What Is World Economic Outlook (WEO)?

The World Economic Outlook (WEO) is a report by the International Monetary Fund (IMF) 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 systems.

Key Takeaways

  • The World Economic Outlook (WEO) is an IMF report that provides analysis and forecasts of economic developments and policies in its member countries.
  • The report encapsulates the state of the global economy and highlights risks and uncertainty that could threaten growth.
  • The IMF surveys economists and other experts twice a year to publish the WEO report.

Understanding 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.

The World Economic Outlook database is created during the bi-annual WEO exercise, which begins in January and June of each year and results in the April and September/October WEO publication. It is usually prepared twice a year and is used in meetings of the International Monetary and Financial Committee.

In 2017 WEO argued for a strengthening global recovery, with some 120 economies, accounting for three-quarters of world GDP, seeing a pickup in growth, the broadest synchronized global growth upsurge since 2010. Growth was higher than projected for advanced economies, including Germany, Japan, Korea, and the United States. Furthermore, key emerging markets and developing economies, including Brazil, China, and South Africa, also posted third-quarter growth stronger than their prior forecasts.

By April 2019, the situation had reversed. Global economic growth slowed during the second half of 2018. For 2019, growth was expected to be down by three basis points, from 3.6% in 2018 to 3.3% in 2019. According to the agency, the main causes for a global deceleration were trade tensions between the United States and China during the second half of 2018, tightening of financial policies across several countries, and policy uncertainty across economies. Industrial production declined noticeably, especially in China, during the second half of 2018 due to declining business confidence.

In early 2020, global lockdowns and travel restrictions gripped the world, causing initial economic fallout as people stayed at home and quarantined; this prompted revision in the IMF's outlook. Despite the economic toll, as of March 31, 2021, the WEO predicts that the global economy will grow at a rate of 6.6% in 2021 and moderating to 4.4% in 2022. These were higher than the October 2020 projections, largely due to more fiscal support in some large economies and the promise of vaccine-powered recovery. The report did note that a high degree of uncertainty surrounded these projections. This was also up from forecasts of 5.5% and 4.2% respectively that were produced just two months earlier as vaccine rollout has picked up the pace. Of course, these new forecasts are also subject to revision as things change.

While the 2020 crisis remains the most pressing concern, the IMF also keeps its eye on other factors that can change the economic trajectory of certain regions or the entire globe. Key risks to the forecasts include the flaring up of trade tensions between countries, risks regarding the UK's exit from the Eurozone area, and decelerating growth in Europe and China. The agency termed the current state of the global economy as a "delicate moment" and highlighted the role of policy certainty in ensuring that growth remains on track and the risks remain minimal.