World Economic Outlook Update Global Recovery Advances But Remains Uneven

The two-speed recovery continues. In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks. In many emerging economies, activity remains buoyant, inflation pressures are emerging, and there are now some signs of overheating, driven in part by strong capital inflows. Most developing countries, particularly in sub-Saharan Africa, are also growing strongly. Global output is projected to expand by 41⁄2 percent in 2011 (Table 1 and Figure 1), an upward revision of about 1⁄4 percentage point relative to the October 2010 World Economic Outlook (WEO). This reflects stronger-than-expected activity in the second half of 2010 as well as new policy initiatives in the United States that will boost activity this year. But downside risks to the recovery remain elevated. The most urgent requirements for robust recovery are comprehensive and rapid actions to overcome sovereign and financial troubles in the euro area and policies to redress fiscal imbalances and to repair and reform financial systems in advanced economies more generally. These need to be complemented with policies that keep overheating pressures in check and facilitate external re-balancing in key emerging economies.

Website:

Pages:

9

Publisher:

International Monetary Fund

Author:

International Monetary Fund

Date:

January 25, 2011

Media Type:

Report

Category:

Emerging Markets, Public Policy