General Features and Composition of Groups in the World Economic Outlook Classification
XII. Climate Change Issues
The Effects of Weather Shocks on Economic Activity: How Can Low-Income Countries Cope? October 2017, Chapter 3
The Growth Impact of Tropical Cyclones October 2017, Box 3.1
The Role of Policies in Coping with Weather Shocks: A Model-Based Analysis October 2017, Box 3.2 Strategies for Coping with Weather Shocks and Climate Change: Selected Case Studies October 2017, Box 3.3
Coping with Weather Shocks: The Role of Financial Markets October 2017, Box 3.4
Historical Climate, Economic Development, and the World Income Distribution October 2017, Box 3.5
Mitigating Climate Change October 2017, Box 3.6
The Price of Manufactured Low-Carbon Energy Technologies April 2019, Box 3.1
What’s Happening with Global Carbon Emissions? October 2019, Box 1.SF.1
Mitigating Climate Change—Growth and Distribution-Friendly Strategies October 2020, Chapter 3
Glossary October 2020, Box 3.1
Zooming in on the Electricity Sector: The First Step toward Decarbonization October 2020, Box 3.2 Who Suffers Most from Climate Change? The Case of Natural Disasters April 2021, Box 1.2
Jobs and the Green Economy October 2021, Box 1.2
Clean Tech and the Role of Basic Scientific Research October 2021, Box 3.2
Commodity Market Developments and Forecasts October 2021, Chapter 1
Special Feature A Greener Labor Market: Employment, Policies, and Economic Transformation April 2022, Chapter 3 The Geography of Green- and Pollution-Intensive Jobs: Evidence from the United States April 2022, Box 3.1
A Greener Post-COVID Job Market? April 2022, Box 3.2
Near-Term Macroeconomic Impact of Decarbonization Policies October 2022, Chapter 3
Near-Term Implications of Carbon Pricing: A Review of the Literature October 2022, Box 3.1 Political Economy of Carbon Pricing: Experiences from South Africa, Sweden, and Uruguay October 2022, Box 3.2 Decarbonizing the Power Sector While Managing Renewables’ Intermittence October 2022, Box 3.3
The Natural Rate of Interest and the Green Transition April 2023, Box 2.1
Getting By with a Little Help from a Boom: Do Commodity Windfalls Speed Up
Human Development? October 2015, Box 2.3
Breaking the Deadlock: Identifying the Political Economy Drivers of Structural Reforms April 2016, Box 3.1 Can Reform Waves Turn the Tide? Some Case Studies Using the Synthetic Control Method April 2016, Box 3.4
A Global Rush for Land October 2016, Box 1.SF.1
Conflict, Growth, and Migration April 2017, Box 1.1
Tackling Measurement Challenges of Irish Economic Activity April 2017, Box 1.2
Within-Country Trends in Income per Capita: The Cases of Brazil, Russia, India,
China, and South Africa April 2017, Box 2.1
Technological Progress and Labor Shares: A Historical Overview April 2017, Box 3.1 The Elasticity of Substitution between Capital and Labor: Concept and Estimation April 2017, Box 3.2 Routine Tasks, Automation, and Economic Dislocation around the World April 2017, Box 3.3
Adjustments to the Labor Share of Income April 2017, Box 3.4
Smartphones and Global Trade April 2018, Box 1.1
Has Mismeasurement of the Digital Economy Affected Productivity Statistics? April 2018, Box 1.4
The Changing Service Content of Manufactures April 2018, Box 3.1
Patent Data and Concepts April 2018, Box 4.1
International Technology Sourcing and Knowledge Spillovers April 2018, Box 4.2
Relationship between Competition, Concentration, and Innovation April 2018, Box 4.4
Increasing Market Power October 2018, Box 1.1
Sharp GDP Declines: Some Stylized Facts October 2018, Box 1.5
Predicting Recessions and Slowdowns: A Daunting Task October 2018, Box 1.6
The Rise of Corporate Market Power and Its Macroeconomic Effects April 2019, Chapter 2 The Comovement between Industry Concentration and Corporate Saving April 2019, Box 2.1
Effects of Mergers and Acquisitions on Market Power April 2019, Box 2.2
The Global Automobile Industry: Recent Developments, and Implications for the Global Outlook October 2019, Box 1.1
Measuring Subnational Regional Economic Activity and Welfare October 2019, Box 2.1
The Persistent Effects of Local Shocks: The Case of Automotive Manufacturing Plant Closures October 2019, Box 2.3
The Political Effects of Structural Reforms October 2019, Box 3.1
The Impact of Crises on Structural Reforms October 2019, Box 3.2
The Persistence and Drivers of the Common Component of Interest Rate–Growth Differentials in
Advanced Economies April 2020, Box 2.2
Social Unrest during COVID-19 October 2020, Box 1.4
The Role of Information Technology Adoption during the Pandemic: Evidence from the
United States October 2020, Box 2.2
Education Losses during the Pandemic and the Role of Infrastructure April 2021, Box 2.2
Food Insecurity and the Business Cycle April 2021, Chapter 1,
Annex 1.SF.1
Food Insecurity and Prices during COVID-19 October 2021, Box 2.1
mRNA Vaccines and the Role of Basic Scientific Research October 2021, Box 3.1
Intellectual Property, Competition, and Innovation October 2021, Box 3.3
E
xecutive Directors broadly agreed with staff’s assessment of the global economic outlook, risks, and policy priorities. They welcomed the continued global economic resilience, particularly of some advanced and emerging market economies, but acknowledged that divergent growth prospects across the world’s regions pose a challenge to returning to pre-pandemic output trends. In the case of many emerging market and developing economies (EMDEs), the loss of momentum has reduced prospects for income convergence. Directors recognized that tight monetary policies, necessary to fight inflation, and the withdrawal of fiscal policy support to tackle soaring global debt and support disinflation efforts are also headwinds to growth in the short run. Most Directors agreed that increasing geoeconomic fragmentation is also weighing on the recovery and welcomed the Fund’s analysis on the costs of fragmentation. A few Directors emphasized that diversification in supply chains is important to build resilience. More generally, a number of Directors stressed that the Fund’s communication on geoeconomic fragmentation should be balanced.Directors generally agreed that ending Russia’s war against Ukraine remains the single most impactful action to improve the global outlook.
Directors broadly agreed that risks to the outlook are more balanced relative to April 2023, but remain tilted to the downside. While the acute stress in the banking system seen in March this year has subsided, in part due to swift action in Switzerland and the United States, they broadly noted that financial stability risks remain elevated. In particular, Directors emphasized that persistence in global underlying inflation could warrant higher-for-longer policy rates, which could in turn trigger a correction in financial markets and capital flow volatility. They also considered that commodity prices could see more
volatility due to climate and geopolitical shocks. Most Directors noted the risk of a further deterioration in China’s property sector and, in this regard, welcomed the recent policy actions taken by the authorities.
Directors also highlighted the risk of further debt distress in those EMDEs heavily reliant on external borrowing and generally indicated that the presence of a weak tail of banks in some major economies also poses vulnerabilities. Directors emphasized that should financial conditions tighten abruptly, adverse feedback loops could be triggered and again test the resilience of the global financial system.
Directors noted that global core inflation remains persistent and declining only slowly, and stressed that monetary policy should maintain a restrictive policy stance, tailored to country circumstances, until inflation declines sustainably to target. They called for clear and transparent communication to avoid a de-anchoring of inflation expectations. Directors also indicated that policies aimed at encouraging labor market participation can help ease labor market tightness in many advanced economies, which would support disinflation.
Directors acknowledged that the fast pace of monetary policy tightening adds further pressure on the financial sector, requiring careful monitoring of risks, better risk assessment and strengthened supervision, and closing supervision gaps in the nonbank financial sector. They called for an assessment of how consistently international standards in banking regulation were implemented during recent financial stresses. Noting vulnerabilities in the commercial real estate sector of some countries, Directors called for continued vigilance and close monitoring.
Directors stressed the need to gradually tighten fiscal policies as deficits and debt remain elevated. They considered that, although the primary responsibility for restoring price stability lies with central banks, The following remarks were made by the Chair at the conclusion of the Executive Board’s discussion of the Fiscal Monitor, Global Financial Stability Report, and World Economic Outlook on September 26, 2023.
by reducing aggregate demand and reinforcing the overall credibility of disinflation strategies. Directors recommended mobilizing revenues through tax capacity building and achieving efficiency gains in spending to help restore some fiscal space, while safeguarding targeted measures to protect the most vulnerable. They also noted that some countries in debt distress may require preemptive and orderly debt restructuring, underscoring the importance of multilateral cooperation in this regard.
Directors expressed concern over the dimming growth prospects for the medium term. In this context, they emphasized the importance of facilitating investment and of targeted and carefully sequenced supply-side reforms, which can enhance productivity growth despite constrained policy space and help dampen inflationary pressures.
Directors called for accelerating decarbonization efforts, while noting that the policy mix will need to strike a balance between climate goals, fiscal sustainability, and political feasibility. They agreed that relying mostly on spending-based measures will be costly and instead favored a combination of revenue, expenditure, and other financing and structural policies to deliver on climate goals. In this context, most Directors agreed that a policy package containing carbon pricing, complemented with measures to address market failures, catalyze private finance and green investment, and mitigate distributional concerns has higher chances to deliver on climate goals and
however, that carbon pricing is not an adequate solution in all countries. Directors acknowledged that the green transition will be challenging, particularly for EMDEs with high debt and sizable investment needs; at the same time, delaying the transition will only increase its costs. They generally agreed that incorporating climate change considerations into debt sustainability analyses could improve policy planning, while taking into consideration country-specific characteristics.
Directors underscored that internationally coordinated efforts are indispensable to minimize the cost of decarbonization, especially for low-income countries and small developing states. In this context, they highlighted the important catalytic role that the Resilience and Sustainability Trust could play in attracting green financing and investments. Directors stressed that green industrial policies should avoid distortions to trade and investment flows, in line with the rules of the World Trade Organization (WTO). In this context, a few Directors emphasized that measures such as carbon border adjustment mechanisms should also be WTO-compliant to safeguard international trade. While they considered that, in principle, green and food corridor agreements could help safeguard the energy transition and avert food insecurity, a few Directors underscored the difficulty of implementing these mechanisms. More generally, Directors emphasized that safeguarding the rules-based trading system would be important for global prosperity.