IMF / WORLD ECONOMIC OUTLOOK PRESSER
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STORY: IMF / WORLD ECONOMIC OUTLOOK PRESSER
TRT: 2:33
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 8 APRIL 2014, WASHINGTON DC
SHOTLIST:
1. Wide shot, IMF officials taking seats before briefing on World Economic Outlook
2. Med shot, IMF officials
3. Med shot, TV cameras
4. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“The recovery is strengthening. We forecast world growth to be 3.6% this year, 2014, 3.9 percent next year.”
5. Med shot, reporters taking notes at briefing
6. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“Going back to the euro area, the good news is that, for the first time in two years, the southern periphery countries are forecast to have positive, if admittedly quite low, growth. But, while their exports are generally strong, internal demand is still weak. And it has to become stronger if the recovery is to be sustained in those countries.”
7. Close up, reporter asking question about Russia
8. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“The main effect of what has happened there is clearly on Ukraine first, but then on Russia. And probably the main two channels through which this is affecting Russia, from an economic point of view, the first one is an investment climate which was not perfect to start with and is probably a bit worse. And, more hesitation on the part of investors to put their money in Russia or leave it in Russia, so that one can expect fairly substantial capital outflows.”
9. Wide shot, reporters
10. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“I’m reluctant to give you a number, but surely based on what has happened, growth in Russia will be lower than it would otherwise have been.”
11. Close up, reporter asking question about Asia
12. SOUNDBITE (English) Thomas Helbling, Chief of the World Economics Outlook Division at the IMF:
“For a long time, emerging markets were the stars of the global economy, seeing robust growth, offering better return prospects. I think what has changed now are that we have seen better return prospects in advanced economies, better growth but also prospects of monetary policy normalization and that’s a more difficult environment in the sense that investors have become less tolerant to risk.”
13. Wide shot, briefing
14. Med shot, reporters approaching IMF officials after briefing ends
STORYLINE:
The global recovery is becoming broader, but the changing external environment poses new challenges to emerging market and developing economies, says the IMF’s latest World Economic Outlook (WEO).
“The recovery is strengthening. We forecast world growth to be 3.6% this year, 2014, 3.9% next year,” said IMF Chief Economist Olivier Blanchard, who noted the growth is up from 3 percent in 2013.
The strengthening of the recovery from the Great Recession in the advanced economies is a welcome development, according to IMF staff. But the latest WEO also emphasizes that growth remains subpar and uneven across the globe.
Blanchard cautioned, however, that while acute risks have decreased, risks have not disappeared.
In this setting, the global economy is still fragile despite improved prospects, and important risks—both old and new—remain. Risks identified previously include finishing the financial sector reform agenda, high debt levels in many countries, stubbornly high unemployment, and concerns about emerging markets.
New worries on the horizon include persistently low inflation in advanced economies, a weaker outlook for emerging markets than thought in the second half of last year, and recent geopolitical strains. Against this background, the WEO underscores that stronger policy efforts are needed to fully restore confidence and ensure a durable and sustained global recovery.
Overall, the outlook remains broadly unchanged from the October 2013 WEO.
A major impulse to global growth has come from the United States, where annual growth in 2014–15 is projected to be above trend at about 2¾ percent. More moderate fiscal consolidation helps; support also comes from accommodative monetary conditions, a recovering real estate sector, and higher household wealth.
In the euro area, growth has turned positive. Across the euro area, a strong reduction in the pace of fiscal tightening is expected to help lift growth. Outside the core euro area, contributions from net exports have helped the turnaround, as has the stabilization of domestic demand.
However, growth in demand is expected to remain sluggish, given continued financial fragmentation, tight credit, and a high corporate debt burden. Growth performance will therefore continue to lag the core euro area.
“The good news is that, for the first time in two years, the southern periphery countries are forecast to have positive, if admittedly quite low, growth. But, while their exports are generally strong, internal demand is still weak. And it has to become stronger if the recovery is to be sustained in those countries,” said Blanchard.
In Japan economic activity is expected to get a boost from some underlying growth drivers, notably private investment and exports. Nevertheless, economic activity overall is projected to slow moderately in response to a tightening fiscal policy stance in 2014–15, starting with the rise in consumption tax.
Emerging market and developing economies continue to contribute more than two-thirds of global growth, and their growth is projected to increase moderately from 4.7 percent in 2013 to 4.9 percent in 2014 and 5.3 percent in 2015.
The weaker momentum compared with advanced economies reflects in part the adjustment to a less favorable external financial environment and, in some cases, continued weak investment and other domestic structural constraints. Going forward, stronger exports to advanced economies are expected to underpin moderate increase in growth.
“For a long time, emerging markets were the stars of the global economy, seeing robust growth, offering better return prospects. I think what has changed now are that we have seen better return prospects in advanced economies, better growth but also prospects of monetary policy normalization and that’s a more difficult environment in the sense that investors have become less tolerant to risk,” said Thomas Helbling, the chief of the World Economics Outlook Division at the IMF.
The forecast for China is that growth will remain broadly unchanged at about 7½ percent in 2014–15 as the authorities seek to put the economy on a more balanced and sustainable growth path. In India, real GDP growth is projected to strengthen, partly due to government efforts to revive investment growth.
Only a modest acceleration in activity is expected for regional growth in Latin America, with growth rising from 2½ percent in 2014 to 3 percent in 2015). Some economies have recently faced strong market pressure.
In sub-Saharan Africa, growth continues at a strong pace, and is expected to increase from 4.8 percent in 2013 to 5½ percent in 2014–15. Commodity-related projects elsewhere in the region are expected to support higher growth.
The Middle East and North Africa face challenging conditions, with regional growth projected to rise only moderately in 2014–15. Most of the recovery is due to the oil-exporting economies, while many oil-importing economies continue to struggle with difficult sociopolitical and security conditions.
Near-term prospects in Russia and many other economies of the Commonwealth of Independent States (CIS) have been downgraded, reflecting the fallout from the Ukraine crisis.
“The main effect of what has happened there is clearly on Ukraine first, but then on Russia. And probably the main two channels through which this is affecting Russia, from an economic point of view, the first one is an investment climate which was not perfect to start with and is probably a bit worse. And, more hesitation on the part of investors to put their money in Russia or leave it in Russia, so that one can expect fairly substantial capital outflows,” said Blanchard.
He said that Russia has large reserves so it can “almost surely face those outflows.” He said the events will clearly impact Russia’s economy.
“I’m reluctant to give you a number, but surely based on what has happened, growth in Russia will be lower than it would otherwise have been.”
In emerging and developing Europe, growth is expected to decelerate in 2014 before recovering moderately in 2015, largely reflecting changing external financial conditions.
The WEO notes that the balance of risks to global growth has improved, but that some hurdles along the way remain.
The report reiterates the risk from persistently low inflation in advanced economies, especially in the euro area. Inflation is projected to remain below target for some time, as growth is not expected to be high enough for economic slack to decline rapidly. Longer-term inflation expectations are then more likely to drift down in response, and risks of lower-than-expected inflation, or even deflation, will increase, because interest rates are already close to zero and only limited options remain for using monetary policy to respond.
The result would be premature increases in the cost of borrowing and higher real debt burden. The lingering danger is that the longer inflation remains weak, the more vulnerable the region is to damaging debt deflation in the event of adverse shocks to activity.
TRT: 2:33
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 8 APRIL 2014, WASHINGTON DC
SHOTLIST:
1. Wide shot, IMF officials taking seats before briefing on World Economic Outlook
2. Med shot, IMF officials
3. Med shot, TV cameras
4. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“The recovery is strengthening. We forecast world growth to be 3.6% this year, 2014, 3.9 percent next year.”
5. Med shot, reporters taking notes at briefing
6. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“Going back to the euro area, the good news is that, for the first time in two years, the southern periphery countries are forecast to have positive, if admittedly quite low, growth. But, while their exports are generally strong, internal demand is still weak. And it has to become stronger if the recovery is to be sustained in those countries.”
7. Close up, reporter asking question about Russia
8. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“The main effect of what has happened there is clearly on Ukraine first, but then on Russia. And probably the main two channels through which this is affecting Russia, from an economic point of view, the first one is an investment climate which was not perfect to start with and is probably a bit worse. And, more hesitation on the part of investors to put their money in Russia or leave it in Russia, so that one can expect fairly substantial capital outflows.”
9. Wide shot, reporters
10. SOUNDBITE (English) Olivier Blanchard, Chief Economist at the IMF:
“I’m reluctant to give you a number, but surely based on what has happened, growth in Russia will be lower than it would otherwise have been.”
11. Close up, reporter asking question about Asia
12. SOUNDBITE (English) Thomas Helbling, Chief of the World Economics Outlook Division at the IMF:
“For a long time, emerging markets were the stars of the global economy, seeing robust growth, offering better return prospects. I think what has changed now are that we have seen better return prospects in advanced economies, better growth but also prospects of monetary policy normalization and that’s a more difficult environment in the sense that investors have become less tolerant to risk.”
13. Wide shot, briefing
14. Med shot, reporters approaching IMF officials after briefing ends
STORYLINE:
The global recovery is becoming broader, but the changing external environment poses new challenges to emerging market and developing economies, says the IMF’s latest World Economic Outlook (WEO).
“The recovery is strengthening. We forecast world growth to be 3.6% this year, 2014, 3.9% next year,” said IMF Chief Economist Olivier Blanchard, who noted the growth is up from 3 percent in 2013.
The strengthening of the recovery from the Great Recession in the advanced economies is a welcome development, according to IMF staff. But the latest WEO also emphasizes that growth remains subpar and uneven across the globe.
Blanchard cautioned, however, that while acute risks have decreased, risks have not disappeared.
In this setting, the global economy is still fragile despite improved prospects, and important risks—both old and new—remain. Risks identified previously include finishing the financial sector reform agenda, high debt levels in many countries, stubbornly high unemployment, and concerns about emerging markets.
New worries on the horizon include persistently low inflation in advanced economies, a weaker outlook for emerging markets than thought in the second half of last year, and recent geopolitical strains. Against this background, the WEO underscores that stronger policy efforts are needed to fully restore confidence and ensure a durable and sustained global recovery.
Overall, the outlook remains broadly unchanged from the October 2013 WEO.
A major impulse to global growth has come from the United States, where annual growth in 2014–15 is projected to be above trend at about 2¾ percent. More moderate fiscal consolidation helps; support also comes from accommodative monetary conditions, a recovering real estate sector, and higher household wealth.
In the euro area, growth has turned positive. Across the euro area, a strong reduction in the pace of fiscal tightening is expected to help lift growth. Outside the core euro area, contributions from net exports have helped the turnaround, as has the stabilization of domestic demand.
However, growth in demand is expected to remain sluggish, given continued financial fragmentation, tight credit, and a high corporate debt burden. Growth performance will therefore continue to lag the core euro area.
“The good news is that, for the first time in two years, the southern periphery countries are forecast to have positive, if admittedly quite low, growth. But, while their exports are generally strong, internal demand is still weak. And it has to become stronger if the recovery is to be sustained in those countries,” said Blanchard.
In Japan economic activity is expected to get a boost from some underlying growth drivers, notably private investment and exports. Nevertheless, economic activity overall is projected to slow moderately in response to a tightening fiscal policy stance in 2014–15, starting with the rise in consumption tax.
Emerging market and developing economies continue to contribute more than two-thirds of global growth, and their growth is projected to increase moderately from 4.7 percent in 2013 to 4.9 percent in 2014 and 5.3 percent in 2015.
The weaker momentum compared with advanced economies reflects in part the adjustment to a less favorable external financial environment and, in some cases, continued weak investment and other domestic structural constraints. Going forward, stronger exports to advanced economies are expected to underpin moderate increase in growth.
“For a long time, emerging markets were the stars of the global economy, seeing robust growth, offering better return prospects. I think what has changed now are that we have seen better return prospects in advanced economies, better growth but also prospects of monetary policy normalization and that’s a more difficult environment in the sense that investors have become less tolerant to risk,” said Thomas Helbling, the chief of the World Economics Outlook Division at the IMF.
The forecast for China is that growth will remain broadly unchanged at about 7½ percent in 2014–15 as the authorities seek to put the economy on a more balanced and sustainable growth path. In India, real GDP growth is projected to strengthen, partly due to government efforts to revive investment growth.
Only a modest acceleration in activity is expected for regional growth in Latin America, with growth rising from 2½ percent in 2014 to 3 percent in 2015). Some economies have recently faced strong market pressure.
In sub-Saharan Africa, growth continues at a strong pace, and is expected to increase from 4.8 percent in 2013 to 5½ percent in 2014–15. Commodity-related projects elsewhere in the region are expected to support higher growth.
The Middle East and North Africa face challenging conditions, with regional growth projected to rise only moderately in 2014–15. Most of the recovery is due to the oil-exporting economies, while many oil-importing economies continue to struggle with difficult sociopolitical and security conditions.
Near-term prospects in Russia and many other economies of the Commonwealth of Independent States (CIS) have been downgraded, reflecting the fallout from the Ukraine crisis.
“The main effect of what has happened there is clearly on Ukraine first, but then on Russia. And probably the main two channels through which this is affecting Russia, from an economic point of view, the first one is an investment climate which was not perfect to start with and is probably a bit worse. And, more hesitation on the part of investors to put their money in Russia or leave it in Russia, so that one can expect fairly substantial capital outflows,” said Blanchard.
He said that Russia has large reserves so it can “almost surely face those outflows.” He said the events will clearly impact Russia’s economy.
“I’m reluctant to give you a number, but surely based on what has happened, growth in Russia will be lower than it would otherwise have been.”
In emerging and developing Europe, growth is expected to decelerate in 2014 before recovering moderately in 2015, largely reflecting changing external financial conditions.
The WEO notes that the balance of risks to global growth has improved, but that some hurdles along the way remain.
The report reiterates the risk from persistently low inflation in advanced economies, especially in the euro area. Inflation is projected to remain below target for some time, as growth is not expected to be high enough for economic slack to decline rapidly. Longer-term inflation expectations are then more likely to drift down in response, and risks of lower-than-expected inflation, or even deflation, will increase, because interest rates are already close to zero and only limited options remain for using monetary policy to respond.
The result would be premature increases in the cost of borrowing and higher real debt burden. The lingering danger is that the longer inflation remains weak, the more vulnerable the region is to damaging debt deflation in the event of adverse shocks to activity.
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