WHAT IS ‘World Economic Outlook – WEO’
The World Economic Outlook (WEO) is a report by the International Monetary Fund that analyzes key parts of the IMF’s surveillance of economic developments and policies in its member countries. It also projects developments in the global financial markets and economic system. The WEO is usually prepared twice a year and is used in meetings of the International Monetary and Financial Committee.
BREAKING DOWN ‘World Economic Outlook – WEO’
The World Economic Outlook (WEO) presents the IMF’s analysis and projections of global economic developments and classifies their analysis by region and stage of economic development. This report is the main instrument of disseminating the findings and analysis of their global surveillance activities to the world.
Recent News and Trends in World Economic Outlook
In January 2018, the WEO reported that global economic activity continued to “firm up” at the end of 2017. They estimated global output to have grown by 3.7 percent in 2017, higher and faster than predicted. The WEO suggested U.S. tax policy changes would stimulate global activity, including the short-term impact of U.S. investors responding to corporate income-tax cuts, and favorable demand spillovers for U.S. trading partners, particularly its direct neighbors, Canada and Mexico. They estimate the effect on U.S. growth to be positive through 2020. The WEO also reported that global recovery has strengthened, with some 120 economies, accounting for three quarters of world GDP, seeing a pickup in growth in 2017, the broadest synchronized global growth upsurge since 2010. Growth in the third quarter of 2017 was higher than projected for advanced economies, including Germany, Japan, Korea, and the United States. Furthermore, key emerging market and developing economies, including Brazil, China, and South Africa, also posted third-quarter growth stronger than their prior forecasts.
The WEO reported that global risks include the buildup of financial vulnerabilities, inward-looking policies, and noneconomic factors. Noneconomic factors include geopolitical tensions, particularly in East Asia and the Middle East, and political uncertainties related to the possibility of new regimes after elections, including countries such as Brazil, Colombia, Italy, and Mexico. Other noneconomic factors the WEO takes into account are extreme weather events: hurricanes in the Atlantic and drought in sub-Saharan Africa and Australia suggest the possibility of recurring and worsening episodes, which could lead to devastating humanitarian costs and economic losses, along with the stressor of increased migration.
With respect to policies, the WEO surmised that cooperative multilateral effort remained absolutely crucial in safeguarding the growth in global activity, strengthening medium-term prospects, and ensuring the benefits from technological progress and global economic integration are shared more widely. The WEO identified priority areas, which included a financial regulatory reform agenda; modernizing the multilateral trade framework; strengthening the global financial safety net; addressing international money laundering, organized crime, and terrorism; and meeting the challenges of climate change.