Global Economic Outlook 2013, May 2013 update
The global economy has yet to shake off the fallout from the crisis of 2008-2009. Global growth dropped to almost 3 percent in 2012, which indicates that about a half a percentage point has been shaved off the long-term trend since the crisis emerged. This slowing trend will likely continue. Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won’t do so in 2013. Uncertainty across the regions – from the post-election ‘fiscal debate’ question in the U.S. to the Chinese leadership transition and reforms in the Euro Area – will continue to have global impacts in sluggish trade and tepid foreign direct investment.
Main results:
- Across the advanced economies, the Outlook predicts 1.2 percent growth in 2013, compared to 1.1 percent in 2012. The slight uptick is largely due to Europe, which is expected to return to very slow growth of 0.3 percent after the -0.2 percent contraction in 2012. U.S. growth is expected to fall from 2.2 percent in 2012 to 1.6 percent in 2013.
- In the medium-term, the outlook expects the U.S. and other advanced economies to go some ways toward closing large output gaps – that is, the difference between current output and the level of output an economy can produce in a noninflationary way, given the size of its labor force and its potential to invest in and create technological progress. The current output gap is a result of weak demand due to the 2008-2009 crisis. This development should allow the U.S. to average 2.3 percent annual growth during 2013-2018 before falling to 2.0 percent in 2019-2025. In the same two periods, Japan is expected to grow at 0.9 percent per annum.
- A more significant slowdown is expected for less mature economies over the next year – and beyond. Overall, growth in developing and emerging economies is projected to drop from 5.5 percent in 2012 to 5.0 percent in 2013, with growth falling in China from 7.8 to 7.5 percent and in India from 5.5 to 4.7 percent. From 2019-2025 emerging and developing countries are projected to grow at 3.3 percent.
- The long-term global slowdown we project to 2025 will be driven largely by structural transformations in the emerging economies. As China, India, Brazil, and others mature from rapid, investment-intensive ‘catch-up’ growth to a more balanced model, the structural ‘speed limits’ of their economies are likely to decline, bringing down global growth despite the recovery we expect in advanced economies after 2013.
Global Outlook for Growth of Gross Domestic Product, 2013-2025 (May 2013)
Europe includes all 27 current members of the European Union, as well as
Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New
Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, Serbia &
Montenegro, and Turkey.
Source: The Conference Board Global Economic Outlook 2013, May 2013 update
Global Outlook for Growth of Gross Domestic Product, 1996-2013 (May 2013)
| 1996 - 2005 | 2006 - 2012 | 2012 | 2013 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Distribution of World Output 2012 | GDP Growth | Contribution to World GDP growth**** | Projected GDP Growth | Contribution to World GDP growth**** | Projected GDP Growth | Contribution to World GDP growth**** | Projected GDP Growth | Contribution to World GDP growth**** | |
| United States | 18.2% | 3.3 | 0.7 | 1.1 | 0.2 | 2.2 | 0.4 | 1.6 | 0.3 |
| Europe* | 20.3% | 2.4 | 0.6 | 0.9 | 0.2 | -0.2 | 0.0 | 0.3 | 0.1 |
|
of which: Euro Area |
13.8% | 2.2 | - | 0.7 | - | -0.5 | - | 0.1 | - |
| Japan | 5.6% | 1.0 | 0.1 | 0.2 | 0.0 | 0.6 | 0.0 | 0.8 | 0.0 |
| Other advanced** | 7.2% | 4.0 | 0.3 | 3.0 | 0.2 | 2.2 | 0.2 | 2.8 | 0.2 |
| Advanced Economies | 51.3% | 2.7 | 1.7 | 1.2 | 0.7 | 1.1 | 0.6 | 1.2 | 0.6 |
| China | 16.4% | 8.1 | 0.6 | 10.4 | 1.3 | 7.8 | 1.2 | 7.5 | 1.2 |
| India | 6.3% | 6.5 | 0.3 | 7.8 | 0.4 | 5.5 | 0.3 | 4.7 | 0.3 |
| Other developing Asia | 5.3% | 3.9 | 0.2 | 5.0 | 0.2 | 5.3 | 0.3 | 5.0 | 0.3 |
| Latin America | 7.7% | 2.8 | 0.2 | 3.7 | 0.3 | 3.1 | 0.2 | 3.0 | 0.2 |
| Middle East | 3.7% | 4.6 | 0.1 | 4.3 | 0.2 | 5.5 | 0.2 | 2.2 | 0.1 |
| Africa | 3.3% | 4.6 | 0.1 | 4.7 | 0.1 | 3.7 | 0.1 | 4.2 | 0.1 |
| Russia, Central Asia and Southeast Europe*** | 5.9% | 4.0 | 0.2 | 4.0 | 0.2 | 3.6 | 0.2 | 2.9 | 0.2 |
| Emerging and Developing Economies | 48.7% | 5.0 | 1.8 | 6.5 | 2.8 | 5.5 | 2.6 | 5.0 | 2.4 |
| World Total | 100.0% | 3.6 | 3.5 | 3.2 | 3.0 | ||||
*Europe includes all 27 current members of the European Union, as well as Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, and Serbia & Montenegro, and Turkey..
****The percentage contributions to global growth are computed as log differences and therefore do not exactly add up to the percentage growth rate for the world economy.
Source: The Conference Board Global Economic Outlook, May 2013 update.
Comparison of Base Scenario with Optimistic and Pessimistic Scenarios, 2013 - 2025 (May 2013)
| 2013 - 2018 | 2019 - 2025 | ||||||
|---|---|---|---|---|---|---|---|
| GDP Growth in Optimistic Scenario | GDP Growth in Base Scenario | GDP Growth in Pessimistic Scenario | GDP Growth in Optimistic Scenario | GDP Growth in Base Scenario | GDP Growth in Pessimistic Scenario | Distribution of World Output 2025 | |
| United States | 2.5 | 2.3 | 2.1 | 2.4 | 2.0 | 1.6 | 18.3% |
| Europe* | 1.5 | 1.2 | 0.8 | 1.6 | 1.3 | 0.9 | 17.4% |
| of which: Euro Area |
1.4 | 1.1 | 0.8 | 1.6 | 1.3 | 1.0 | 12.0% |
| Japan | 1.3 | 0.9 | 0.5 | 1.2 | 0.9 | 0.7 | 4.8% |
| Other advanced** | 3.5 | 2.6 | 1.7 | 2.5 | 1.8 | 1.2 | 7.3% |
| Advanced Economies | 2.1 | 1.8 | 1.4 | 2.0 | 1.6 | 1.2 | 47.8% |
| China | 8.0 | 5.8 | 3.7 | 4.9 | 3.7 | 2.5 | 22.7% |
| India | 5.7 | 4.7 | 3.6 | 4.5 | 3.8 | 3.2 | 8.2% |
| Other developing Asia | 6.4 | 5.0 | 3.6 | 5.5 | 4.4 | 3.2 | 4.9% |
| Latin America | 3.9 | 3.2 | 2.5 | 3.4 | 2.8 | 2.2 | 7.1% |
| Middle East | 2.7 | 2.5 | 2.3 | 2.5 | 2.3 | 2.0 | 2.5% |
| Africa | 5.1 | 4.1 | 3.2 | 5.0 | 4.1 | 3.2 | 2.6% |
| Russia, Central Asia and Southeast Europe*** | 3.1 | 2.1 | 1.2 | 2.1 | 1.5 | 1.0 | 4.1% |
| Emerging and Developing Economies | 5.7 | 4.4 | 3.0 | 4.2 | 3.3 | 2.5 | 52.2% |
| World Total | 4.0 | 3.1 | 2.2 | 3.3 | 2.6 | 1.9 | 100.0% |
*Europe includes all 27 current members of the European Union, as well as Iceland, Norway, and Switzerland.
**Other advanced includes Canada, Israel, Korea, Australia, Taiwan, Hong Kong, Singapore, and New Zealand.
***Southeast Europe includes Albania, Bosnia & Herzegovina, Croatia, Macedonia, Serbia & Montenegro, and Turkey.
Source: The Conference Board Global Economic Outlook 2013, May 2013 update
About The Conference Board Global Economic Outlook
The Conference Board Global Economic Outlook 2013 provides projections for the output growth of the world economy for 2013, 2014-2018, and 2019-2025, including 11 major regions and about 50 advanced and emerging economies. Most forecasters only focus on the next year or two, while the International Monetary Fund provides an outlook that projects five years ahead. By extending projections based on a growth accounting model, looking at the contributions of labor, capital and productivity, over more than a decade, The Conference Board outlook can identify underlying structural changes in the economy.
- For detailed methodology, click here.
- For underlying data, click here.
Methodological Notes
- Short-term (2013) projections are based on The Conference Board U.S. Economic Forecast, The Conference Board Leading Economic indexes (LEIs) for 11 countries/regions, and secondary sources, such as the World Economic Outlook (International Monetary Fund), the Economic Outlook (Organization for Economic Cooperation and Development), European Commission and Congressional Budget Office.
- Medium-term (2014-2018) and long-term (2019-2025) projections are based on a growth accounting model, looking at the contributions of labor, capital and total factor productivity to growth. Growth in labor is approximated by the growth in working age population. Capital growth and total factor productivity growth are estimated by system of equations which are largely based on relevant past-period variables and some economic variables.
- The projected GDP growth, based on the growth accounting framework, is considered relative to measured trend growth of an economy. Our optimistic and pessimistic scenarios are based on the deviation of capital growth and total factor productivity growth from their respective trend growth.
- The calculation of measures of regional and global GDP growth requires levels of GDP to weigh the growth rates of individual countries and regions by their size of GDP. The country and region GDP weights are current weights, which are the average for the beginning and the end of each period, and which are benchmarked on purchasing power parity (PPP)-adjusted GDP from Penn World Table 7.0.