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Publications & Research :: Working Paper

Global Economic Prospects, January 2011 : Navigating Strong Currents

asset price auction Bank Bond Bank Equity bank lending bank loan banking assets banking sector banking sectors banking system basis points Bond bond flows bond issuance Bond Portfolio bond yield bonds capacity constraints capital control capital controls capital flows capital formation capital gains capital inflow Capital inflows capital markets capital outflows capital shortages CDS Central Bank commodities commodity commodity prices consumer debt consumer demand consumer goods contingent liabilities Copyright Clearance Copyright Clearance Center corporate bonds credit default credit default swap credit default swaps credit rating creditors Current account balance current account balances current account deficit current account deficits current account surpluses debt flows debt relief deposits developing countries Developing country developing economies dividends dollar value domestic credit domestic economy durable durable goods economic developments economic performance emerging markets equipment equities equity flows equity issues equity market equity markets exchange rate exchange rate movements exchange rates exporters exposure financial crisis financial flows financial inflows financial institutions financial integration financial market financial markets financial sector financial sector policies Financial Stability financial support fiscal consolidation fiscal consolidations fiscal deficits fiscal policy Fixed investment flows of capital Food price food prices foreign banks foreign capital Foreign direct investment foreign exchange foreign exchange market foreign holdings foreign investors fund managers future growth futures global economy global exports global financial markets global investors global pension global trade government finances government spending growth rate growth rates hedge funds holdings host country import costs income incomes indebtedness inflation inflationary pressure inflationary pressures infrastructure investment institutional development Institutional investor interest income interest rate interest rate differentials interest rates International Bank international bond International capital International capital flows international financial markets International settlements investment climate investment flows investment funds investment projects investment rates investment spending investment vehicles labor market liquidity local currency local economy local market long-term interest loss of confidence Low-income countries macroeconomic management macroeconomic policy market developments market expectations market index market makers market participants market price market prices market valuations market volatility maturity middle-income countries monetary policy money market money supply monopoly Net debt oil price oil prices output output gap output gaps pension pension funds pension systems political stability Portfolio portfolio investment portfolios power parity price volatility private capital private capital flows Private creditors private savings public finances purchasing power rapid expansion regulatory requirements remittance remittances repayments reserve reserve requirements reserves savings savings rates securities short-term assets short-term debt sovereign debt sovereign debt markets speculative bubble supply shocks tax tax rate tax rates Technological change trading transaction costs transition countries transition economies Treasuries Unemployment rates volatility withdrawal world economy world trade yield spreads
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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 | Middle East | Europe and Central Asia | Sub-Saharan Africa | Latin America
2013-01-04T20:52:56Z | 2013-01-04T20:52:56Z | 2011-01

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.

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