May 25, 2024

The World of the IMF…

 

 

According to the forecasts released by the IMF last week, global growth will accelerate from 3.2% in 2012 to 3.5% in 2013 and 4.1% in 2014. While the growth of developing countries jumped from 5.1% in 2012 to 5.5% in 2013 and 5.9% in 2014, the growth of developed countries will increase from 1.3% in 2012 to 1.4% in 2013 and to 2.2% in 2014.

According to the World Economy Outlook report published in October, global growth forecasts show a 0.1 percentage point contraction compared to 2013 and 2014. There is no striking change in the IMF’s forecasts for the US economy and developing countries.

The growth of the US economy, which has left behind the concerns of the fiscal cliff, is accelerating. Despite the slowdown in developing countries, IMF experts maintain their optimistic stance in their growth forecasts for China and India. The findings that the recession in the Eurozone will accelerate in 2013 (-0.3p) and that there will be a sudden slowdown in the Japanese economy in 2014 (-0.4p) play an important role in the revision of the global forecasts.
In the IMF report, it is explained that after the measures taken, the possibility of a new crisis that will deepen the recession in the Eurozone has decreased considerably, and the risk perception regarding the European debt crisis has improved significantly. However, since the decline in government bond rates and the improvement in banks’ funding conditions are still not reflected in the economy through the credit mechanism, a 0.2% contraction is expected in 2013 instead of 0.2% growth. The IMF’s forecasts contrast with the improvement in the Eurozone PMI data released last week. However, it is worth waiting for a few observations due to the volatility of the PMI data.

IMF experts do not foresee a significant decline in the growth of the Japanese economy in 2013. With the effect of expansionary fiscal and monetary policies, the Japanese economy is expected to grow by 1.2% in 2013. On the other hand, growth is expected to slow down by 0.4 points to 0.7% in 2014.

There are three important findings in the report that concern developing countries. IMF experts lower their forecasts for international trade in goods and services by 0.7 points for 2013 and 0.3 points for 2014. They lower their oil price forecasts by 4.1% in 2013 and increase it by 1.3% in 2014. For developing countries, they increase their inflation forecasts for 2013 by 0.3 points to 6.1%, and for 2014 by 0.2 points to 5.5%.
There is no direct information about Turkey in the report. However, it is useful to briefly summarize the indirect effects of the changes made in the estimates.

A Europe that shrinks harder and remains stagnant for a long time will cause Turkey to lag behind its potential growth. The decline in oil prices partially compensates for the pressure that the recession in Europe will create on our foreign trade deficit. Despite the decline in oil prices, the high course of inflation in developing countries confronts the Central Banks of developing countries with the dilemma of allowing their currencies to appreciate or accepting that they cannot meet the inflation target.

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