Rebalancing global demand
AbstractThe article examines to what extent the recovery of the global economy could gain support from a more balanced growth of global demand than in the past. Despite the gradual recovery of the global economy, it remains highly uncertain when – or even whether – growth can return to the often very vigorous pace prevailing before the crisis, especially as that dynamism was in many countries largely based on macroeconomic distortions which were most clearly apparent in the growing current account surpluses and deficits on the balance of payments, as is evident from our analysis of the figures from 1995 onwards. At the Pittsburgh summit in September 2009, in the Framework for Strong, Sustainable, and Balanced Growth the G20 leaders agreed that deficit countries should support private savings and strive towards fiscal consolidation. They will not only need to modify their spending patterns but will also have to transfer their focus to the export sector. To offset the shortfall in demand from these deficit countries, the surplus countries are called upon to reduce their dependence on exports and tap domestic sources of growth. The authors examine the actual policy implications of this for the US, China and the euro area. Although a number of countries have already adopted a range of policy measures which are a move in the right direction, restoring the balance of global demand remains a major challenge, not least on account of the difficult-to-implement but no less essential structural reforms, or the time required to push those reforms through. It will be no easy task to restore the macroeconomic equilibrium, achieve a broad consensus and create the conditions for strong, sustainable and balanced growth, in line with the G20 aims. The movement towards a new global balance risks becoming a protracted process, with the possibility of a worldwide growth slowdown in the meantime.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2010)
Issue (Month): II (September)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
G20; United States; China; euro area; saving; investment; balance of payments current account;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.