Without Economic Rebalancing, There Will Be No Healthy Recovery in EU Countries or in Global Economy

The global economic recovery is advancing. However, the recovery remains uneven, with downside risks in advanced economies remaining elevated, while overheating risks are growing in emerging economies. Rebalancing, internal and external, continues to be crucial. Without this economic rebalancing, there will be no healthy recovery. The argument is very simple: before the crisis, growth in many countries came from excessive domestic demand, be it consumption, or housing investment. This could not go on. Those countries must rely on other sources of demand. Until now, they have used fiscal policy to prop up domestic demand. This was needed, but it is not sustainable. Rebalancing is a complex process. No single measure, no one country holds the solution on its own. In other words, despite the overall global growth rebound, substantial shifts will be needed in order to secure the intended goals of strong, sustainable, and balanced global growth. Moreover, the critical role for enhanced global economic and financial policy cooperation is selfevident.