World Economy Profile 2017

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Economy - overviewThe international financial crisis of 2008-09 led to the first downturn in global output since 1946 and presented the world with a major new challenge: determining what mix of fiscal and monetary policies to follow to restore growth and jobs, while keeping inflation and debt under control. Financial stabilization and stimulus programs that started in 2009-11, combined with lower tax revenues in 2009-10, required most countries to run large budget deficits. Treasuries issued new public debt - totaling $9.1 trillion since 2008 - to pay for the additional expenditures. To keep interest rates low, most central banks monetized that debt, injecting large sums of money into their economies - between December 2008 and December 2013 the global money supply increased by more than 35%. Governments are now faced with the difficult task of spurring current growth and employment without saddling their economies with so much debt that they sacrifice long-term growth and financial stability. When economic activity picks up, central banks will confront the difficult task of containing inflation without raising interest rates so high they snuff out further growth.

Fiscal and monetary data for 2013 are currently available for 180 countries, which together account for 98.5% of world GDP. Of the 180 countries, 82 pursued unequivocally expansionary policies, boosting government spending while also expanding their money supply relatively rapidly - faster than the world average of 3.1%; 28 followed restrictive fiscal and monetary policies, reducing government spending and holding money growth to less than the 3.1% average; and the remaining 70 followed a mix of counterbalancing fiscal and monetary policies, either reducing government spending while accelerating money growth, or boosting spending while curtailing money growth.

(For more information, see attached spreadsheet, Fiscal and Monetary Data, 2008-2012.)

In 2013, for many countries the drive for fiscal austerity that began in 2011 abated. While 5 out of 6 countries slowed spending in 2012, only 1 in 2 countries slowed spending in 2013. About 1 in 3 countries actually lowered the level of their expenditures. The global growth rate for government expenditures increased from 1.6% in 2012 to 5.1% in 2013, after falling from a 10.1% growth rate in 2011. On the other hand, nearly 2 out of 3 central banks tightened monetary policy in 2013, decelerating the rate of growth of their money supply, compared with only 1 out of 3 in 2012. Roughly 1 of 4 central banks actually withdrew money from circulation, an increase from 1 out of 7 in 2012. Growth of the global money supply, as measured by the narrowly defined M1, slowed from 8.7% in 2009 and 10.4% in 2010 to 5.2% in 2011, 4.6% in 2012, and 3.1% in 2013. Several notable shifts occurred in 2013. By cutting government expenditures and expanding money supplies, the US and Canada moved against the trend in the rest of the world. France reversed course completely. Rather than reducing expenditures and money as it had in 2012, it expanded both. Germany reversed its fiscal policy, sharply expanding federal spending, while continuing to grow the money supply. South Korea shifted monetary policy into high gear, while maintaining a strongly expansionary fiscal policy. Japan, however, continued to pursue austere fiscal and monetary policies.

Austere economic policies have significantly affected economic performance. The global budget deficit narrowed to roughly $2.7 trillion in 2012 and $2.1 trillion in 2013, or 3.8% and 2.5% of World GDP, respectively. But growth of the world economy slipped from 5.1% in 2010 and 3.7% in 2011, to just 3.1% in 2012, and 2.9% in 2013.

Countries with expansionary fiscal and monetary policies achieved significantly higher rates of growth, higher growth of tax revenues, and greater success reducing the public debt burden than those countries that chose contractionary policies. In 2013, the 82 countries that followed a pro-growth approach achieved a median GDP growth rate of 4.7%, compared to 1.7% for the 28 countries with restrictive fiscal and monetary policies, a difference of 3 percentage points. Among the 82, China grew 7.7%, Philippines 6.8%, Malaysia 4.7%, Pakistan and Saudi Arabia 3.6%, Argentina 3.5%, South Korea 2.8%, and Russia 1.3%, while among the 28, Brazil grew 2.3%, Japan 2.0%, South Africa 2.0%, Netherlands -0.8%, Croatia -1.0%, Iran -1.5%, Portugal -1.8%, Greece -3.8%, and Cyprus -8.7%.

Faster GDP growth and lower unemployment rates translated into increased tax revenues and a less cumbersome debt burden. Revenues for the 82 expansionary countries grew at a median rate of 10.7%, whereas tax revenues fell at a median rate of 6.8% for the 28 countries that chose austere economic policies. Budget balances improved for about three-quarters of the 28, but, for most, debt grew faster than GDP, and the median level of their public debt as a share of GDP increased 9.1 percentage points, to 59.2%. On the other hand, budget balances deteriorated for most of the 82 pro-growth countries, but GDP growth outpaced increases in debt, and the median level of public debt as a share of GDP increased just 1.9%, to 39.8%.

The world recession has suppressed inflation rates - world inflation declined 1.0 percentage point in 2012 to about 4.1% and 0.2 percentage point to 3.9% in 2013. In 2013 the median inflation rate for the 82 pro-growth countries was 1.3 percentage points higher than that for the countries that followed more austere fiscal and monetary policies. Overall, the latter countries also improved their current account balances by shedding imports; as a result, current account balances deteriorated for most of the countries that pursued pro-growth policies. Slow growth of world income continued to hold import demand in check and crude oil prices fell. Consequently, the dollar value of world trade grew just 1.3% in 2013.

Beyond the current global slowdown, the world faces several long standing economic challenges. The addition of 80 million people each year to an already overcrowded globe is exacerbating the problems of pollution, waste-disposal, epidemics, water-shortages, famine, over-fishing of oceans, deforestation, desertification, and depletion of non-renewable resources. The nation-state, as a bedrock economic-political institution, is steadily losing control over international flows of people, goods, services, funds, and technology. The introduction of the euro as the common currency of much of Western Europe in January 1999, while paving the way for an integrated economic powerhouse, has created economic risks because the participating nations have varying income levels and growth rates, and hence, require a different mix of monetary and fiscal policies. Governments, especially in Western Europe, face the difficult political problem of channeling resources away from welfare programs in order to increase investment and strengthen incentives to seek employment. Because of their own internal problems and priorities, the industrialized countries are unable to devote sufficient resources to deal effectively with the poorer areas of the world, which, at least from an economic point of view, are becoming further marginalized. The terrorist attacks on the US on 11 September 2001 accentuated a growing risk to global prosperity - the diversion of resources away from capital investments to counter-terrorism programs.

Despite these vexing problems, the world economy also shows great promise. Technology has made possible further advances in a wide range of fields, from agriculture, to medicine, alternative energy, metallurgy, and transportation. Improved global communications have greatly reduced the costs of international trade, helping the world gain from the international division of labor, raise living standards, and reduce income disparities among nations. Much of the resilience of the world economy in the aftermath of the financial crisis resulted from government and central bank leaders around the globe working in concert to stem the financial onslaught, knowing well the lessons of past economic failures.
GDP (purchasing power parity)$119.3 trillion (2016 est.)
$115.8 trillion (2015 est.)
$112.2 trillion (2014 est.)
note: data are in 2016 dollars
GDP (official exchange rate)SGWP (gross world product): $75.27 trillion (2016 est.)
GDP - real growth rate3% (2016 est.)
3.2% (2015 est.)
3.3% (2014 est.)
GDP - per capita (PPP)$16,300 (2016 est.)
$16,000 (2015 est.)
$15,800 (2014 est.)
note: data are in 2016 dollars
Gross national saving26.8% of GDP (2016 est.)
27.4% of GDP (2015 est.)
27.8% of GDP (2014 est.)
GDP - composition, by end usehousehold consumption: 57.2%
government consumption: 16.4%
investment in fixed capital: 25.3%
investment in inventories: 0.8%
exports of goods and services: 28.1%
imports of goods and services: -27.7% (2016 est.)
GDP - composition by sectoragriculture: 6.3%
industry: 30.2%
services: 62.8% (2016 est.)
Labor force3.53 billion (2016 est.)
Labor force - by occupationagriculture: 31.7%
industry: 23.6%
services: 44.7% (2013 est.)
Unemployment rate7.3% (2016 est.)
7.2% (2015 est.)
note: 30% combined unemployment and underemployment in many non-industrialized countries; developed countries typically 4%-12% unemployment (2007 est.)
Household income or consumption by percentage sharelowest 10%: 2.6%
highest 10%: 30.2% (2008 est.)
Distribution of family income - Gini index37.9 (2012 est.)
37.9 (2005 est.)
Budgetrevenues: $19.8 trillion
expenditures: $22.02 trillion (2016 est.)
Taxes and other revenues26.3% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-3% of GDP (2016 est.)
Public debt59.6% of GDP (2016 est.)
58.7% of GDP (2015 est.)
Inflation rate (consumer prices)world average: 3.6% (2015 est.) 0.9% (2015 est.)
developed countries: 5.4% (2015 est.) 0.3% (2014 est.)
developing countries: 5.7% (2015 est.) 4.7% (2014 est.)
note: the above estimates are weighted averages; inflation in developed countries is 0% to 4% typically, in developing countries, 4% to 10% typically; national inflation rates vary widely in individual cases; inflation rates have declined for most countries for the last several years, held in check by increasing international competition from several low wage countries and by soft demand due to the world financial crisis
Stock of narrow money$30.97 trillion (31 December 2016 est.)
$27.91 trillion (31 December 2015 est.)
Stock of broad money$83.64 trillion (31 December 2016 est.)
$80.79 trillion (31 December 2015 est.)
Stock of domestic credit$93.95 trillion (31 December 2016 est.)
$88.82 trillion (31 December 2015 est.)
Market value of publicly traded shares$66.79 trillion (31 December 2015 est.)
$67.47 trillion (31 December 2014 est.)
$67.16 trillion (31 December 2013 est.)
Industriesdominated by the onrush of technology, especially in computers, robotics, telecommunications, and medicines and medical equipment; most of these advances take place in OECD nations; only a small portion of non-OECD countries have succeeded in rapidly adjusting to these technological forces; the accelerated development of new technologies is complicating already grim environmental problems
Industrial production growth rate2.3% (2016 est.)
Exports$15.78 trillion (2016 est.)
$15.86 trillion (2015 est.)
Exports - commoditiesthe whole range of industrial and agricultural goods and services
top ten - share of world trade: electrical machinery, including computers 14.8%; mineral fuels, including oil, coal, gas, and refined products 14.4%; nuclear reactors, boilers, and parts 14.2%; cars, trucks, and buses 8.9%; scientific and precision instruments 3.5%; plastics 3.4%; iron and steel 2.7%; organic chemicals 2.6%; pharmaceutical products 2.6%; diamonds, pearls, and precious stones 1.9% (2007 est.)
Imports$15.13 trillion (2016 est.)
$16.05 trillion (2015 est.)
Imports - commoditiesthe whole range of industrial and agricultural goods and services
top ten - share of world trade: see listing for exports
Debt - external$75.89 trillion (31 December 2016 est.)
$74.74 trillion (31 December 2015 est.)
note: this figure is the sum total of all countries' external debt, both public and private
Stock of direct foreign investment - at home$28.06 trillion (31 December 2016 est.)
$26.07 trillion (31 December 2015 est.)
Stock of direct foreign investment - abroad$29.56 trillion (31 December 2016 est.)
$27.72 trillion (31 December 2015 est.)

Source: CIA World Factbook
This page was last updated on July 9, 2017