International Monetary Fund

Data cited at: Consumer price indexes, The International Monetary Fund Consumer price indexes (CPIs) are index numbers that measure changes in the prices of goods and services purchased or otherwise acquired by households, which households use directly, or indirectly, to satisfy their own needs and wants. In practice, most CPIs are calculated as weighted averages of the percentage price changes for a specified set, or ‘‘basket’’, of consumer products, the weights reflecting their relative importance in household consumption in some period. CPIs are widely used to index pensions and social security benefits. CPIs are also used to index other payments, such as interest payments or rents, or the prices of bonds. CPIs are also commonly used as a proxy for the general rate of inflation, even though they measure only consumer inflation. They are used by some governments or central banks to set inflation targets for purposes of monetary policy. The price data collected for CPI purposes can also be used to compile other indices, such as the price indices used to deflate household consumption expenditures in national accounts, or the purchasing power parities used to compare real levels of consumption in different countries.

Global growth is forecast at 3.5 percent in 2015 and 3.8 percent in 2016, with uneven prospects across the main countries and regions of the world. The distribution of risks to near-term global growth has become more balanced relative to the October World Economic Outlook but is still tilted to the downside. The decline in oil prices could boost activity more than expected. Geopolitical tensions continue to pose threats, and risks of disruptive shifts in asset prices remain relevant. In some advanced economies, protracted low inflation or deflation also pose risks to activity. The chapter takes a region-by-region look at the recent development in the world economy and the outlook for 2015, with particular attention to notable development in countries within each region.

Recent exchange rate movements have been unusually large, triggering a debate regarding their likely effects on trade. Historical experience in advanced and emerging market and developing economies suggests that exchange rate movements typically have sizable effects on export and import volumes. A 10 percent real effective depreciation in an economy’s currency is associated with a rise in real net exports of, on average, 1.5 percent of GDP, with substantial cross-country variation around this average. Although these effects fully materialize over a number of years, much of the adjustment occurs in the first year. The boost to exports associated with currency depreciation is found to be largest in countries with initial economic slack and with domestic financial systems that are operating normally. Some evidence suggests that the rise of global value chains has weakened the relationship between exchange rates and trade in intermediate products used as inputs into other economies’ exports. However, the bulk of global trade still consists of conventional trade, and there is little evidence of a general trend toward disconnect between exchange rates and total exports and imports.

The Data Template on International Reserves and Foreign Currency Liquidity is an innovative single framework that integrates the concept of international reserves and foreign currency liquidity by covering data on on-balance-sheet and off-balance-sheet international financial activities of country authorities as well as supplementary information. It aims to provide a comprehensive account of official foreign currency assets and drains on such resources arising from various foreign/domestic currency liabilities and commitments of the authorities.

The Principal Global Indicators (PGI) dataset provides internationally comparable data for the Group of 20 economies (G-20) and economies with systemically important financial sectors that are not members of the G-20. The PGI facilitates the monitoring of economic and financial developments for these jurisdictions. Launched in 2009, the PGI website is hosted by the IMF and is a joint undertaking of the Inter-Agency Group of Economic and Financial Statistics (IAG).

Private fixed investment in advanced economies contracted sharply during the global financial crisis, and there has been little recovery since. Investment has generally slowed more gradually in the rest of the world. Although housing investment fell especially sharply during the crisis, business investment accounts for the bulk of the slump, and the overriding factor holding it back has been the overall weakness of economic activity. In some countries, other contributing factors include financial constraints and policy uncertainty. These findings suggest that addressing the general weakness in economic activity is crucial for restoring growth in private investment.

Economic activity was surprisingly resilient through the global disinflation of 2022–23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession. However, the pace of expansion is expected to be low by historical standards and the speed of convergence toward higher living-standards for middle- and lower-income countries has slowed, implying persistent global disparities. With inflationary pressures abating more swiftly than expected in many countries, risks to the global outlook are now broadly balanced compared with last year. Monetary policy should ensure that inflation touches down smoothly. A renewed focus on fiscal consolidation is needed to rebuild room for budgetary maneuver and priority investments, and to ensure debt sustainability. Intensifying supply-enhancing reforms are crucial to increase growth towards the higher prepandemic era average and accelerate income convergence. Multilateral cooperation is needed to limit the costs and risks of geoeconomic fragmentation and climate change, speed the transition to green energy, and facilitate debt restructuring.