2015-12 Growth projections for the advanced and emerging economies

We talked a few times about international linkages between countries. An article in the Economist focuses on international linkages between regions. It is based on the projections by the International Monetary Fund about growth in the next 5 years. There are three scenarios considered

• baseline
• there is a slowdown in emerging economies (a 4% drop in investment)
• there is a slowdown in emerging economies (a 4% drop in investment) and capital outflow from emerging economies.

As you can see from the graphs below, emerging economies slowdown would reduce growth quite a bit: by 2% in BRICS countries, 1% in other emerging economies and .3% in advanced economies. A panic which leads to a capital outflow from emerging economies would make things worse in all regions.

Note also that the predictions suggest convergence: poor countries are expected, in every scenario, to grow faster than rich countries.