The World Economic Outlook, published twice a year in English, French, Spanish, and Arabic, presents IMF staff economists analyses of global economic developments during the near and medium term. Chapters give an overview of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest. Annexes, boxes, charts, and an extensive statistical appendix augment the text.



A Survey by the Staff of the International Monetary Fund


Washington, DC

© 1993 International Monetary Fund

World economic outlook (International Monetary Fund)

World economic outlook: a survey by the staff of the International Monetary Fund.—1980– —Washington, D.C.: The Fund, 1980–

v.; 28 cm.—(1981–84: Occasional paper/International Monetary Fund ISSN 0251-6365)


Has occasional updates, 1984—

ISSN 0258-7440 = World economic and financial surveys

ISSN 0256-6877 = World economic outlook (Washington)

1. Economic history—1971- —Periodicals. I. International Monetary Fund. II. Series: Occasional paper (International Monetary Fund)

HC10.W7979 84-640155



Library of Congress 8507

Published biannually.

ISBN 9781557753403

The cover, charts, and interior of this publication were designed and produced by the IMF Graphics Section

Price: US$30.00

(US$20.00 to full-time faculty members and students at universities and colleges)

Please send orders to:

International Monetary Fund, Publication Services

700 19th Street, N.W., Washington, D.C. 20431, U.S.A.

Tel.: (202) 623-7430 Telefax: (202) 623-7201


  • Assumptions and Conventions

  • Preface

  • Chapter I. Overview

    • Industrial Countries

    • Developing Countries

    • Countries in Transition

  • Chapter II. World Economic Situation and Short-Term Prospects

    • Activity and Employment

    • Inflation and Commodity Prices

    • Foreign Exchange and Financial Markets

    • External Payments, Financing, and Debt

  • Chapter III. Recent Changes in the European Exchange Rate Mechanism

    • Factors Underlying the Exchange Market Tensions in Europe

    • Monetary Policy in the New Framework

    • Options for the Future

  • Chapter IV. The Critical Need for Fiscal Adjustment and Labor Market Reform in Industrial Countries

    • The Stance of Monetary Policies

    • Structural Budget Positions and Current Fiscal Policies

    • Requirements for Medium-Term Budgetary Sustainability

    • Unemployment, Trade, and Protectionism

  • Chapter V. Domestic and Foreign Saving in Developing Countries

    • Growth, Investment, and Productivity

    • Domestic Private and Public Saving

    • Capital Flows

    • Policy Response to Capital Inflows

    • Efficient Allocation of Capital Inflows

  • Chapter VI. Stabilization and Enterprise Reform in the Countries in Transition

    • Macroeconomic Stabilization and Renewed Growth in Central Europe

    • Macroeconomic Instability in the Former Soviet Union

    • Enterprise Privatization

    • Transformation of the Enterprise Sector

  • Boxes

    • Chapter II.

      • 1. India’s Economic Rebound

      • 2. Japan’s Trade Surplus

    • III.

      • 3. Chronology of Events in the Recent Crisis in the European Monetary System

    • IV.

      • 4. The Sustainability of Fiscal Policy

    • V.

      • 5. Is the Debt Crisis Over?

      • 6. Economic Performance and Financing Needs in Africa

    • VI.

      • 7. Stabilization and Economic Reform in the Baltic Countries

      • 8. Hyperinflation and Chronic Inflation

      • 9. The Treuhandanstalt

    • Annex II.

      • 10. Military Spending Data

  • Annexes.

    • I.

      • Structural Budget Indicators for the Major Industrial Countries

      • Fiscal Trends and the Concept of the Structural Budget Balance

      • Estimates of Structural Budget Balances

    • II.

      • Economic Benefits of Reducing Military Expenditure

      • Trends and Prospects

      • Economic Impact of Cuts in Military Expenditure

    • III.

      • Medium-Term Projections

      • Baseline Scenario for Industrial Countries

      • Baseline Scenario for Developing Countries

      • Alternative Scenario for Developing Countries

  • Tables

    • Chapter I.

      • 1. Major Industrial Countries: Actual and Structural Budget Positions for General Government

    • II.

      • 2. Overview of the World Economic Outlook Projections

      • 3. Industrial Countries: Real GDP and Consumer Prices

      • 4. Selected Developing Countries and Countries in Transition: Real GDP and Consumer Prices

    • III.

      • 5. European Countries: Convergence Indicators for 1993 and 1994

    • IV.

      • 6. Industrial Countries: General Government Financial Balances Including and Excluding Social Insurance

      • 7. United States: Estimates of the Federal Budget Balance

      • 8. Germany: Fiscal Indicators

      • 9. Major Industrial Countries: General Government Debt and Budget Balances

      • 10. Major Industrial Countries: Estimated Net Pension Liabilities—Present Value of Current and Future Rights and Future Contributions

      • 11. Major Industrial Countries: Gross Saving and Investment

    • V.

      • 12. Developing Countries: Economic Performance

      • 13. Developing Countries: Saving

      • 14. Developing Countries: Saving and Macroeconomic Stability

      • 15. Developing Countries: Capital Flows

      • 16. Developing Countries: Foreign Saving and Economic Performance

      • 17. Selected Developing Countries: Debt, Investment, and Growth

      • 18. Developing Countries: Illustrative Indicators of the Real Cost of Borrowing

    • VI.

      • 19. Countries in Transition: Real GDP

      • 20. Countries in Transition: General Government Budget Balances

      • 21. Russian Federation: State Subsidies in 1992

    • Tables Annex I.

      • 22. Major Industrial Countries: Potential Output Growth

      • 23. Major Industrial Countries: Revenue Elasticities and Lags in Corporate Tax Collection

      • 24. Major Industrial Countries: Cyclical Responsiveness of General Government Budget

      • 25. Major Industrial Countries: General Government Structural Budget Balances, Actual Budget Balances, and Output Gaps

    • II.

      • 26. World Military Spending

      • 27. Impact of a 20 Percent Cut in Worldwide Military Spending

      • 28. Present Value of Costs and Benefits of Reducing Military Spending in 1992

    • III.

      • 29. Industrial Countries: Indicators of Economic Performance

      • 30. Developing Countries: Indicators of Economic Performance

      • 31. Net Debtor Developing Countries: Indicators of Economic Performance

      • 32. Developing Countries: Alternative Projections Assuming Policy Slippages

    • Tables Box

      • 1. India: Key Economic Indicators

      • 2. Major Industrial Countries: Imports and Exports of Goods and Nonfactor Services

      • 3. Major Industrial Countries: Budget Targets to Achieve Three Debt Rules

      • 4. Selected Countries: Inflation

  • Charts

    • Chapter I.

      • 1. World Indicators

      • 2. Major Industrial Countries: Policy-Related Interest Rates and Ten-Year Government Bond Rates

    • II.

      • 3. Major Industrial Countries: Real GDP

      • 4. Major Industrial Countries: Output Gaps

      • 5. Developing Countries: Real GDP

      • 6. Consumer Prices and Commodity Prices

      • 7. Major Industrial Countries: Nominal and Real Effective Exchange Rates

      • 8. Major Industrial Countries: Short-Term Interest Rates

      • 9. Major Industrial Countries: Long-Term Interest Rates

      • 10. Developing Countries: Shares of Intraregional Trade in Total Trade

      • 11. Major Industrial Countries: Current Account Positions

      • 12. Developing Countries and Countries in Transition: Net External Financing Flows

      • 13. Developing Countries and Countries in Transition: External Debt and Debt Service

    • III.

      • 14. Selected European Countries: Real Bilateral Exchange Rates vis-à-vis the Deutsche Mark and Real Effective Exchange Rates

      • 15. Selected European Countries: Bilateral Exchange Rates vis-à-vis the Deutsche Mark

      • 16. European Countries: Divergences in Unemployment Trends

      • 17. Selected European Countries: Short-Term Interest Rates

      • 18. European Monetary System: Interest Rate Differentials vis-à-vis Germany

      • 19. Projected Deutsche Mark and French Franc Interest Rates Based on Futures Market Quotes

    • IV.

      • 20. United States: Monetary Indicators

      • 21. Japan: Monetary Indicators

      • 22. Germany: Monetary Indicators

      • 23. Major Industrial Countries: Actual and Structural General Government Budget Balances

      • 24. Industrial Countries: Unemployment

      • 25. Industrial Countries: Unemployment, Trade, and Productivity

    • V.

      • 26. Developing Countries: Real GDP Growth

      • 27. Developing Countries: Domestic Saving and Investment

      • 28. Developing Countries: Domestic and Foreign Saving

      • 29. Developing Countries: Private and Public Saving

      • 30. Developing Countries: Capital Flows

    • VI.

      • 31. Selected Central European Countries in Transition: Consumer Prices

      • 32. Selected Central European Countries in Transition: Nominal and Real Effective Exchange Rates

      • 33. Selected Countries of the Former Soviet Union: Consumer Prices

      • 34. Selected Countries of the Former Soviet Union: Nominal and Real Exchange Rates

    • Charts Annex I.

      • 35. Major Industrial Countries: General Government Fiscal Developments

    • II.

      • 36. Trends in Military Spending

      • 37. Regional Trends in Military Spending

    • Charts Box 2.

      • Japan: Real Effective Exchange Rate and Current Account Balance

    • 6.

      • Developing Countries: Export Volume and Terms of Trade

      • Developing Countries: External Debt and Debt Service

    • 8.

      • Selected Countries: Inflation and Output Growth Before and After Stabilization

  • Statistical Appendix

    • Assumptions

    • Conventions

    • Classification of Countries

    • List of Tables

      • Output (Tables A1-A7)

      • Inflation (Tables A8-A13)

      • Financial Policies (Tables A14-A20)

      • Foreign Trade (Tables A21-A25)

      • Current Account Transactions (Tables A26-A31)

      • External Financing (Tables A32-A36)

      • External Debt and Debt Service (Tables A37-A42)

      • Flow of Funds (Table A43)

  • List of Tables

    • Output

      • A1. Summary of World Output

      • A2. Industrial Countries: Real GDP and Total Domestic Demand

      • A3. Industrial Countries: Components of Real GDP

      • A4. Industrial Countries: Employment, Unemployment, and Real Per Capita GDP

      • A5. Developing Countries: Real GDP

      • A6. Developing Countries—By Country: Real GDP

      • A7. Countries in Transition: Real GDP

    • Inflation

      • A8. Summary of Inflation

      • A9. Industrial Countries: GDP Deflators and Consumer Prices

      • A10. Industrial Countries: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing

      • A11. Developing Countries: Consumer Prices

      • A12. Developing Countries—By Country: Consumer Prices

      • A13. Countries in Transition: Consumer Prices

    • Financial Policies

      • A14. Summary Financial Indicators

      • A15. Major Industrial Countries: Central Government Fiscal Balance and Impulse

      • A16. Major Industrial Countries: General Government Fiscal Balance and Impulse

      • A17. Industrial Countries: Monetary Aggregates

      • A18. Industrial Countries: Interest Rates

      • A19. Developing Countries: Central Government Fiscal Balance

      • A20. Developing Countries: Broad Money Aggregates

    • Foreign Trade

      • A21. Summary of World Trade Volume and Prices

      • A22. Industrial Countries: Export Volume, Import Volume, and Terms of Trade

      • A23. Developing Countries—By Region: Merchandise Trade

      • A24. Developing Countries—By Predominant Export: Merchandise Trade

      • A25. Developing Countries: Nonfuel Commodity Prices

    • Current Account Transactions

      • A26. Summary of Payments Balances on Current Account

      • A27. Industrial Countries: Balance of Payments on Current Account

      • A28. Industrial Countries: Current Account Transactions

      • A29. Developing Countries: Payments Balances on Current Account

      • A30. Developing Countries—By Region: Current Account Transactions

      • A31. Developing Countries—By Analytical Criteria: Current Account Transactions

    • External Financing

      • A32. Summary of External Financing

      • A33. Developing Countries—By Region: External Financing

      • A34. Developing Countries—By Analytical Criteria: External Financing

      • A35. Developing Countries: Reserves

      • A36. Net Credit from IMF

    • External Debt and Debt Service

      • A37. Summary of External Debt and Debt Service

      • A38. Developing Countries—By Region: External Debt, by Maturity and Type of Creditor

      • A39. Developing Countries—By Analytical Criteria: External Debt, by Maturity and Type of Creditor

      • A40. Developing Countries: Ratio of External Debt to GDP

      • A41. Developing Countries: Debt-Service Ratios

      • A42. IMF Charges and Repurchases to the IMF

    • Flow of Funds

      • A43. Summary of Sources and Uses of World Saving

Assumptions and Conventions

A number of assumptions have been adopted for the projections presented in this report. It has been assumed that average real effective exchange rates will remain constant at their August 16-20, 1993 levels except for the bilateral rates among the exchange rate mechanism (ERM) currencies, which are assumed to remain constant in nominal terms; that “present” policies of national authorities will be maintained; that the average price of oil will be $16.68 a barrel in 1993, $17.23 a barrel in 1994, and remain unchanged in real terms over the medium term; and that the six-month U.S. dollar London interbank offered rate (LIBOR) will average 3.5 percent in 1993 and 4.1 percent in 1994. 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 on September 10, 1993, except for Japan, where the projections incorporate the national account estimates released on September 14 and the fiscal package announced on September 16.

The following conventions have been used throughout the report:

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

  • — to indicate that the figure is zero or less than half the final digit shown;

  • - between years or months (for example, 1991-92 or January-June) to indicate the years or months covered, including the beginning and ending years or months;

  • / between years or months (for example, 1991/92) to indicate fiscal or financial years.

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

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

Minor discrepancies between constituent figures and totals are due to rounding.

As used in this report, the term “country” does 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.


The projections and analysis contained in the World Economic Outlook are an integral element of the IMF’s ongoing surveillance of economic developments and policies in its member countries and of the global economic system. The IMF has published the World Economic Outlook annually from 1980 through 1983 and biannually since 1984. An Interim Assessment of the World Economic Outlook was published in January 1993.

The survey of prospects and policies is the product of a comprehensive interdepartmental review of world economic developments, which draws primarily on the information the IMF staff gathers through its consultations with member countries. These consultations are carried out in particular by the IMF’s area departments together with the Policy Development and Review and Fiscal Affairs Departments.

The country projections are prepared by the IMF’s area departments on the basis of internationally consistent assumptions about world activity, exchange rates, and conditions in international financial and commodity markets. For approximately 50 of the largest economies—accounting for 90 percent of world output—the projections are updated for each World Economic Outlook exercise. For smaller countries, the estimates are based on the projections prepared at the time of the IMF’s regular Article IV consultations with member countries or in connection with the use of IMF resources; for these countries, the estimates used in the World Economic Outlook are updated incrementally to reflect changes in global economic conditions.

The analysis in the World Economic Outlook draws extensively on the ongoing work of the IMF’s area and specialized departments, and is coordinated in the Research Department under the general direction of Michael Mussa, Economic Counsellor and Director of Research. The World Economic Outlook project is directed by Flemming Larsen, Assistant Director in the Research Department, together with David T. Coe, Chief of the World Economic Studies Division.

Other contributors to the current issue include Staffan Gorne, Garry J. Schinasi, Robert P. Ford, Manmohan S. Kumar, Johan Baras, Monica Hargraves, Robert A. Feldman, Alexander Hoffmaister, Hossein Samiei, Vivek Arora, Tamim Bayoumi, Ranjit S. Teja, Paulo C. Leme, Tapio O. Saavalainen, Carlos A. Vegh, and Karl F. Habermeier. The authors of the annexes are indicated in each case. The Fiscal Analysis Division of the Fiscal Affairs Department computed the structural budget indicators and fiscal impulse measures. Anthony G. Turner, Sheila Bassett, Sungcha Hong Cha, and Toh Kuan provided research assistance. Cathy Wright, Allen Cobler, Nicholas Dopuch, Gretchen Gallick, Shamim Kassam, Yasoma Liyanarachchi, Steven Parker, and Prem Pillai processed the data and managed the computer systems. Susan Duff, Margarita Lorenz-Santin, and Nora Mori-Whitehouse were responsible for word processing. James McEuen of the External Relations Department edited the manuscript and coordinated production of the publication.

The analysis has benefited from comments and suggestions by staff from other IMF departments, as well as by Executive Directors following their discussion of the World Economic Outlook on September 1 and 3, 1993. 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.