This paper highlights that the second part of 1992 has been characterized by flagging consumer and business confidence, weaker-than-expected economic activity—especially in Europe and Japan—and considerable tensions in foreign exchange markets. Despite encouraging signs of increased growth in the United States, these developments have cast new doubts on the prospects for recovery in the industrial world after what has already been two years of weak growth or recession in many countries. The persistent currency turbulence since September 1992 and growing tensions over trade have also contributed to increased uncertainty.

The World Economic Outlook, published twice a year in English, French, Spanish, and Arabic, presents IMF staff economists analyses of global economic developments during the near and medium term. Chapters give an overview of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest. Annexes, boxes, charts, and an extensive statistical appendix augment the text.

The economic and financial crisis that erupted in southeast Asia in July 1997 had continued to deepen and broaden as of December, and spillover effects from investor deteriorating confidence in emerging market economies were being felt throughout the global financial system. This special Interim Assessment of the World Economic Outlook revises regional and global economic projections made by the IMF staff, as published in the October 1997 issue, in light of the crisis; charts the buildup to the crisis and its onset and evolution; assesses effects on the advanced economies and on private financing for developing countries; and raises policy issues that the crisis has posed.

This interim update of the IMF's latest regular reports on the World Economic Outlook (published in October 1998) and International Capital Markets (September 1998) provides a preliminary assessment of the unusual turbulence in international financial markets during much of the period August-November 1998, and its implications for the global economic outlook and for policy. The survey of prospects and policies is the product of a comprehensive interdepartmental review of world economic developments, which draws primarily on information the IMF gathers through its consultations with member countries. For its eveluation of developments in financial markets, the report also draws, in part, on informal discussions with commercial and investment banks, securities firms, stock and futures exchanges, and regulatory and monetary authorities.

This paper provides information on private market financing for developing countries, covering developments since August 1992. Progress in dealing with bank debt problems has been based in large part on persistence in the pursuit of stabilization and reform programs. Such programs have resulted in strengthened external positions that have allowed debtor countries to accumulate reserves for use in debt-reduction operations. All of the countries where negotiations are now continuing had at some point suspended payments on medium- and long-term debt. Banks have recognized that resumption of regular (albeit partial) payments can be politically difficult in the absence of a quid pro quo. The group of middle-and lower-middle income countries with debt problems still to come to terms with bank creditors on debt-reduction packages is now limited. Many of these remaining countries (including Bulgaria, Ecuador, Panama, Peru, and Poland) have already begun negotiations with creditor banks.

Research activity in the IMF emphasizes the links between the organization's policy and operational concerns. The main objectives of research is IMF staff understanding of policy and operational issues relevant to the institution, and to improve the analytical quality of the work prepared for management and the Executive Board and the advice provided to member countries. The scope of research in the IMF is defined by the purposes and functions of the institution. In order to foster innovation and ensure quality control, the IMF makes much of its research available outside the institution and encourages staff to interact with academia and other research organizations through conferences, seminars, and occasional joint research projects. The visiting scholar’s program has also enhanced the quality of research done in the IMF. This program brings in leading members of the economics profession from around the world to assist in the preparation of papers for the Executive Board and to conduct research on IMF-related issues.

The World Economic Outlook, published twice a year in English, French, Spanish, and Arabic, presents IMF staff economists analyses of global economic developments during the near and medium term. Chapters give an overview of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest. Annexes, boxes, charts, and an extensive statistical appendix augment the text.

The World Economic Outlook, published twice a year in English, French, Spanish, and Arabic, presents IMF staff economists analyses of global economic developments during the near and medium term. Chapters give an overview of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest. Annexes, boxes, charts, and an extensive statistical appendix augment the text.

The World Economic Outlook presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities.