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STORY: IMF / WEO PREVIEW
TRT: 2.21
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH NATS
DATELINE: 7 OCTOBER 2014, WASHINGTON DC / FILE
RECENT - PARIS, FRANCE
1. Wide shot, Arc de Triomphe
2. Wide shot, street scene
7 OCTOBER 2014, WASHINGTON DC
3. SOUNDBITE (English) Olivier Blanchard, Chief Economist, IMF:
“So, numbers for 2014 is 3.3 percent for world growth, and for 2015, 3.8 percent. This being said, looking at just the world growth number is misleading because what you have is very different evolutions across different countries.”
RECENT - BRUSSELS, BELGIUM
4. Various shots, Atomium
7 OCTOBER 2014, WASHINGTON DC
5. SOUNDBITE (English) Olivier Blanchard, Chief Economist, IMF:
“The recovery in the Euro Zone is not stalling, but growth, we predict, is going to be very, very low. It's 0.8 percent for 2014, 1.3 percent for 2015. These are low numbers, but again, there's a lot of differences across countries.”
RECENT - WASHINGTON DC
6. Various shots, Capitol Building
7 OCTOBER 2014, WASHINGTON DC
7. SOUNDBITE (English) Olivier Blanchard, Chief Economist, IMF:
“If you look forward what matters is potential growth, and there the news is not good. Over the last three years we have revised our estimates of potential growth down a bit for advanced economies, but it was already quite low, and much more so in terms of magnitudes for emerging market economies. So we're not going to return to anything like the growth rate of the first half of 2000s. It's going to be lower growth looking forward.”
RECENT - HYDERABAD, INDIA
8. Various shots, traffic
7 OCTOBER 2014, WASHINGTON DC
9. SOUNDBITE (English) Olivier Blanchard, Chief Economist, IMF:
“Emerging market growth is still high, not as high as it used to be, and it's a bit lower than we expected a while back. This being said, you have to look at differences across countries. So you have a country like China which, despite a slowdown in housing and credit, is maintaining growth at a fairly high level. You have India, which was doing relatively poorly, and is doing much better. There is clearly more confidence and more investment coming. Then, on the other side, you have countries like Brazil, where confidence seems to be missing. Investment is low. Growth is very close to zero.”
RECENT - SAINT LOUIS, MISSOURI
10. Various shots, bridge construction
The International Monetary Fund’s latest assessment of the global economy is that both advanced and emerging markets are failing to deliver job-creating growth this year. While the economic recovery creeps ahead, it’s threatened by stubbornly low inflation in many countries and financial markets that look optimistically high.
“So, numbers for 2014 is 3.3 percent for world growth, and for 2015, 3.8 percent. This being said, looking at just the world growth number is misleading because what you have is very different evolutions across different countries,” IMF Chief Economist Olivier Blanchard said.
Each region of the world has a story to tell why growth is slowing. In Europe, although the recovery is weak, it hasn’t completely stalled.
“The recovery in the Euro Zone is not stalling, but growth, we predict, is going to be very, very low. It's 0.8 percent for 2014, 1.3 percent for 2015. These are low numbers, but again, there's a lot of differences across countries,” Blanchard said.
In addition to Europe, there’s a slowdown in Russia stemming from the conflict with Ukraine. Investment there has declined and Russia has experienced large capital outflows.
Growth in the U.S. is strengthening as government spending cuts and tax increases have mostly come to an end, the Federal Reserve is still giving the economy a boost, and the housing market is healthier.
However, the IMF is warning that there’s a very real risk that growth in advanced economies could get stuck in a rut. If that happens, growth rates over a five year period could be depressed by nearly half a percentage point and unemployment could stay at unacceptably high levels, and inflation very low.
“If you look forward what matters is potential growth, and there the news is not good. Over the last three years we have revised our estimates of potential growth down a bit for advanced economies, but it was already quite low, and much more so in terms of magnitudes for emerging market economies. So we're not going to return to anything like the growth rate of the first half of 2000s. It's going to be lower growth looking forward,” Blanchard said.
The problem isn’t limited to advanced economies. Emerging markets are slowing from the growth rates they experienced before and right after the crisis. They IMF says they need to address underlying problems holding back higher growth.
“Emerging market growth is still high, not as high as it used to be, and it's a bit lower than we expected a while back. This being said, you have to look at differences across countries. So you have a country like China which, despite a slowdown in housing and credit, is maintaining growth at a fairly high level. You have India, which was doing relatively poorly, and is doing much better. There is clearly more confidence and more investment coming. Then, on the other side, you have countries like Brazil, where confidence seems to be missing. Investment is low. Growth is very close to zero,” Blanchard said.
The IMF says that for countries in need of repairing highways, electrical networks and infrastructure, now is a good time to invest while borrowing costs are low. For countries with efficient management of public investment, infrastructure investment can provide a much-needed boost to job creation and pace of growth both today and down the road.
