Front Matter

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International Monetary Fund. Research Dept.
Published Date:
April 2019
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Growth Slowdown, Precarious Recovery

2019 APR

©2019 International Monetary Fund

Cover and Design: IMF CSF Creative Solutions Division

Composition: AGS, An RR Donnelley Company

Cataloging-in-Publication Data

Joint Bank-Fund Library

Names: International Monetary Fund.

Title: World economic outlook (International Monetary Fund)

Other titles: WEO | Occasional paper (International Monetary Fund) | World economic and financial surveys.

Description: Washington, DC : International Monetary Fund, 1980- | Semiannual | Some issues also have thematic titles. | Began with issue for May 1980. | 1981–1984: Occasional paper / International Monetary Fund, 0251–6365 | 1986-: World economic and financial surveys, 0256–6877.

Identifiers: ISSN 0256–6877 (print) | ISSN 1564–5215 (online)

Subjects: LCSH: Economic development—Periodicals. | International economic relations— Periodicals. | Debts, External—Periodicals. | Balance of payments—Periodicals. | International finance—Periodicals. | Economic forecasting—Periodicals.

Classification: LCC HC10.W79


ISBN 978-1-48439-748-0 (English Paper)

978-1-49830-610-2 (English ePub)

978-1-49830-611-9 (English Mobi)

978-1-49830-611-9 (English PDF)

The World Economic Outlook (WEO) is a survey by the IMF staff published twice a year, in the spring and fall. The WEO is prepared by the IMF staff and has benefited from comments and suggestions by Executive Directors following their discussion of the report on March 21, 2019. The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Directors or their national authorities.

Recommended citation: International Monetary Fund. 2018. World Economic Outlook: Growth Slowdown, Precarious Recovery. Washington, DC, April.

Publication orders may be placed online, by fax, or through the mail:

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Tel.: (202) 623–7430 Fax: (202) 623–7201



Assumptions and Conventions

A number of assumptions have been adopted for the projections presented in the World Economic Outlook (WEO). It has been assumed that real effective exchange rates remained constant at their average levels during January 14 to February 11, 2019, except for those for the currencies participating in the European exchange rate mechanism II (ERM II), which are assumed to have remained constant in nominal terms relative to the euro; that established policies of national authorities will be maintained (for specific assumptions about fiscal and monetary policies for selected economies, see Box A1 in the Statistical Appendix); that the average price of oil will be $59.16 a barrel in 2019 and $59.02 a barrel in 2020 and will remain unchanged in real terms over the medium term; that the six-month London interbank offered rate (LIBOR) on US dollar deposits will average 3.2 percent in 2019 and 3.8 percent in 2020; that the three-month euro deposit rate will average –0.3 percent in 2019 and –0.2 in 2020; and that the six-month Japanese yen deposit rate will yield, on average, 0.0 percent in 2019 and 2020, respectively. These are, of course, working hypotheses rather than forecasts, and the uncertainties surrounding them add to the margin of error that would, in any event, be involved in the projections. The estimates and projections are based on statistical information available through March 29, 2019.

The following conventions are used throughout the WEO:

… to indicate that data are not available or not applicable;

– between years or months (for example, 2018–19 or January–June) to indicate the years or months covered, including the beginning and ending years or months; and

/ between years or months (for example, 2018/19) to indicate a fiscal or financial year.

“Billion” means a thousand million; “trillion” means a thousand billion.

“Basis points” refers to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

Data refer to calendar years, except in the case of a few countries that use fiscal years. Please refer to Table F in the Statistical Appendix, which lists the economies with exceptional reporting periods for national accounts and government finance data for each country.

For some countries, the figures for 2018 and earlier are based on estimates rather than actual outturns. Please refer to Table G in the Statistical Appendix, which lists the latest actual outturns for the indicators in the national accounts, prices, government finance, and balance of payments indicators for each country.

What is new in this publication:

  • FYR Macedonia is now called North Macedonia.

  • In February 2019, Zimbabwe adopted a new local currency unit, the RTGS dollar, which has become the official unit of account. Efforts are underway to revise and update all national accounts series to the new RTGS dollar. Current data are based on IMF staff estimates of price and exchange rate developments in US (and RTGS) dollars. Staff estimates of US dollar values may differ from authorities’ estimates.

In the tables and figures, the following conventions apply:

  • If no source is listed on tables and figures, data are drawn from the WEO database.

  • When countries are not listed alphabetically, they are ordered on the basis of economic size.

  • Minor discrepancies between sums of constituent figures and totals shown reflect rounding.

As used in this report, the terms “country” and “economy” do not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

Composite data are provided for various groups of countries organized according to economic characteristics or region. Unless noted otherwise, country group composites represent calculations based on 90 percent or more of the weighted group data.

The boundaries, colors, denominations, and any other information shown on the maps do not imply, on the part of the IMF, any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.

Further Information

Corrections and Revisions

The data and analysis appearing in the World Economic Outlook (WEO) are compiled by the IMF staff at the time of publication. Every effort is made to ensure their timeliness, accuracy, and completeness. When errors are discovered, corrections and revisions are incorporated into the digital editions available from the IMF website and on the IMF eLibrary (see below). All substantive changes are listed in the online table of contents.

Print and Digital Editions


Print copies of this WEO can be ordered from the IMF bookstore at


Multiple digital editions of the WEO, including ePub, enhanced PDF, Mobi, and HTML, are available on the IMF eLibrary at

Download a free PDF of the report and data sets for each of the charts therein from the IMF website at or scan the QR code below to access the World Economic Outlook web page directly:

Copyright and Reuse

Information on the terms and conditions for reusing the contents of this publication are at


This version of the World Economic Outlook (WEO) is available in full through the IMF eLibrary ( and the IMF website ( Accompanying the publication on the IMF website is a larger compilation of data from the WEO database than is included in the report itself, including files containing the series most frequently requested by readers. These files may be downloaded for use in a variety of software packages.

The data appearing in the WEO are compiled by the IMF staff at the time of the WEO exercises. The historical data and projections are based on the information gathered by the IMF country desk officers in the context of their missions to IMF member countries and through their ongoing analysis of the evolving situation in each country. Historical data are updated on a continual basis as more information becomes available, and structural breaks in data are often adjusted to produce smooth series with the use of splicing and other techniques. IMF staff estimates continue to serve as proxies for historical series when complete information is unavailable. As a result, WEO data can differ from those in other sources with official data, including the IMF’s International Financial Statistics.

The WEO data and metadata provided are “as is” and “as available,” and every effort is made to ensure their timeliness, accuracy, and completeness, but these cannot be guaranteed. When errors are discovered, there is a concerted effort to correct them as appropriate and feasible. Corrections and revisions made after publication are incorporated into the electronic editions available from the IMF eLibrary ( and on the IMF website ( All substantive changes are listed in detail in the online tables of contents.

For details on the terms and conditions for usage of the WEO database, please refer to the IMF Copyright and Usage website (

Inquiries about the content of the WEO and the WEO database should be sent by mail, fax, or online forum (telephone inquiries cannot be accepted):

World Economic Studies Division

Research Department

International Monetary Fund

700 19th Street, NW

Washington, DC 20431, USA

Fax: (202) 623–6343

Online Forum:


The analysis and projections contained in the World Economic Outlook are integral elements of the IMF’s surveillance of economic developments and policies in its member countries, of developments in international financial markets, and of the global economic system. The survey of prospects and policies is the product of a comprehensive interdepartmental review of world economic developments, which draws primarily on information the IMF staff gathers through its consultations with member countries. These consultations are carried out in particular by the IMF’s area departments—namely, the African Department, Asia and Pacific Department, European Department, Middle East and Central Asia Department, and Western Hemisphere Department—together with the Strategy, Policy, and Review Department; the Monetary and Capital Markets Department; and the Fiscal Affairs Department.

The analysis in this report was coordinated in the Research Department under the general direction of Gita Gopinath, Economic Counsellor and Director of Research. The project was directed by Gian Maria Milesi-Ferretti, Deputy Director, Research Department and Oya Celasun, Division Chief, Research Department; and Helge Berger, Assistant Director, Research Department and Head of the IMF’s Spillover Task Force.

The primary contributors to this report were Christian Bogmans, Wenjie Chen, Federico Diez, Allan Dizioli, Romain Duval, Johannes Eugster, Benjamin Hunt, Florence Jaumotte, Callum Jones, Toh Kuan, Weicheng Lian, Margaux MacDonald, Akito Matsumoto, Malhar Nabar, Natalija Novta, Andrea Pescatori, Roberto Piazza, Rafael Portillo, Evgenia Pugacheva, Carolina Villegas-Sánchez, Yannick Timmer, and Petia Topalova.

Other contributors include Michal Andrle, Gavin Asdorian, Carlos Caceres, Luisa Calixto, Diego Cerdeiro, Kyun Suk Chang, Mai Chi Dao, Pankhuri Dutt, Angela Espiritu, Rebecca Eyassu, Jiayue Fan, Chanpheng Fizzarotti, Swarnali Ahmed Hannan, Mandy Hemmati, Ava Yeabin Hong, Christopher Johns, Lama Kiyasseh, Zsóka Kóczán, Jungjin Lee, Nan Li, Rui Mano, Sergii Meleshchuk, Cynthia Nyanchama Nyakeri, Emory Oakes, Ilse Peirtsegaele, Adrian Robles Villamil, Marika Santoro, Susie Xiaohui Sun, Ariana Tayebi, Nicholas Tong, Menexenia Tsaroucha, Shan Wang, Julia Xueliang Wang, Jilun Xing, Yuan Zeng, Qiaoqiao Zhang, Huiyuan Zhao, Caroline Chenqi Zhou, and Jillian Zirnhelt.

Joseph Procopio from the Communications Department led the editorial team for the report, with production and editorial support from Christine Ebrahimzadeh, and editorial assistance from James Unwin, Lucy Scott Morales, and Vector Talent Resources.

The analysis has benefited from comments and suggestions by staff members from other IMF departments, as well as by Executive Directors following their discussion of the report on March 21, 2019. However, both projections and policy considerations are those of the IMF staff and should not be attributed to Executive Directors or to their national authorities.


One year ago economic activity was accelerating in almost all regions of the world and the global economy was projected to grow at 3.9 percent in 2018 and 2019. One year later, much has changed: the escalation of US–China trade tensions, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, tighter credit policies in China, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion, especially in the second half of 2018. With this weakness expected to persist into the first half of 2019, the World Economic Outlook (WEO) projects a decline in growth in 2019 for 70 percent of the global economy. Global growth, which peaked at close to 4 percent in 2017, softened to 3.6 percent in 2018, and is projected to decline further to 3.3 percent in 2019. Although a 3.3 percent global expansion is still reasonable, the outlook for many countries is very challenging, with considerable uncertainties in the short term, especially as advanced economy growth rates converge toward their modest long-term potential.

While 2019 started out on a weak footing, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies, made possible by the absence of inflationary pressures despite closing output gaps. The US Federal Reserve, in response to rising global risks, paused interest rate increases and signaled no increases for the rest of the year. The European Central Bank, the Bank of Japan, and the Bank of England have all shifted to a more accommodative stance. China has ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs. Furthermore, the outlook for US–China trade tensions has improved as the prospects of a trade agreement take shape.

These policy responses have helped reverse the tightening of financial conditions to varying degrees across countries. Emerging markets have experienced a resumption in portfolio flows, a decline in sovereign borrowing costs, and a strengthening of their currencies relative to the dollar. While the improvement in financial markets has been rapid, those in the real economy have yet to materialize. Measures of industrial production and investment remain weak for most advanced and emerging economies, and global trade has yet to recover.

With improvements expected in the second half of 2019, global economic growth in 2020 is projected to return to 3.6 percent. This return is predicated on a rebound in Argentina and Turkey and some improvement in a set of other stressed emerging market and developing economies, and therefore subject to considerable uncertainty. Beyond 2020 growth will stabilize at around 3½ percent, bolstered mainly by growth in China and India and their increasing weights in world income. Growth in advanced economies will continue to slow gradually as the impact of US fiscal stimulus fades and growth tends toward the modest potential for the group, given ageing trends and low productivity growth. Growth in emerging market and developing economies will stabilize at around 5 percent, though with considerable variance between countries as subdued commodity prices and civil strife weaken prospects for some.

While the overall outlook remains benign, there are many downside risks. There is an uneasy truce on trade policy, as tensions could flare up again and play out in other areas (such as the auto industry) with large disruptions to global supply chains. Growth in China may surprise on the downside, and the risks surrounding Brexit remain heightened. In the face of significant financial vulnerabilities associated with large private and public sector debt in several countries, including sovereign-bank doom loop risks (for example, in Italy), there could be a rapid change in financial conditions owing to, for example, a risk-of episode or a no-deal Brexit.

With weak expansion projected for important parts of the world, a realization of these downside risks could dramatically worsen the outlook. This would take place at a time when conventional monetary and fiscal space is limited as a policy response. It is therefore imperative that costly policy mistakes are avoided. Policymakers need to work cooperatively to help ensure that policy uncertainty doesn’t weaken investment. Fiscal policy will need to manage trade-offs between supporting demand and ensuring that public debt remains on a sustainable path, and the optimal mix will depend on country-specific circumstances. Financial sector policies must address vulnerabilities proactively by deploying macroprudential tools. Low-income commodity exporters should diversify away from commodities given the subdued outlook for commodity prices. Monetary policy should remain data dependent, be well communicated, and ensure that inflation expectations remain anchored.

Across all economies, the imperative is to take actions that boost potential output, improve inclusiveness, and strengthen resilience. A social dialogue across all stakeholders to address inequality and political discontent will benefit economies. There is a need for greater multilateral cooperation to resolve trade conflicts, to address climate change and risks from cybersecurity, and to improve the effectiveness of international taxation.

This issue of the WEO also tackles three major developments that need to be addressed to enhance long-term growth. The first is rising inequality, the second is weak investment, and the third is rising protectionism in trade. Chapter 2 investigates the evolution of corporate market power (as measured by markups) and its ability to explain several macro phenomena, including weak investment and the declining labor shares that help fuel inequality. The finding is that the aggregate increase in markups since 2000 has been modest and, consequently, the implications for the macroeconomy relatively modest. There is, however, significant heterogeneity, with the aggregate increase driven mainly by a more substantial increase in markups by a small number of firms that are the more productive and innovative firms. The increase in aggregate market power therefore appears to be, as of now, less a phenomenon of poor competition and more one of winner-takes-most dynamics, where markups compensate in part for investment in intangible assets. However, going forward this market dominance could lead to unfair advantages that weaken market entry and competition and, more significantly, dampen investment and innovation. It is therefore important to cut barriers to market entry and reform and strengthen competition law to better align with the new economy.

Chapter 3 highlights the benefits for investment of reducing trade barriers. Over the past three decades, the relative price of machinery and equipment has fallen in all countries, driven both by higher productivity in the capital-goods-producing sector and increased trade integration. This decline has supported the rise in real investment rates in machinery and equipment, benefiting developing countries. Rising trade tensions could reverse these price declines and damage investment at a time when investment is already weak, which only further emphasizes the need to quickly resolve trade disagreements.

The final chapter of the WEO examines the link between bilateral trade tariffs and trade imbalances. US–China trade frictions have brought a focus on the question of whether bilateral trade imbalances can (or should) be addressed using bilateral trade measures. This chapter demonstrates that the link between the two is precarious. Bilateral trade balances since the mid-1990s have reflected mostly aggregate macro-economic forces known to determine aggregate trade balances at the country level and have had much less to do with bilateral tariffs. Targeting bilateral trade balances will likely only lead to trade diversion, with limited impact on country-level balances. The findings of this chapter help explain why, despite the tariff measures, the US trade deficit is the largest it has been since 2008. The chapter also establishes that the negative impact of tariffs on output is significantly higher today than in 1995 owing to the bigger role of global supply chains in world trade.

This is a delicate year for the global economy. If the downside risks do not materialize and the policy support put in place is effective, then global growth will return to 3.6 percent in 2020. If, however, any of the major risks materialize, then the expected recoveries in stressed economies, export-dependent economies, and highly indebted economies may not occur. In that case, policymakers will need to adjust. Depending on circumstances, this may require synchronized, country-specific policy stimulus across economies, complemented by accommodative monetary policy. Synchronization can make fiscal stimulus more effective through signaling effects that raise household and business confidence, and through the mitigation of leakages via imports. Finally, adequate resources for multilateral institutions remain essential to retain an effective global safety net, which would help stabilize the global economy.

Gita Gopinath

Economic Counsellor

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