth slowed in some major countries—including the United States and Japan. Directors noted the risk that this slowdown could persist, especially if employment growth in the United States remains relatively modest. Overall, while Directors generally expected a continued solid expansion of the world economy, they considered that the balance of risks has shifted to the downside, with further oil price volatility and geopolitical risks becoming the central short-term concerns.

Directors noted that inflationary risks remain generally moderate. Nevertheless, after falling to unusually low levels in mid-2003, inflation has turned up around the world, reflecting a combination of strong growth and higher commodity prices. Directors cautioned that, going forward, inflationary pressures could prove stronger than expected, necessitating a sharper-than-expected rise in interest rates. While acknowledging that monetary policy in many countries remains appropriately accommodative, Directors underscored that the key short-term policy challenge will be to continue to manage the transition toward higher interest rates to ensure that nascent inflationary pressures are contained, while facilitating—through continued good communication of the stance of monetary policy—sustained economic recovery and orderly adjustment in financial markets. In this connection, Directors viewed further sustained increases in oil prices as a complicating factor. While first-round oil price effects should be accommodated, central banks will need to ensure that second-round effects are well contained.

Directors called on policymakers to take advantage of the current cyclical expansion to address three key medium-term vulnerabilities and concerns.

• First, global imbalances—which remain an important medium-term risk to the economic outlook—need to be tackled. Directors reiterated that eliminating these will require medium-term fiscal consolidation in the United States to increase domestic saving, structural reforms to boost growth in Europe, Japan, and elsewhere, and steps toward greater exchange rate flexibility in Asia, as appropriate. In all three areas, much remains to be done; it will be important to make strong progress on each of them.

• Second, the pace of structural reforms needs to be quickened to increase economic flexibility and resilience, so that countries are well positioned to take full advantage of the opportunities from globalization and the information technology revolution, while strengthening their resistance to future shocks. Noting the key role of open markets in promoting competitiveness and efficiency, Directors looked forward to far-reaching trade liberalization under the Doha Round, building on the welcome progress in Geneva in July.

• Third, medium-term fiscal positions need to be strengthened in both industrial and developing countries. This will require a combination of fiscal consolidation, while allowing automatic stabilizers to work; structural measures to improve debt sustainability, including tax reform and stronger public expenditure frameworks; and reforms of pension and health care systems.

Industrial Countries

Directors welcomed the strong expansion in the United States, which has provided important support to global growth. Although business investment remains strong, Directors cautioned that the slowdown in consumption in the second quarter may be a source of concern going forward, especially since support from past macro-economic stimulus and mortgage refinancing will decline in coming quarters. Nevertheless, in the context of the strong expansion expected for 2004, Directors agreed that a measured pace of tightening of monetary policy—calibrated according to the strength of the expansion and the extent of underlying inflationary pressures— is likely to be appropriate. Regarding fiscal policy, most Directors considered the pace of deficit reduction targeted for fiscal years 2005 and 2006 as appropriate, but many encouraged the authorities to capitalize on the better-than-expected budget outcome for fiscal year 2004 by further strengthening the near-term deficit reduction objective. For the medium term, most Directors suggested that the objective of halving the budget deficit over five years is not sufficiently ambitious. Directors generally reiterated the long-standing call for the establishment of a clear long-term fiscal goal embedded within the context of a credible medium-term fiscal framework.

Directors were encouraged that the euro area expansion has finally gained momentum, although the upturn remains moderate and heavily dependent on external demand, with substantial differences across countries. Looking forward, rising disposable incomes and progress in corporate balance sheet restructuring should help the euro area boost private consumption and investment, and contribute to a more balanced area-wide recovery. With underlying inflationary pressures still relatively moderate, Directors agreed that monetary policy should remain accommodative until a self-sustaining upturn in domestic demand is in place. Although recently enacted structural reforms have strengthened the prospects for medium-term growth, further reforms will be needed to provide critically needed impetus to employment creation and domestic demand. Directors stressed that the recovery provides a renewed opportunity for progress, focused particularly on the key issue of raising labor utilization. In this connection, some Directors recalled that, based on past experience, renewed initiatives at the European Union level for product market deregulation can also play a useful role, as they strengthen incentives for reforms, especially in labor markets.

Directors were encouraged by the finding of the staff’s analysis of fiscal behavior under the EMU that fiscal policies in the euro area have become less procyclical over the past decade. However, they also highlighted the persisting tendency toward fiscal expansion in good times, which they saw as an important reason why some member states are currently breaching the Stability and Growth Pact (SGP) deficit limits. Accordingly, Directors urged euro area governments to take full advantage of the current expansion to strengthen fiscal positions. Many Directors underlined that reducing the procycli-cal bias of fiscal policy should be an important objective of ongoing reflection on the improvements needed in the design and effectiveness of SGP fiscal rules.

Directors welcomed the strong expansion in Japan over the last year. They noted that this was accompanied by a gradual easing of deflationary pressures, and continued progress in addressing corporate and financial sector vulnerabilities— although a substantial reform agenda remains to be completed in both areas. Despite the slowdown in GDP growth in the second quarter, most high-frequency indicators remain supportive of a continued solid expansion, with external sector developments—including with respect to oil prices and the exchange rate, as well as labor market conditions—remaining keys to the outlook. Directors underscored that to ensure an end to deflation, the current highly accommodative monetary stance should be maintained until inflation is firmly positive. Most Directors emphasized that, given Japan’s difficult fiscal position and the favorable economic environment, it is now opportune to start the process of fiscal consolidation, including by achieving savings in fiscal year 2004 relative to the budget. Some Directors noted that stepped-up structural reforms should also improve Japan’s fiscal position by increasing potential output growth—with the priorities being public enterprise reforms, strengthened competition policy, and enhanced labor market flexibility.

Directors welcomed the staff’s analysis of the global house price boom and the impact that rising interest rates in industrial countries might have on housing markets. They noted the staff’s analysis, which, reflecting linkages in economic activity and interest rates, shows a remarkable degree of synchronization of house prices across industrial countries—although the data limitations need to be recognized. Given the importance of house prices for private consumption, through wealth and credit channels, many Directors suggested that policymakers should monitor developments in the housing market closely, and they noted that a tightening of monetary policy during the transition to a more neutral policy stance could trigger a slowing or reversal of house price growth. Some Directors also underscored the need to further develop the mortgage market infrastructure and improve housing statistics.

Emerging Markets and Developing Countries

Directors welcomed the continued strength of the expansion in emerging Asia, reflecting the combined influence of the global upturn, especially in the electronics sector; the generally supportive macroeconomic policies, including highly competitive exchange rates; and the progressively stronger domestic demand growth. Looking forward, regional growth is expected to slow somewhat, but to remain solid, with much depending on developments in China, where— despite signs of slowing growth—a soft landing is not yet guaranteed. Other potential risks include the region’s relatively greater exposure to oil price volatility and to higher global real interest rates, especially on countries reliant on external financing.

Given the prospects for solid growth and the still generally accommodative policies in emerging Asia, Directors agreed that monetary policies may need to be tightened, albeit by varying degrees, in most countries. Most Directors noted that, given continued current account and balance of payments surpluses, monetary tightening would be facilitated by greater exchange rate flexibility. In this connection, a number of Directors called on the authorities to use the current favorable conditions to initiate the transition to more flexible exchange rates. Directors stressed the importance of sound underlying macroeconomic policies and structural reforms in ensuring a smooth transition to more flexible exchange rate regimes. Directors were encouraged by the staff’s finding that voluntary transitions to more flexible exchange rate regimes are generally not associated with an increase in macroeconomic instability. This probably reflects the strengthening of monetary and financial policy frameworks through greater central bank independence, the adoption of inflation targeting, the improvements in bank supervision, and the development of securities markets that frequently accompanied the transitions. Directors stressed the importance of proper timing and sequencing of reforms in these areas, tailored to individual country circumstances, in order to prepare the transition. Several Directors also pointed out that sound policies are essential for the success of any exchange rate regime.

Directors were encouraged by the strong rebound in economic activity in Latin America, supported by easier monetary conditions in most countries, improved confidence, rising commodity prices, and the global expansion. They noted that while sovereign borrowers have already largely met their funding requirements for 2004, external financing requirements remain high, and constitute an important vulnerability going forward. Directors emphasized that cutting high public debt ratios will be key to reducing vulnerabilities, and urged countries to press ahead with fiscal reforms. To boost medium-term growth, Directors pointed to the importance of strengthening the rule of law and investor rights, fostering financial sector development, further liberalizing trade, and promoting labor market flexibility. They noted that the success of these reforms will also require actions to address income inequality and reduce poverty.

Directors welcomed the continued strong growth momentum in emerging Europe the commonwealth of Independent States (CIS),while cautioning that policymakers in some of these countries need to guard against overheating. They underscored the need for fiscal consolidation, especially in light of substantial expenditure pressures and—in much of emerging Europe and the CIS-7—large external deficits. They also called for tighter monetary policies in the CIS, including through upward exchange rate flexibility in countries with large external surpluses; and for strengthening bank supervision in both regions to curb the prudential risks arising from rapid private sector credit growth. In addition, countries will need to persist with key structural reforms to further improve investment climates and fully develop the institutions and structures for market-based economies. In the Middle East, Directors noted the fading impetus to growth from higher oil production and prices as production reaches capacity. At the same time, they noted that the region will benefit from an expected substantial pickup in non-oil growth stemming from the global expansion and progress with reforms, especially trade liberalization. Fiscal consolidation will remain a priority in most countries, as will the need to boost employment by improving the environment for sustained private secto—rled growth.

Directors were encouraged by the improved outlook for Africa. This has been underpinned by greater macroeconomic stability, higher export commodity prices, lower external debt burdens, somewhat better access to industrial country markets, and a variety of country-specific developments. Nevertheless, with most countries likely to fall significantly short of achieving the Millennium Development Goals, key challenges going forward will be to promote private investment and develop infrastructure, deepen institutional reforms, and reduce government involvement in the economy. Directors were encouraged that several countries have achieved more favorable governance levels. They called on the international community to support the region’s strengthened reform efforts—through increased and better-coordinated assistance, continued debt relief, and elimination of barriers to exports, particularly in agriculture.

Demographic Change

Directors welcomed the work undertaken by the staff on demographic change, which is becoming an increasingly urgent concern. To meet the demographic challenges from population aging, industrial countries should boost labor supply, saving, and productivity, which, given the size of prospective demographic changes, will require a combination of reforms to be politically acceptable. Particularly important will be the selection of reforms, especially with respect to pension and health care systems: they will need to be resilient to a wide range of possible future demographic changes. For developing countries, Directors agreed that the key policy priorities will be to increase the flexibility of labor and product markets, and to ensure that labor resources and savings are effectively utilized. It will be important in these countries to move early to lay the groundwork for eventual population aging, including by strengthening pension and health care systems. This will be particularly challenging where medium-term fiscal positions are already under strain. Directors agreed that a broad longer-term implication of the staff’s work on demographic change is that the effectiveness of actions to facilitate movements of goods, capital, and labor smoothly and efficiently across countries will significantly influence the pace, and pattern, of global adjustment to different rates of population aging. This promises to be a subject in which the international community—including the Fund—has a shared interest.

The statistical appendix presents historical data, as well as projections. It comprises five sections: Assumptions, What’s New, Data and Conventions, Classification of Countries, and Statistical Tables.

The assumptions underlying the estimates and projections for 2004–05 and the mediumterm scenario for 2006–09 are summarized in the first section. The second section presents a brief description of changes to the database and statistical tables. The third section provides a general description of the data, and of the conventions used for calculating country group composites. The classification of countries in the various groups presented in the World Economic Outlook is summarized in the fourth section.

The last, and main, section comprises the statistical tables. Data in these tables have been compiled on the basis of information available through mid-September 2004. The figures for 2004 and beyond are shown with the same degree of precision as the historical figures solely for convenience; since they are projections, the same degree of accuracy is not to be inferred.

Assumptions

Real effective exchange rates for the advanced economies are assumed to remain constant at their average levels during the period July 7– August 4, 2004. For 2004 and 2005, these assumptions imply average U.S. dollar/SDR conversion rates of 1.468 for 2004 and 1.461 for 2005, U.S. dollar/euro conversion rate of 1.22 and 1.21, and yen/U.S. dollar conversion rates of 109.7 and 109.8, respectively.

It is assumed that the price of oil will average $37.25 a barrel in 2004 and 2005.

Established policies of national authorities are assumed to be maintained. The more specific policy assumptions underlying the projections for selected advanced economies are described in Box A1.

With regard to interest rates, it is assumed that the London interbank offered rate (LIBOR) on six-month U.S. dollar deposits will average 1.6 percent in 2004 and 3.4 percent in 2005, that six-month euro deposits will average 2.2 percent in 2004 and 2.8 percent in 2005, and that six-month Japanese yen deposits will average 0.1 percent in 2004 and 0.3 percent in 2005.

With respect to introduction of the euro, on December 31, 1998, the Council of the European Union decided that, effective January 1, 1999, the irrevocably fixed conversion rates between the euro and currencies of the member states adopting the euro are as follows.

1 euro = 13.7603	Austrian schillings
= 40.3399	Belgian francs
= 1.95583	Deutsche mark
= 5.94573	Finnish markkaa
= 6.55957	French francs
= 340.750	Greek drachma1
= 0.787564	Irish pound
= 1,936.27	Italian lire
= 40.3399	Luxembourg francs
= 2.20371	Netherlands guilders
= 200.482	Portuguese escudos
= 166.386	Spanish pesetas

View Table

1 euro = 13.7603	Austrian schillings
= 40.3399	Belgian francs
= 1.95583	Deutsche mark
= 5.94573	Finnish markkaa
= 6.55957	French francs
= 340.750	Greek drachma1
= 0.787564	Irish pound
= 1,936.27	Italian lire
= 40.3399	Luxembourg francs
= 2.20371	Netherlands guilders
= 200.482	Portuguese escudos
= 166.386	Spanish pesetas

See Box 5.4 in the October 1998 World Economic Outlook for details on how the conversion rates were established.

Classification of Countries

Summary of the Country Classification

The country classification in the World Economic Outlook divides the world into two major groups: advanced economies and other emerging market and developing countries.⁴ Rather than being based on strict criteria, economic or otherwise, this classification has evolved over time with the objective of facilitating analysis by providing a reasonably meaningful organization of data. A few countries are presently not included in these groups, either because they are not IMF members and their economies are not monitored by the IMF, or because databases have not yet been fully developed. Because of data limitations, group composites do not reflect the following countries: Afghanistan, Bosnia and Herzegovina, Brunei Darussalam, Eritrea, Liberia, Serbia and Montenegro, Somalia, and Timor-Leste. Cuba and the Democratic People’s Republic of Korea are examples of countries that are not IMF members, whereas San Marino, among the advanced economies, is an example of an economy for which a database has not been completed.

Each of the two main country groups is further divided into a number of subgroups. Among the advanced economies, the seven largest in terms of GDP, collectively referred to as the major advanced countries, are distinguished as a subgroup, and so are the 12 members of the euro area, and the four newly industrialized Asian economies. The other emerging market and developing countries are classified by region, as well as into a number of analytical and other groups. Table A provides an overview of these standard groups in the World Economic Outlook, showing the number of countries in each group and the average 2003 shares of groups in aggregate PPP-valued GDP, total exports of goods and services, and population.

Table A.

Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2003¹

(Percent of total for group or world)

¹The GDP shares are based on the purchasing-power-parity (PPP) valuation of country GDPs. The number of countries comprising each group reflects those for which data are included in the group aggregates.

Table A.

Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2003¹

(Percent of total for group or world)

			Number of Countries	GDP				Exports of Goods and Services				Population
			Advanced economies		World		Advanced economies		World		Advanced economies		World
Advanced economies			29		100.0		55.5		100.0		73.4		100.0		15.4
United States					38.0		21.1		15.1		11.1		30.4		4.7
Euro area			12		28.6		15.9		43.6		32.0		32.2		5.0
	Germany				8.1		4.5		12.9		9.5		8.6		1.3
	France				5.8		3.2		6.8		5.0		6.4		1.0
	Italy				5.5		3.0		5.4		4.0		6.0		0.9
	Spain				3.2		1.8		3.5		2.6		4.3		0.7
Japan					12.6		7.0		7.8		5.7		13.3		2.1
United Kingdom					5.7		3.2		6.7		4.9		6.2		1.0
Canada					3.5		1.9		4.9		3.6		3.3		0.5
Other advanced economies			13		11.7		6.5		21.9		16.1		14.6		2.2
Memorandum
Major advanced economies			7		79.1		43.9		59.7		43.8		74.3		11.4
Newly industrialized Asian economies			4		5.9		3.3		12.7		9.3		8.6		1.3
			Other emerging market and developing economies		World		Other emerging market and developing economies		World		Other emerging market and developing economies		World
Other emerging market and
	developing countries		146		100.0		44.5		100.0		26.6		100.0		84.6
Regional groups
Africa			48		7.3		3.2		7.9		2.1		14.6		12.4
	Sub-Sahara		45		5.5		2.5		5.8		1.5		13.3		11.2
		Excluding Nigeria and South Africa	43		2.9		1.3		2.8		0.7		9.7		8.2
Central and eastern Europe			15		7.5		3.3		15.0		4.0		3.5		3.0
Commonwealth of Independent States			13		8.2		3.7		9.1		2.4		5.3		4.5
	Russia				5.7		2.6		6.2		1.7		2.7		2.3
Developing Asia			23		53.5		23.8		38.8		10.3		61.9		52.4
	China				28.3		12.6		19.8		5.3		24.6		20.9
	India				12.9		5.7		3.4		0.9		20.3		17.2
	Excluding China and India		21		12.4		5.5		15.6		4.2		17.0		14.3
Middle East			14		6.3		2.8		13.7		3.6		4.7		4.0
Western Hemisphere			33		17.2		7.6		15.6		4.1		9.9		8.4
	Brazil				6.2		2.8		3.4		0.9		3.3		2.8
	Mexico				4.1		1.8		4.8		1.3		1.9		1.6
Analytical groups
	By source of export earnings
	Fuel		19		7.2		3.2		16.5		4.4		7.3		6.1
	Nonfuel		127		92.8		41.3		83.5		22.2		92.7		78.5
		of which, primary products	29		2.6		1.2		2.6		0.7		7.1		6.0
	By external financing source
	Net debtor countries		129		59.6		26.5		59.5		15.8		69.2		58.5
		of which, official financing	54		10.4		4.6		8.5		2.3		23.7		20.0
	Net debtor countries
		by debt-servicing experience
	Countries with arrears and/or
		rescheduling during 1997–2001	55		18.4		8.2		15.7		4.2		27.1		22.9
Other groups
Heavily indebted poor countries			36		2.8		1.2		1.9		0.5		9.9		8.4
Middle East and north Africa			20		8.4		3.7		15.9		4.2		6.8		5.7

¹The GDP shares are based on the purchasing-power-parity (PPP) valuation of country GDPs. The number of countries comprising each group reflects those for which data are included in the group aggregates.

View Table

Table A.

Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2003¹

(Percent of total for group or world)

			Number of Countries	GDP				Exports of Goods and Services				Population
			Advanced economies		World		Advanced economies		World		Advanced economies		World
Advanced economies			29		100.0		55.5		100.0		73.4		100.0		15.4
United States					38.0		21.1		15.1		11.1		30.4		4.7
Euro area			12		28.6		15.9		43.6		32.0		32.2		5.0
	Germany				8.1		4.5		12.9		9.5		8.6		1.3
	France				5.8		3.2		6.8		5.0		6.4		1.0
	Italy				5.5		3.0		5.4		4.0		6.0		0.9
	Spain				3.2		1.8		3.5		2.6		4.3		0.7
Japan					12.6		7.0		7.8		5.7		13.3		2.1
United Kingdom					5.7		3.2		6.7		4.9		6.2		1.0
Canada					3.5		1.9		4.9		3.6		3.3		0.5
Other advanced economies			13		11.7		6.5		21.9		16.1		14.6		2.2
Memorandum
Major advanced economies			7		79.1		43.9		59.7		43.8		74.3		11.4
Newly industrialized Asian economies			4		5.9		3.3		12.7		9.3		8.6		1.3
			Other emerging market and developing economies		World		Other emerging market and developing economies		World		Other emerging market and developing economies		World
Other emerging market and
	developing countries		146		100.0		44.5		100.0		26.6		100.0		84.6
Regional groups
Africa			48		7.3		3.2		7.9		2.1		14.6		12.4
	Sub-Sahara		45		5.5		2.5		5.8		1.5		13.3		11.2
		Excluding Nigeria and South Africa	43		2.9		1.3		2.8		0.7		9.7		8.2
Central and eastern Europe			15		7.5		3.3		15.0		4.0		3.5		3.0
Commonwealth of Independent States			13		8.2		3.7		9.1		2.4		5.3		4.5
	Russia				5.7		2.6		6.2		1.7		2.7		2.3
Developing Asia			23		53.5		23.8		38.8		10.3		61.9		52.4
	China				28.3		12.6		19.8		5.3		24.6		20.9
	India				12.9		5.7		3.4		0.9		20.3		17.2
	Excluding China and India		21		12.4		5.5		15.6		4.2		17.0		14.3
Middle East			14		6.3		2.8		13.7		3.6		4.7		4.0
Western Hemisphere			33		17.2		7.6		15.6		4.1		9.9		8.4
	Brazil				6.2		2.8		3.4		0.9		3.3		2.8
	Mexico				4.1		1.8		4.8		1.3		1.9		1.6
Analytical groups
	By source of export earnings
	Fuel		19		7.2		3.2		16.5		4.4		7.3		6.1
	Nonfuel		127		92.8		41.3		83.5		22.2		92.7		78.5
		of which, primary products	29		2.6		1.2		2.6		0.7		7.1		6.0
	By external financing source
	Net debtor countries		129		59.6		26.5		59.5		15.8		69.2		58.5
		of which, official financing	54		10.4		4.6		8.5		2.3		23.7		20.0
	Net debtor countries
		by debt-servicing experience
	Countries with arrears and/or
		rescheduling during 1997–2001	55		18.4		8.2		15.7		4.2		27.1		22.9
Other groups
Heavily indebted poor countries			36		2.8		1.2		1.9		0.5		9.9		8.4
Middle East and north Africa			20		8.4		3.7		15.9		4.2		6.8		5.7

¹The GDP shares are based on the purchasing-power-parity (PPP) valuation of country GDPs. The number of countries comprising each group reflects those for which data are included in the group aggregates.

General Features and Composition of Groups in the World Economic Outlook Classification

Advanced Economies

The 29 advanced economies are listed in Table B. The seven largest in terms of GDP—the United States, Japan, Germany, France, Italy, the United Kingdom, and Canada—constitute the subgroup of major advanced economies, often referred to as the Group of Seven (G-7) countries. The euro area (12 countries) and the newly industrialized Asian economies are also distinguished as subgroups. Composite data shown in the tables for the euro area cover the current members for all years, even though the membership has increased over time.

Table B.

Advanced Economies by Subgroup

¹On July 1, 1997, Hong Kong was returned to the People’s Republic of China and became a Special Administrative Region of China.

Table B.

Advanced Economies by Subgroup

		Other Subgroups
Major Currency Areas	Euro area		Newly industrialized Asian economies	Major advanced economies	Other advanced economies
United States	Austria	Ireland	Hong Kong SAR1	Canada	Australia	Korea
Euro area	Belgium	Italy	Korea	France	Cyprus	New Zealand
Japan	Finland	Luxembourg	Singapore	Germany	Denmark	Norway
	France	Netherlands	Taiwan Province	Italy	Hong Kong SAR1	Singapore
	Germany	Portugal	of China	Japan	Iceland	Sweden
	Greece	Spain		United Kingdom	Israel	Switzerland
				United States		Taiwan Province
						of China

¹On July 1, 1997, Hong Kong was returned to the People’s Republic of China and became a Special Administrative Region of China.

View Table

Table B.

Advanced Economies by Subgroup

		Other Subgroups
Major Currency Areas	Euro area		Newly industrialized Asian economies	Major advanced economies	Other advanced economies
United States	Austria	Ireland	Hong Kong SAR1	Canada	Australia	Korea
Euro area	Belgium	Italy	Korea	France	Cyprus	New Zealand
Japan	Finland	Luxembourg	Singapore	Germany	Denmark	Norway
	France	Netherlands	Taiwan Province	Italy	Hong Kong SAR1	Singapore
	Germany	Portugal	of China	Japan	Iceland	Sweden
	Greece	Spain		United Kingdom	Israel	Switzerland
				United States		Taiwan Province
						of China

¹On July 1, 1997, Hong Kong was returned to the People’s Republic of China and became a Special Administrative Region of China.

Table C.

European Union

Table C.

European Union

Austria	France	Latvia	Portugal
Belgium	Germany	Lithuania	Slovak Republic
Cyprus	Greece	Luxembourg	Slovenia
Czech Republic	Hungary	Malta	Spain
Denmark	Ireland	Netherlands	Sweden
Estonia	Italy	Poland	United Kingdom
Finland

View Table

Table C.

European Union

Austria	France	Latvia	Portugal
Belgium	Germany	Lithuania	Slovak Republic
Cyprus	Greece	Luxembourg	Slovenia
Czech Republic	Hungary	Malta	Spain
Denmark	Ireland	Netherlands	Sweden
Estonia	Italy	Poland	United Kingdom
Finland

In 1991 and subsequent years, data for Germany refer to west Germany and the eastern Länder (i.e., the former German Democratic Republic). Before 1991, economic data are not available on a unified basis or in a consistent manner. Hence, in tables featuring data expressed as annual percent change, these apply to west Germany in years up to and including 1991, but to unified Germany from 1992 onward. In general, data on national accounts and domestic economic and financial activity through 1990 cover west Germany only, whereas data for the central government and balance of payments apply to west Germany through June 1990 and to unified Germany thereafter.

Other Emerging Market and Developing Countries

The group of other emerging market and developing countries (146 countries) includes all countries that are not classified as advanced economies.

The regional breakdowns of other emerging market and developing countries—Africa, central and eastern Europe, Commonwealth of Independent States, developing Asia, Middle East, and Western Hemisphere—largely conform to the regional breakdowns in the IMF’s International Financial Statistics. In both classifications, Egypt and the Libyan Arab Jamahiriya are included in the Middle East region rather than in Africa. Three additional regional groupings—two of them constituting part of Africa and one a subgroup of Asia—are included in the World Economic Outlook because of their analytical significance. These are sub-Sahara, sub-Sahara excluding Nigeria and South Africa, and Asia excluding China and India.

Other emerging market and developing countries are also classified according to analytical criteria and into other groups. The analytical criteria reflect countries’ composition of export earnings and other income from abroad, a distinction between net creditor and net debtor countries, and, for the net debtor countries, financial criteria based on external financing source and experience with external debt servicing. Included as “other groups” are the heavily indebted poor countries (HIPCs), and Middle East and north Africa (MENA). The detailed composition of other emerging market and developing countries in the regional, analytical, and other groups is shown in Tables D through F.

Table D.

Other Emerging Market and Developing Countries by Region and Main Source of Export Earnings

Table D.

Other Emerging Market and Developing Countries by Region and Main Source of Export Earnings

		Fuel	Nonfuel, of Which Primary Products
Africa
Sub-Sahara		Angola	Botswana
		Congo, Rep. of	Burkina Faso
		Equatorial Guinea	Burundi
		Gabon	Chad
		Nigeria	Congo, Dem. Rep. of
			Côte d’Ivoire
			Ethiopia
			Ghana
			Guinea
			Guinea-Bissau
			Mali
			Mauritania
			Namibia
			Niger
			Rwanda
			Sierra Leone
			Togo
			Uganda
			Zambia
			Zimbabwe
North Africa		Algeria
Commonwealth
	of Independent
	States	Azerbaijan	Tajikistan
		Turkemenistan	Uzbekistan
Developing Asia			Papua New Guinea
		Solomon Islands
Middle East		Bahrain
		Iran, I.R. of
		Iraq
		Kuwait
		Libya
		Oman
		Qatar
		Saudi Arabia
		United Arab Emirates
		Yemen
Western
	Hemisphere	Venezuela	Bolivia
			Chile
			Guyana

View Table

Table D.

Other Emerging Market and Developing Countries by Region and Main Source of Export Earnings

		Fuel	Nonfuel, of Which Primary Products
Africa
Sub-Sahara		Angola	Botswana
		Congo, Rep. of	Burkina Faso
		Equatorial Guinea	Burundi
		Gabon	Chad
		Nigeria	Congo, Dem. Rep. of
			Côte d’Ivoire
			Ethiopia
			Ghana
			Guinea
			Guinea-Bissau
			Mali
			Mauritania
			Namibia
			Niger
			Rwanda
			Sierra Leone
			Togo
			Uganda
			Zambia
			Zimbabwe
North Africa		Algeria
Commonwealth
	of Independent
	States	Azerbaijan	Tajikistan
		Turkemenistan	Uzbekistan
Developing Asia			Papua New Guinea
		Solomon Islands
Middle East		Bahrain
		Iran, I.R. of
		Iraq
		Kuwait
		Libya
		Oman
		Qatar
		Saudi Arabia
		United Arab Emirates
		Yemen
Western
	Hemisphere	Venezuela	Bolivia
			Chile
			Guyana

Table E.

Other Emerging Market and Developing Countries by Region and Net External Position

¹Star instead of dot indicates that the net debtor’s main external finance source is official financing.

²Mongolia, which is not a member of the Commonwealth of Independent States, is included in this group for reasons of geography and simi-latiries in economic structure.

Table E.

Other Emerging Market and Developing Countries by Region and Net External Position

Countries	Net Creditor	Net Debtor1	Countries	Net Creditor	Net Debtor1
Africa			Croatia		•
Sub-Sahara			Czech Republic		•
Angola		•	Estonia		•
Benin		*	Hungary		•
Botswana	•		Latvia		•
Burkina Faso		*	Lithuania		•
Burundi		*	Macedonia, FYR	•
Cameroon		*	Malta		•
Cape Verde		•	Poland		•
Central African Republic		*
Chad		*	Romania		•
			Serbia and Montenegro		*
Comoros		*	Slovak Republic		•
Congo, Dem. Rep. of		*
Congo, Rep. of		*	Slovenia	•
Côte d’Ivoire		•	Turkey	•
Djibouti		*	Commonwealth of2
Equatorial Guinea		•	Independent States2
Eritrea		*	Armenia		•
Ethiopia		*	Azerbaijan		•
Gabon		*	Belarus		•
Gambia, The		•	Georgia		*
Ghana		*	Kazakhstan		•
Guinea		*	Kyrgyz Republic		*
Guinea-Bissau		*	Moldova		•
Kenya		•	Mongolia		*
Lesotho		•	Russia	•
Madagascar		*	Tajikistan		*
Malawi		*	Turkmenistan	•
Mali		*	Ukraine		•
Mauritania		*	Uzbekistan		•
Mauritius		•	Developing Asia
Mozambique, Rep. of		*	Bangladesh		*
Namibia	•		Bhutan		*
Niger		*	Brunei	•
Nigeria		*	Cambodia		*
Rwanda		*	China		•
São Tomé and Príncipe		*	Fiji		*
Senegal		•
			India
Seychelles		•	Indonesia		*
Sierra Leone		•	Kiribati	•
South Africa		•	Lao PDR		*
Sudan		•	Malaysia		•
Swaziland		•	Maldivs		•
Tanzania		•
Togo		*	Myanmar		*
Uganda Zambia		•	Nepal		*
Zimbabwe		*	Papua New Guinea		*
North Africa			Philippines		•
Algeria	•		Samoa		•
Morocco		•	Solomon Islands		*
Tunisia		•	Sri Lanka		•
Central and eastern Europe			Thailand		•
Albania		*	Tonga		*
Bosnia and Herzegovina		*	Vanuatu		*
Bulgaria	•		Vietnam		*
Middle East			Costa Rica		•
Bahrain		•	Dominica		•
Egypt		•	Dominican Republic		•
Iran, I.R. of	•		Equador		*
Iraq		•	El Salvador		*
Jordan		*	Grenada		*
Kuwait	•		Guatemala		•
Lebanon		•	Guyana		•
Libya	•		Haiti		*
Oman		•
			Honduras		*
Qator	•
Saudi Arabia	•		Jamaica		•
Syrian Arab Republic		•
United Arab Emirates	•		Netherlands Antilles		•
Yemen		*	Panama		•
Western Hemisphere
Antigua and Barbuda		•	Paraguay		•
Argentina		•	St. Kitts and Nevis		•
Bahamas, The		•
Barbados		•	St. Lucia		*
Belize		•	St. Vincent and the Grenadines		•
Bolivia		•	Suriname		•
Brazil		•	Trinidad and Tobago		•
Chile		•	Uruguay		•
Colombia		•	Venezuela		•

¹Star instead of dot indicates that the net debtor’s main external finance source is official financing.

²Mongolia, which is not a member of the Commonwealth of Independent States, is included in this group for reasons of geography and simi-latiries in economic structure.

View Table

Table E.

Other Emerging Market and Developing Countries by Region and Net External Position

Countries	Net Creditor	Net Debtor1	Countries	Net Creditor	Net Debtor1
Africa			Croatia		•
Sub-Sahara			Czech Republic		•
Angola		•	Estonia		•
Benin		*	Hungary		•
Botswana	•		Latvia		•
Burkina Faso		*	Lithuania		•
Burundi		*	Macedonia, FYR	•
Cameroon		*	Malta		•
Cape Verde		•	Poland		•
Central African Republic		*
Chad		*	Romania		•
			Serbia and Montenegro		*
Comoros		*	Slovak Republic		•
Congo, Dem. Rep. of		*
Congo, Rep. of		*	Slovenia	•
Côte d’Ivoire		•	Turkey	•
Djibouti		*	Commonwealth of2
Equatorial Guinea		•	Independent States2
Eritrea		*	Armenia		•
Ethiopia		*	Azerbaijan		•
Gabon		*	Belarus		•
Gambia, The		•	Georgia		*
Ghana		*	Kazakhstan		•
Guinea		*	Kyrgyz Republic		*
Guinea-Bissau		*	Moldova		•
Kenya		•	Mongolia		*
Lesotho		•	Russia	•
Madagascar		*	Tajikistan		*
Malawi		*	Turkmenistan	•
Mali		*	Ukraine		•
Mauritania		*	Uzbekistan		•
Mauritius		•	Developing Asia
Mozambique, Rep. of		*	Bangladesh		*
Namibia	•		Bhutan		*
Niger		*	Brunei	•
Nigeria		*	Cambodia		*
Rwanda		*	China		•
São Tomé and Príncipe		*	Fiji		*
Senegal		•
			India
Seychelles		•	Indonesia		*
Sierra Leone		•	Kiribati	•
South Africa		•	Lao PDR		*
Sudan		•	Malaysia		•
Swaziland		•	Maldivs		•
Tanzania		•
Togo		*	Myanmar		*
Uganda Zambia		•	Nepal		*
Zimbabwe		*	Papua New Guinea		*
North Africa			Philippines		•
Algeria	•		Samoa		•
Morocco		•	Solomon Islands		*
Tunisia		•	Sri Lanka		•
Central and eastern Europe			Thailand		•
Albania		*	Tonga		*
Bosnia and Herzegovina		*	Vanuatu		*
Bulgaria	•		Vietnam		*
Middle East			Costa Rica		•
Bahrain		•	Dominica		•
Egypt		•	Dominican Republic		•
Iran, I.R. of	•		Equador		*
Iraq		•	El Salvador		*
Jordan		*	Grenada		*
Kuwait	•		Guatemala		•
Lebanon		•	Guyana		•
Libya	•		Haiti		*
Oman		•
			Honduras		*
Qator	•
Saudi Arabia	•		Jamaica		•
Syrian Arab Republic		•
United Arab Emirates	•		Netherlands Antilles		•
Yemen		*	Panama		•
Western Hemisphere
Antigua and Barbuda		•	Paraguay		•
Argentina		•	St. Kitts and Nevis		•
Bahamas, The		•
Barbados		•	St. Lucia		*
Belize		•	St. Vincent and the Grenadines		•
Bolivia		•	Suriname		•
Brazil		•	Trinidad and Tobago		•
Chile		•	Uruguay		•
Colombia		•	Venezuela		•

¹Star instead of dot indicates that the net debtor’s main external finance source is official financing.

²Mongolia, which is not a member of the Commonwealth of Independent States, is included in this group for reasons of geography and simi-latiries in economic structure.

Table F.

Other Developing Country Groups

Table F.

Other Developing Country Groups

Countries	Heavily Indebted Poor Countries	Middle East and North Africa	Countries	Heavily Indebted Poor Countries	Middle East and North Africa
Africa			Togo	•
Sub-Sahara			Uganda	•
Benin	•		Zambia	•
Burkina Faso	•		North Africa
Burundi	•		Algeria		•
Cameroon	•		Morocco		•
Central African Republic	•		Tunisia		•
Chad	•		Developing Asia
Comoros			Lao PDR	•
Congo, Dem. Rep. of	•		Myanmar	•
Congo, Rep. of	•		Middle East
Côte d’lvoire	•		Bahrain		•
Ethiopia	•		Egypt		•
Gambia, The	•		Iran, I.R. of		•
Ghana	•		Iraq		•
Guinea	•		Jordan		•
Guinea-Bissau	•		Kuwait		•
			Lebanon		•
Madagascar	•		Libya		•
Malawi	•		Oman		•
Mali	•		Qatar		•
Mauritania	•	•	Saudi Arabia		•
Mozambique, Rep. of	•		Syrian Arab Republic		•
Niger	•		United Arab Emirates		•
Rwanda	•		Yemen		•
São lomé and principle			Western Hemisphere Bolivia
Sierra Leone	•
			Guyana	•
Sudan	•	•	Honduras	•
Tanzania	•		Nicaragua	•

View Table

Table F.

Other Developing Country Groups

Countries	Heavily Indebted Poor Countries	Middle East and North Africa	Countries	Heavily Indebted Poor Countries	Middle East and North Africa
Africa			Togo	•
Sub-Sahara			Uganda	•
Benin	•		Zambia	•
Burkina Faso	•		North Africa
Burundi	•		Algeria		•
Cameroon	•		Morocco		•
Central African Republic	•		Tunisia		•
Chad	•		Developing Asia
Comoros			Lao PDR	•
Congo, Dem. Rep. of	•		Myanmar	•
Congo, Rep. of	•		Middle East
Côte d’lvoire	•		Bahrain		•
Ethiopia	•		Egypt		•
Gambia, The	•		Iran, I.R. of		•
Ghana	•		Iraq		•
Guinea	•		Jordan		•
Guinea-Bissau	•		Kuwait		•
			Lebanon		•
Madagascar	•		Libya		•
Malawi	•		Oman		•
Mali	•		Qatar		•
Mauritania	•	•	Saudi Arabia		•
Mozambique, Rep. of	•		Syrian Arab Republic		•
Niger	•		United Arab Emirates		•
Rwanda	•		Yemen		•
São lomé and principle			Western Hemisphere Bolivia
Sierra Leone	•
			Guyana	•
Sudan	•	•	Honduras	•
Tanzania	•		Nicaragua	•

The first analytical criterion, by source of export earnings, distinguishes between categories: fuel (Standard International Trade Classification— SITC 3) and nonfuel and then focuses on non-fuel primary products (SITC 0, 1, 2, 4, and 68).

The financial criteria focus on net creditor and net debtor countries. Net debtor countries are further differentiated on the basis of two additional financial criteria: by official external financing and by experience with debt servicing.⁵

The other groups of developing countries constitute the HIPCs and MENA countries. The first group comprises the countries considered by the IMF and the World Bank for their debt initiative, known as the HIPC Initiative.⁶ Middle East and north Africa, also referred to as the MENA countries, is a World Economic Outlook group, whose composition straddles the Africa and Middle East regions. It is defined as the Arab League countries plus the Islamic Republic of Iran.