Comparative Economic Projections for 2014 and beyond

Webinar presentation by the

Council for Multilateral Business Diplomacy

11 February 2014

Comparative Economic Projections for 2014 and beyond

• Perspectives and Context – an overview of relative economic size and growth

• International Governmental Organizations that provide economic projections– Descriptions of the IMF, World Bank, OECD and UN DESA programs– Most recent projections: Outcomes and Implications

• Comparisons of Current Country Projections to 2015 and Extensions to 2020– Projections to 2015, top 10 economies, by the IMF, World Bank, OECD and UN DESA– Extended projections to 2020 for USA, China, Japan, Germany, France, UK, Brazil, Italy

Perspectives and Context• The economy of the United States, with a current GDP of over 16 trillion dollars, is the world’s largest. It is about twice the

size of the second largest economy, China, which has a GDP of about 8.3 trillion US dollars. About 6 times in per capita terms

• Between 2000 and 2011, the economy of China expanded at an average annual rate more than 6 times that of the United States. Going forward, with China’s economy growing at 7 percent per year, and the US economy growing at 3 percent per year, the economy of China will be the larger by the year 2030.

• The 3rd and 4th largest economies are those of Japan ( $6 trillion) and Germany ( $3.4 trillion). Both of these economies are expected to grow slowly in the future on account of aging and declining populations.

• The 5th, 6th, 7th, 8th and 9th largest economies; France, United Kingdom, Brazil, Russia and Italy, are all clustered between 2 and 3 trillion US dollars, as measured by GDP. Differences in growth rates will result in a shuffling within those ranks in the next few years. India is the 10th largest economy with a GDP of about $1.8 trillion and growing fast.

This map shows the relative sizes of country economies in 2011

Perspectives and Context• A one percentage point increase in the GDP of the United States is as large as the entire GDP of Romania

or Viet Nam. A three percent increase in the GDP of the United States is as large as the entire GDP of Poland or Belgium.

• India is the 10th largest economy, with a current GDP of 1.8 trillion US dollars. It is a bit more than 10 percent as large as the US economy, but with about 3 times as many people. A 6 percent growth in India’s GDP is roughly equivalent to the entire GDP of Bangladesh or Angola.

• Within many of the world’s largest economies, exports have been expanding at rates at least as great as the rates of overall GDP growth.

This map shows rates of growth in GDP by country in 2011

Economic Growth and Business Opportunity

Growth has implications for– Sales– Marketing– Sourcing– Production

Combined with other key factors– Political stability– Taxes– Laws and customs– Human resources

International Governmental Organizations

that produce economic projectionsInternational Monetary Fund

The World Bank Group

Organization for Economic Cooperation and Development

United Nations Department of Economic and Social Affairs

International Monetary Fund

World Economic Outlook

International Monetary FundWorld Economic Outlook

• Coverage 189 Countries; 44 indicators related to GDP in current and constant prices; inflation; savings and investment; exports and imports; government receipts, expenditures and debt; and employment and unemployment

• Forecast Horizon Annual projections to 2018 are provided in the WEO database; growth rates to 2015 are published in current the WEO reports. Much of the detailed, near-term analysis is focused on quarterly data.

• MethodologyCountry level projections are produced by country teams. The country level projections are aggregated and revised through an iterative process. The methodologies employed vary from country to country and the forecasts depend on a variety of factors specific to each country

• Release scheduleThe WEO database and publication are updated and published twice a year, usually in April and September or October, in support of the meetings of the International Monetary and Financial Committee. The WEO forms the main instrument of the IMF's global surveillance activities. The WEO Update covers key WEO projections and is published in between the full Spring and Fall WEO reports. The most recent release was 21 January 2014.

• OtherThe chief economist is Olivier Blanchard.

International Monetary Fund World Economic Outlook

Release notes – 21 January 2014General Remarks

The world economy strengthened during the second half of 2013, as predicted in the previous IMF outlook report

As the advanced economies continue to recover, further improvements in the world economy are expected for 2014-2015

Global growth will be about 3.7 percent in 2014, and 3.9 percent in 2015

Downside risks remain for some economies, growth projections for which have been revised downwards

International Monetary Fund World Economic Outlook

Release notes: 21 January 2014• United StatesGrowth is expected to be 2.8 percent in 2014, up from 1.9 percent in 2013, led by an uptick in inventories in the second half of 2013, carried further by stronger final domestic demand and the confidence borne out of the recent budget agreement. However, maintenance of the sequester cuts may constrain growth going forward. The growth projection for 2015 is 3.0 percent, down from the 3.4 percent in the October 2013 forecast.

• The euro areaThe euro area is turning the corner from recession to recovery. Growth is projected to strengthen to 1 percent in 2014 and 1.4 percent in 2015, but the recovery will be uneven. The pickup will generally be more modest in economies under stress, despite some upward revisions.

• United KingdomThe United Kingdom has been buoyed by easier credit conditions and increased confidence. Growth is expected to average 2.25 percent in 2014–15, but economic slack will remain high.

• JapanSlower growth is projected for Japan, compared to earlier releases of the WEO. The consumption tax increase created a drag that is partly offset by temporary fiscal stimulus. Hence the growth projection for 2014 is 1.7 percent, and for 2015 it is slower, at 1 percent.

International Monetary Fund World Economic Outlook

Release notes – 21 January 2014• ChinaGrowth in China rebounded strongly in the second half of 2013, due largely to an acceleration in investment. This surge is expected to be temporary, in part because of policy measures aimed at slowing credit growth and raising the cost of capital. Growth is thus expected to moderate slightly to around 7.5 percent in 2014–15.

• India India’s growth has been fostered by strong demand for exports, and policies that encourage investment. India’s economy has also benefited from favorable weather conditions. Growth rates: 2013 4.4%; 2014 5.4%; 2015 6.5%.

• Other Emerging EconomiesEmerging market and developing economies have started to benefit from stronger import demand in advanced economies and China. In many, however, domestic demand has remained weaker than expected, due in some cases to tighter financial conditions and policies since mid-2013, to policy or political uncertainty and bottlenecks in others, hampering investment growth.

• The World EconomyGlobal growth is projected to increase from 3 percent in 2013 to 3.7 percent in 2014 and 3.9 percent in 2015.

International Monetary Fund World Economic Outlook

Most recent release – 21 January 2014

The World Bank Group

Global Economic Prospects

The World Bank GroupGlobal Economic Prospects

• CoverageThe GEP analyses are based on a large volume of high-frequency data, with a focus on industrial output, inflation, trade, and international finance data for some 100 developing countries – including short-term (6 month) forecasts for some of these variables -- are used to help evaluate the international economic climate. Regional forecasts are constructed on the basis of approximately 160 separate country-specific forecasts.

• HorizonThe time horizon in the latest published Global Economic Prospects release is 2016.

• MethodologyThe country-specific forecasts are prepared by the World Bank Development Prospects Group in conjunction with World Bank country experts. Country level results are aggregated and revised in a broader model of the global economy. The medium-term forecasts are largely driven by the international investment cycle, macroeconomic policy considerations and other cyclical forces.

• Release scheduleWorld Bank global economic forecasts are published twice yearly, in January and June. The main Global Economic Prospects report and its several regional and topical annexes, are available as electronic documents, and their content are replicated in interactive on-line databases.

• OtherChief Economist is Kaushik Basu

Release notes: January 2014 -- General Remarks

“For the first time in five years, there are indications that a self-sustaining recovery has begun among high-income countries

suggesting that they may now join developing countries as a second engine of growth in the global economy.

The stronger growth in high-income countries reflects progress in both private- and public-sector healing in the wake of the financial crisis.

In particular, the drag from fiscal consolidation and policy uncertainty is expected to ease sharply in the United States and in high-income Europe.

The stronger growth in rich countries is expected to boost demand for the exports of developing countries and contribute to a modest acceleration in their growth.

Overall, global trade growth which has been particularly weak is expected to strengthen over next few years reaching about 5.1 percent by 2016.”

Kaushik Basu, Chief Economist, the World Bank Group

The World Bank GroupGlobal Economic Prospects

Release notes: January 2014 – High Income Countries• United StatesThe recovery is the most advanced in the United States. GDP there has grown for 10 consecutive quarters (as of Q3, 2013) and is now 5.6 percent higher than it was in the pre-crisis period. The drag from higher long-term interest rates, fiscal uncertainty, and the government shutdown have delayed but not derailed the recovery.

• JapanThe economy has responded to strong fiscal and monetary stimulus with robust growth, rising inflation, and a substantial depreciation of the currency that has boosted exports. Output is nearly at par with the pre-crisis peak. Activity has rebounded from the 3rd quarter 2013 slump, with momentum gaining additional strength in the fourth quarter as consumers frontload spending ahead of the upcoming consumption tax increase in April 2014.

• Euro areaThe Euro Area is out of recession but per capita incomes are still declining in several countries. Growth turned positive in the second quarter of 2013 led by stronger growth in Germany. In addition, output in the troubled Southern European periphery economies has also strengthened. Three of the five high-spread economies - Ireland, Portugal and Spain - exited recession during 2013, helped by strong export growth, while the recession is easing in the other two (Italy and Greece). Euro Area output remains well below pre-crisis levels and 10 or more percent below pre-crisis levels in some of the hardest-hit countries of the area.

The World Bank GroupGlobal Economic Prospects

Release notes: January 2014 – Developing Countries

• Growth began to strengthen in the second and third quarters of 2013

• The recovery has been uneven, however, with GDP growth accelerations in China, India, Malaysia, Thailand and Mexico in the third quarter offsetting softness in South Africa, Turkey, Indonesia and contraction in Brazil.

• Manufacturing data for developing countries has continued to show sustained expansion in four of five regions where data are available

• The improvement partly reflects strengthening high -income economies and rising demand in China

• Developing-country exports (excluding China) grew at a 11.2 percent pace during the three months ending October 2013, the fastest in seven months.

The World Bank GroupGlobal Economic Prospects

Most recent release – January 2014

The World Bank GroupGlobal Economic Prospects

Organization for Economic

Cooperation and Development

Economic Outlook

Organization for Economic Cooperation and Development

Economic Outlook• CoverageOECD Member Countries, of which there are 33, plus Brazil, Russia, India, China, South Africa and Indonesia – 39 countries

• HorizonProjections in the published materials run to 2015.

• MethodologyThe OECD’s forecasts combine expert judgment with a variety of existing and new information relevant to current and prospective developments. These include revised policy settings, recent statistical outturns and conjectural indicators, combined with analyses based on specific economic and statistical models and analytical techniques. Projections are first made using the ”NIGEM global model” of the British National Institute of Economic and Social Research, and short-term indicator models. The results from these models provide a backdrop for analyses undertaken using individual country models.

• Release scheduleThe OECD Economic Outlook is released twice a year, in April or May, and in October or November.

• OtherThe chief economist at the OECD is Pier Carlo Padoan.

Organization for Economic Cooperation and Development

Release notes – November 2013• OverviewThe global economy continues to expand at a moderate pace, with some acceleration of growth anticipated in 2014 and 2015. But global growth forecasts have been revised down significantly for this year and 2014, in large part due to weaker prospects in many emerging market economies (EMEs). Downside risks dominate and policy must address them.

• United StatesThe strengthening recovery in the United States should gradually reduce unemployment and erode economic slack, with inflation rising close to targets.

• Euro areaThe muted pick-up in the euro area will make little dent in high levels of joblessness and ample slack will keep inflation very low. In the euro area, recovery is lagging and uneven, unemployment – especially among the young – remains very high and inflationary pressures are very subdued. The ECB should consider further policy measures if deflationary risks become more serious.

• JapanCore inflation is set to turn positive but, abstracting from indirect tax effects, still remain well below its target. the initial impact of new monetary, fiscal and structural policies has produced strong export growth, rising consumer spending and a rebound in business investment. The increase in the consumption tax rate to 8% is welcome and should be followed by a further hike as planned in 2015.

Organization for Economic Cooperation and Development

Most recent release – November 2013

UN Department of Economic

and Social Affairs

World Economic Situation and Prospects

UN Department of Economic and Social Affairs

• CoverageThe World Economic Situation and Prospects report provides estimates of real GDP growth, unemployment rates and inflation rates for about 80 developed, developing and transition economies.

• Forecast HorizonProjections in the current World Economic Situation and Prospects report extend to 2015.

• MethodologyProject LINK is an international collaborative research group for econometric modeling, coordinated jointly by the Development Policy and Analysis Division of UN/DESA and the University of Toronto.

• Release scheduleThe WESP is published twice a year, in January and June.

• Other• The chief economist responsible for the WESP is Dr. Pingfan Hong.

UN Department of Economic and Social Affairs

Most recent release – 14 January 2014

UN Department of Economic and Social Affairs

World Economic Growth2012 - 2015

•World Gross Product in 2012 was between 71 and 73 trillion US dollars.

•Growth of 0.1 percent is equivalent in size to the entire economy of Saudi Arabia or the Netherlands.

•Growth of 0.1 percent is equivalent in size to one and a half times the total revenue (sales) of the world’s largest companies, like Walmart, Shell, and ExxonMobil

Comparisons of Projections to 2015and Extensions to 2020

• United States• China• Japan• Germany

• France• United Kingdom• Brazil• Italy

Projection ComparisonUnited Statesreal annual GDP growth, percent

2012 2013 2014 2015

IMF 2.8 1.9 2.8 3.0

World Bank 2.7 1.8 2.8 2.9

OECD 2.8 1.7 2.9 3.4

UN DESA 2.8 1.6 2.5 3.2

HRI 2.8 1.8 2.9 3.0

HRI 2015 – 2020: 2.5 avg. per year

Projection ComparisonUnited Statesreal annual GDP growth, percent

2012 2013 2014 2015

IMF 2.8 1.9 2.8 3.0

World Bank 2.7 1.8 2.8 2.9

OECD 2.8 1.7 2.9 3.4

UN DESA 2.8 1.6 2.5 3.2

HRI 2.8 1.8 2.9 3.0

HRI 2015 – 2020: 2.5 avg. per year

Projection ComparisonChinareal annual GDP growth, percent

2012 2013 2014 2015

IMF 7.7 7.7 7.5 7.3

World Bank 7.7 7.7 7.7 7.5

OECD 7.7 7.7 8.2 7.5

UN DESA 7.7 7.7 7.5 7.3

HRI 7.7 7.8 8.0 7.9

HRI 2015 – 2020: 7.3 avg. per year

Projection ComparisonChinareal annual GDP growth, percent

2012 2013 2014 2015

IMF 7.7 7.7 7.5 7.3

World Bank 7.7 7.7 7.7 7.5

OECD 7.7 7.7 8.2 7.5

UN DESA 7.7 7.7 7.5 7.3

HRI 7.7 7.8 8.0 7.9

HRI 2015 – 2020: 7.3 avg. per year

Projection ComparisonJapanreal annual GDP growth, percent

2012 2013 2014 2015

IMF 1.4 1.7 1.7 1.0

World Bank 1.9 1.7 1.4 1.2

OECD 1.9 1.8 1.5 1.0

UN DESA 1.9 1.9 1.5 1.2

HRI 2.0 1.6 1.4 1.3

HRI 2015 – 2020: 1.3 avg. per year

Projection ComparisonJapanreal annual GDP growth, percent

2012 2013 2014 2015

IMF 1.4 1.7 1.7 1.0

World Bank 1.9 1.7 1.4 1.2

OECD 1.9 1.8 1.5 1.0

UN DESA 1.9 1.9 1.5 1.2

HRI 2.0 1.6 1.4 1.3

HRI 2015 – 2020: 1.3 avg. per year

Projection ComparisonGermanyreal annual GDP growth, percent

2012 2013 2014 2015

IMF 0.9 0.5 1.6 1.4

World Bank

OECD 0.9 0.5 1.7 2.0

UN DESA 0.7 0.4 1.9 1.9

HRI 0.9 0.4 1.7 1.9

HRI 2015 – 2020: 0.6 avg. per year

Projection ComparisonGermanyreal annual GDP growth, percent

2012 2013 2014 2015

IMF 0.9 0.5 1.6 1.4

World Bank

OECD 0.9 0.5 1.7 2.0

UN DESA 0.7 0.4 1.9 1.9

HRI 0.9 0.4 1.7 1.9

HRI 2015 – 2020: 0.6 avg. per year

Projection ComparisonGermanyreal annual GDP growth, percent

2012 2013 2014 2015

IMF 0.9 0.5 1.6 1.4

World Bank

OECD 0.9 0.5 1.7 2.0

UN DESA 0.7 0.4 1.9 1.9

HRI 0.9 0.4 1.7 1.9

HRI 2015 – 2020: 0.6 avg. per year

Projection ComparisonFrancereal annual GDP growth, percent

2012 2013 2014 2015

IMF 0.0 0.2 0.9 1.5

World Bank

OECD 0.0 0.2 1.0 1.6

UN DESA 0.0 0.1 0.8 1.1

HRI 0.0 0.2 1.0 1.4

HRI 2015 – 2020: 1.5 avg. per year

Projection ComparisonUnited Kingdomreal annual GDP growth, percent

2012 2013 2014 2015

IMF 0.3 1.7 2.4 2.2

World Bank

OECD 0.1 1.4 2.4 2.5

UN DESA 0.1 1.4 2.2 2.4

HRI 0.2 1.4 1.8 2.0

HRI 2015 – 2020: 2.0 avg. per year

Projection ComparisonBrazilreal annual GDP growth, percent

2012 2013 2014 2015

IMF 1.0 2.3 2.3 2.8

World Bank 0.9 2.2 2.4 2.7

OECD 0.9 2.5 2.2 2.5

UN DESA 0.9 2.5 3.0 4.2

HRI 0.9 2.9 3.4 3.1

HRI 2015 – 2020: 2.9 avg. per year

Projection ComparisonItalyreal annual GDP growth, percent

2012 2013 2014 2015

IMF -2.5 -1.8 0.6 1.1

World Bank

OECD -2.6 -1.9 0.6 1.4

UN DESA -2.5 -1.8 0.8 1.4

HRI -2.5 -1.8 0.7 0.9

HRI 2015 – 2020: 1.6 avg. per year

Projection Comparison

Thank YouFor questions and comments concerning the content of this presentation please contact

Ralph Doggett HRI/CMBD

rdoggett@hrigeneva.comrdoggett@cmbd.ch

+41 78 895 8485