A three-speed recoveryA three-speed recovery

In its spring forecasts, the International Monetary Fund (IMF) outlines relatively contained economic outlook. The Fund expects global growth to be 3.3% in 2013, afterwards speeding up to 4.0% in 2014. These forecasts are slightly lower than the ones from last January. Specifically, the global growth expected for 2013 is 0.2 percentage points lower than the previous forecast. The revision for most national economies is of a similar size.

The IMF outlines three different trajectories, which have led the institution to describe the situation as a three-speed recovery. In the most dynamic trajectory are the emerging economies, which will grow by more 5% in both years. The emerging Asian countries still stand out favourably in this group, with flash gross domestic product (GDP) forecasts above 7% for 2013-2014. The second speed group is made up of advanced non-European countries. Of particular note here is the recovery expected for the United States (1.9% growth in 2013 and 3% in 2014).

Lastly, the countries of the euro area would be in a slightly worse situation. The euro area as a whole would see a 0.3% drop this year, afterwards barely growing in 2014 (an increase of 1.1%). Out of the main economies of the single currency, only Germany escapes this recessionary situation and, even so, its 0.6% growth in 2013 compares badly with that of other non-European economies. For its part, Spain would see a 1.6% drop in GDP in 2013, afterwards picking up to 0.7% in 2014.

So what lies behind this disparate economic recovery? With regard to the economies of the euro area, the aspect highlighted by the IMF is the fact that the prolonged debt crisis in the euro area has spilled over and affected not only the activity of the periphery but also several core economies.

In the case of the United States, the Fund mentions that the efforts being made towards fiscal consolidation (which will equal 1.8% of GDP in 2013 according to the IMF) will hinder its recovery. Japan, for its part, will benefit in 2013 from the announced shift in economic policy with notable monetary and fiscal expansion, but the IMF doubts this impetus will last long.

With regard to the emerging economies, one key factor shared by many has been consumption's resistance, even during the slowdown in 2012. Based on this situation, the Fund believes that the current trend towards easier economic policies and the expected recovery in exports will support its scenario of acceleration.

In the area of risks, the IMF believes the measures adopted since the summer (the banking union project, new European Central Bank (ECB) instruments, etc.) have helped to reduce the risk of the euro area breaking up and that fiscal decisions in the United States have lessened the downside risks to activity due to the «fiscal cliff». However, there are still a large number of medium-term risks: the absence of credible fiscal consolidation plans in the United States and Japan; excessive debt, little room for economic policies and insufficient institutional advances in the euro area; the possible unwanted effects of unconventional monetary policies and, in the case of some emerging countries, the excessive investment and overpricing of some assets.