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Publications & Research :: Working Paper

Global Economic Prospects, June 2012 : Managing Growth in a Volatile World

accounting arbitrage assets bailout bank lending Bank Loans banking systems basis points binding constraint bond bond issuance Bond Issues bond spreads Bond Yields bonds borrowing costs budget constraint buffers business confidence capacity constraints capital constraints capital goods capital inflows capital markets Capital outflows capital requirements capitalization CDS central bank Commodities commodity commodity markets commodity price commodity prices commodity traders consumer demand consumer goods consumer spending Copyright Clearance Copyright Clearance Center country capital country debt country Equity Credit Default Credit Default Swap credit squeeze credit squeezes crisis countries Current account balance current account balances current account deficit current account deficits debt Debt data debt flows debt levels debt obligations debt restructuring debt stocks debts decline in investment deposits developing countries developing country Developing country Equity developing economies developing economy domestic markets downside scenario durable durables Economic developments Emerging Markets Emerging-market Equities equity issuance Equity Issues Equity market Equity markets exchange rate Exchange Rates expenditure expenditures export growth export value Interest Rates exporter exporters exposures external shocks financial crises financial crisis financial institutions financial integration financial market financial markets financial sector financial sector developments financial sectors financial systems financing requirements fiscal consolidation fiscal deficits fiscal policies fiscal policy food price food prices foreign banks foreign currency Global Economy global finance global financial markets global financial systems global output global trade Government account government accounts Government budget government debt government deficit government deficits government expenditure government expenditures government revenue government revenues government spending Gross debt growth rate growth rates High-Income Countries high-income country household savings human capital import import demand Income income growth incomes Inflation inflation rates inflationary pressures interest rates International Bank international business International capital International capital flows international financial institutions international financial markets international reserves International Settlements International Trade investing investment activity investment spending lenders level of risk loan local currency low-income countries macroeconomic policies macroeconomic policy Macroeconomic vulnerabilities market conditions market price market prices Market regulators maturity middle-income countries Monetary Fund monetary policies monetary policy natural disasters Net capital oil commodities oil price oil prices Output Output Gap output gaps political stability political uncertainty Portfolio portfolio capital post-crisis period power parity private banks Private creditors Private debt private inflows public spending purchasing power purchasing power parity rate of growth real interest real interest rates Regional trade regulators remittances reserve return risk assessments risk aversion savings savings rate short-term debt small countries sovereign debt stock markets sustainable growth technological change trade deficit trade finance trading transition countries Treasury Treasury Yields value index volatile capital volatility weights withdrawal world economy World Trade

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Washington, DC
Africa | East Asia and Pacific | Europe and Central Asia | Latin America & Caribbean | South Asia | Middle East and North Africa | Africa | East Asia | Europe | North Africa | North America | South Asia | Middle East | Europe and Central Asia | Europe, Middle East and North Africa | Sub-Saharan Africa | Latin America
2013-01-04T20:56:36Z | 2013-01-04T20:56:36Z | 2012-06

The year began on a positive note. A marked improvement in market sentiment, combined with monetary policy easing in developing countries, was reflected in a rebound in economic activity in both developing and advanced countries. Industrial production, trade and capital goods sales all returned to positive territory, following the slow growth of the fourth quarter of 2011. Although debt levels in developing countries are lower, several countries (notably Jordan, India, and Pakistan) must reduce their structural fiscal balances to reduce debt to 40 percent of Gross domestic Product (GDP) by 2020 (or prevent debt-to-GDP ratios from rising further). As a result, sharp swings in investor sentiment and financial conditions will continue to complicate the conduct of macroeconomic policy in developing countries. In these conditions, policy in developing countries needs to be less reactive to short-term changes in external conditions, and more responsive to medium-term domestic considerations. A return to more neutral macroeconomic policies would also help developing countries reduce their vulnerabilities to external shocks, by rebuilding fiscal space, reducing short-term debt exposures and recreating the kinds of buffers that allowed them to react so resiliently to the 2008/09 crisis.


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