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Global Economic Prospects, Volume 2, January 2011 : Navigating Strong Currents
[Perspectivas economicas mundiales, Enero de 2011 : navegar en aguas peligrosas (Vol. 2)]

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  • World Bank

Abstract

Economic activity in most developing countries has, or is close to having, recovered. Supported by resurgence in international and domestic financial flows and higher commodity prices, most of the spare capacity in developing countries that was created by the crisis has been reabsorbed, and developing countries have regained trend growth rates close to those observed in the pre-crisis period. The remainder of this report is organized as follows. The next section discusses recent developments in global production, trade, and financial markets, and presents updates of the World Bank's forecast for the global economy and developing countries. The global economy is transitioning from the bounce-back phase of the recovery toward a period of slower but more sustainable growth. Growth in most developing countries is increasingly running into capacity constraints, while in high-income and developing Europe and Central Asia growth is hampered by the concentrated nature of slack and ongoing restructuring. In this environment, policy needs to be moving away from short-term demand stimulus toward measures that generate additional employment by enhancing the supply potential of economies. The global policy environment has become highly charged and uncertain, and presents multiple risks to prospects for developing countries. As emphasized at the recent G-20 meetings in Seoul (G-20 2010), both developing and high-income countries will need to take care to minimize the negative external consequences of their domestic policy actions. Concretely, this means that while countries must remain mindful of domestic conditions, when opportunities present themselves to pursue domestic policy objectives in a manner that support adjustment elsewhere in the global economy these should be taken up.

Suggested Citation

  • World Bank, 2011. "Global Economic Prospects, Volume 2, January 2011 : Navigating Strong Currents
    [Perspectivas economicas mundiales, Enero de 2011 : navegar en aguas peligrosas (Vol. 2)]
    ," World Bank Publications, The World Bank, number 12102, June.
  • Handle: RePEc:wbk:wbpubs:12102
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    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/12102/GEP2.pdf?sequence=1
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    References listed on IDEAS

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    1. Abdul d Abiad & Petya Koeva Brooks & Irina Tytell & Daniel Leigh & Ravi Balakrishnan, 2009. "What’s the Damage? Medium-term Output Dynamics After Banking Crises," IMF Working Papers 09/245, International Monetary Fund.
    2. World Bank, 2010. "Global Economic Prospects 2010 : Crisis, Finance, and Growth," World Bank Publications, The World Bank, number 2415, July.
    3. Freund, Caroline, 2009. "The trade response to global downturns : historical evidence," Policy Research Working Paper Series 5015, The World Bank.
    4. Radetzki, Marian & Eggert, Roderick G. & Lagos, Gustavo & Lima, Marcos & Tilton, John E., 2008. "The boom in mineral markets: How long might it last?," Resources Policy, Elsevier, vol. 33(3), pages 125-128, September.
    5. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
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