Lesson1 World Economic Outlook for 2010.pptVIP

Lesson One World Economic Outlook for 2010 April 2010 Rebalancing Growth International Monetary Fund /external/pubs In 2010, world output is expected to rise by about 4? percent, following a ? percent contraction in 2009. Economies that are off to a strong start are likely to remain in the lead, as growth in others is held back by lasting damage to financial sectors and household balance sheets. Activity remains dependent on highly accommodative macroeconomic policies and is subject to downside risks, as fiscal fragilities have come to the fore. In most advanced economies, fiscal and monetary policies should maintain a supportive thrust in 2010 to sustain growth and employment. But many of these economies also need to urgently adopt credible medium-term strategies to contain public debt and later bring it down to more prudent levels. Financial sector repair and reform are additional high-priority requirements. Many emerging economies are again growing rapidly and a number have begun to moderate their accommodative macroeconomic policies in the face of high capital inflows. Given prospects for relatively weak growth in the advanced economies, the challenge for emerging economies is to absorb rising inflows and nurture domestic demand without triggering a new boom-bust cycle. 1.Recovery Has Proceeded Better than Expected The global recovery has evolved better than expected, with activity recovering at varying speeds––tepidly in many advanced economies but solidly in most emerging and developing economies. Policy support was essential to jump-start the recovery. Monetary policy ?has been highly expansionary and supported by unconventional liquidity provision. Fiscal policy provided a major stimulus in response to the deep downturn. ? Among advanced economies, the United States is off to a better start than Europe and Japan. Among emerging and developing economies, emerging Asia i