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World Economic Growth is Accelerating, Current Account Imbalances Remain High. Medium-term Outlook for the World Economy until 2011

Listed author(s):
  • Stephan Schulmeister


The medium-term outlook for the world economy starts from the following assumptions: The US dollar will continue to depreciate against the euro until 2008 and will then stabilise. More specifically, the euro exchange rate is assumed to rise to 1.42 $ until 2008, primarily as a result of a slowdown of the US economy, and to subsequently decline moderately until 2011 (to 1.35 $). Crucial factors in the persistent undervaluation of the dollar are the high current account deficit and the enormous foreign debt of the USA. The price of crude oil (Brent) in 2007 is forecast at 60 $ per barrel and is expected to gradually rise thereafter to 65 $ in 2011, primarily in reaction to the continued strong expansion of the world economy. Short-term interest rates in the euro area will average 2.8 percent over the 2007-2011 period, thus remaining lower than those in the USA (4.8 percent).

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Article provided by WIFO in its journal WIFO-Monatsberichte.

Volume (Year): 80 (2007)
Issue (Month): 2 (February)
Pages: 109-120

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Handle: RePEc:wfo:monber:y:2007:i:2:p:109-120
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  1. Maurice Obstfeld & Kenneth Rogoff, 2007. "The Unsustainable U.S. Current Account Position Revisited," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 339-376 National Bureau of Economic Research, Inc.
  2. Stephan Schulmeister, 2000. "Globalization without Global Money: The Double Role of the Dollar as National Currency and World Currency," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(3), pages 365-395, April.
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