The most likely scenario for the U.K. economy is that it will gradually recover, although it will face continued headwinds from a soft housing market, household and financial sector deleveraging, and ongoing consolidation of the budget.
The head of the IMF Christine Lagarde was clear during her press conference—European leaders deal to help Greece and the euro area is a very constructive and comprehensive package of measures to resolve debt problems.
Much of the debate over global rebalancing has focused on the U.S.-China trade imbalance. But that’s missing the bigger picture. With the growth of cross-border supply chains—a signature feature of Asia’s trade in recent decades—it would be misleading to focus on bilateral imbalances and exchange rates. Instead of specializing in producing certain types of final goods, Asian exporters increasingly have specialized in certain stages of production and become vertically integrated with each other. So, as Asia’s economies strive to rebalance their growth models, we need to understand better how the regional supply chain affects the way exchange rates and shifts in global demand work.
With the global economy on the mend, countries in the Middle East and North Africa are witnessing a pickup in trade and economic growth. But, within the region, the picture is mixed. Indeed, for the region’s oil-importing countries, we are likely to see growth nudge up from 4½ percent in 2009 to around 5 percent this year. However, that is well below the growth rate required to create the 18 million jobs needed over the next decade. For these countries, greater competitiveness will be the crucial ingredient to boosting economic growth and employment. In this blog post, Masood Ahmed explores what we mean by ‘competitiveness’ and what are the policy actions governments need to take to raise it.