So what might 2013 look like in terms of GDP growth and inflation? To answer that question I went to the IMF World Economic Outlook Database (October 2012) and downloaded GDP growth and inflation data for 2012 and 2013.* I did this for the 35 economies known as “Advanced economies”. I then created two variables “Excess GDP Growth” and “Excess Inflation” defined as the 2013 value less the 2012 value. So if GDP growth in 2013 is expected to be higher than (expected) GDP growth in 2012 the value of the Excess GDP will be positive. Similarly, if inflation in 2012 in 2013 is expected to be higher than (expected) inflation in 2012 the value of the Excess Inflation will be positive. Ideally we’d like to see positive Excess GDP and negative Excess Inflation (unless you can think of a story why higher inflation is a ‘good’ thing – regrettably some people do think that).
I then graphed the data – the red dot is Australia.
As can be seen the bulk of advanced economies are expected (by the IMF) to enjoy higher GDP growth in 2013 than in 2012 and lower inflation than in 2012. Australia is one of two economies (along with Norway) expected to experience lower GDP growth in 2013 than in 2012 and higher inflation in 2013 than in 2012.
* these data are still forecasts.