Transcript

Washington, D.C.
Monday, April 11, 2011

Speaker: Good day. I am William Murray, Chief of Media Relations at the IMF. This is the spring edition of the World Economic Outlook press briefing. We are live and, of course, on the record.

Welcome to everyone watching via the webcast and on the Online Media Briefing Center. We will be taking questions from journalists both in the room here in Washington and via the Media Briefing Center.

Let me introduce the participants. We have Olivier Blanchard, Economic Counsellor and Director of Research at the IMF; Jörg Decressin, Senior Advisor of Research at the IMF, and Abdul Abiad, who is with the World Economic Studies Division of the Research Department.

Olivier will have some brief opening remarks. We will have them available at end of the briefing and then we will take your questions.

Mr. Blanchard - Thank you, Bill. Good morning.

The world economic recovery is gaining strength but it remains unbalanced and that is what I am going to develop in the next few minutes. The best way to make the point is to give you three numbers. For the world economy, for both 2011 and 2012, we expect the growth rate to be about 4½ percent, a fairly high growth rate, but if you look at the details you find that for advanced economies we forecast only about 2½ percent for each of the two years, and for the emerging and developing countries we forecast 6½ percent for each of the next two years, so 4½ , 2½ , 6.½.

Let me start with the good news, the strengthening of the recovery. Earlier there were fears of a double dip. We did not share them, but they were there. They have not materialized. The main worry was that in advanced economies, after an initial recovery which was driven by the inventory cycle and fiscal stimulus, this would come to an end and growth would fizzle. That has not happened. The inventory cycle is largely over, fiscal stimulus has turned in most places to fiscal consolidation, but private demand, consumption, and investment have taken the relay. That is very good news. It [the double dip recession] is something which did not happen; could have happened, and the fact it did not is good news.

Fears have turned to commodity prices. Commodity prices have increased more than expected, reflecting a combination of strong demand growth and a number of supply shocks. When you think about these increases, you think about the 1970s and the terrible stagflation that we had then. We do not think at this time that these increases will derail the recovery.

If you look at advanced countries, the decrease in the share of oil, the disappearance of wage indexation either de jure or de facto, and the anchoring of inflation expectations all combine to suggest small effects on either growth or core inflation. In emerging market countries, the challenge is stronger, largely because the share of food in consumption is larger, and the credibility of some of the emerging market central banks is still weak.

So, in these countries, they have to be more careful. It could be that inflation may be a bit higher for some time, but as our forecasts indicate, we do not expect this to have a major adverse effect on growth. Let me remind you of our 6½ percent forecast for this set of countries.

Now let me turn to the bad news, which is about the unbalanced aspect of the recovery. In most advanced economies, output is still far below potential. Unemployment is high, and low growth implies that it will remain so for many years to come. The source of low growth can be traced to both pre-crisis excesses and to wounds from the crisis. In many countries, especially the US, the housing market is depressed—there is no other word for it—leading to anemic housing investment. This will continue for some time.

The crisis itself has led to a large deterioration in fiscal positions, forcing a shift from fiscal stimulus to fiscal consolidation, and at the same time not eliminating market worries about fiscal sustainability. Finally, in many countries, banks are struggling to achieve higher capital ratios in the face of increasing nonperforming loans.

The problems of peripheral Europe, which combine these interactions between low growth, fiscal woes, and financial pressures, are particularly acute. Reestablishing fiscal and financial sustainability, in the face of low or negative growth and high interest rates, is a substantial challenge and will take time. And, while they are extreme, the problems of peripheral Europe point to a more general problem and a fundamental one, an underlying low rate of growth of potential output. Adjustment, be it fiscal, financial, or otherwise, is very difficult to do when growth is low.

Now the policy advice to advanced countries remains largely the same as it was last October or even previous WEOs, insofar as it has been only partly heeded This includes, for advanced economies: increased clarity on banks’ exposures with, importantly, ready recapitalization plans if and where needed; smart fiscal consolidation that is not too fast, which would kill growth, and not too slow, which would kill credibility; redesign of financial regulation and supervision; and, especially in Europe, an increased focus on reforms to increase potential growth.

Now let me turn to emerging market countries. In emerging market countries the crisis has not left deep marks or deep wounds. Their fiscal and financial positions were typically stronger to start, and adverse effects of the crisis have been more muted. High underlying growth and low interest rates are making fiscal adjustment much easier than in advanced countries. Exports have largely recovered, and whatever shortfall in external demand some of these countries experienced they have made up through an increase in domestic demand. Capital outflows, which dominated during the crisis, have turned to capital inflows both due to better growth prospects in that part of the world and to higher interest rates.

So the challenge for emerging market countries is very different from that facing advanced countries, namely it is to avoid overheating in the face of a closing output gap and higher capital flows. What should be the response? The response should be twofold: first, on the macro side, to rely on a combination of higher interest rates and fiscal consolidation to maintain output at potential; second, to use a combination of reserve accumulation and macro-prudential tools, including, where needed, capital controls, to avoid increases in systemic risk stemming from inflows.

Now, countries are often tempted to resist the exchange rate appreciation, which is likely to come with higher interest rates and higher inflows. But within limits appreciation is good: appreciation increases real income, is part of the desirable adjustment, and should not be resisted.

Let me return to the overall picture. Overall, the macro policy agenda for the world economy remains the same, but with time, probably more urgent. For the recovery to be sustained, advanced countries must achieve fiscal consolidation. To do so, and to maintain growth, they need to rely on increased external demand. Symmetrically, emerging market countries must rely less on external demand and more on domestic demand.

Appreciation of emerging market countries' currencies relative to advanced countries' currencies is a central key to this global adjustment; it is not the only key but it is a central key. The need for careful design of policies at the national level, coordinated at the global level, may be as important today as it was at the peak of the crisis two years ago.

Thank you very much.

Mr. Murray: We are going to take questions from the audience. Please identify yourselves for our viewers.

Question - I see from your projections that you expect a much slower fiscal adjustment for Italy than the government expects. You have a deficit of 3.5 percent still in 2012 whereas the government is at 3 or below 3. I would like you to explain this. Italy is also the slowest growing country in the G-7, probably among most advanced countries. Could you please explain the reason for this slow growth and what would be your policy advice to Italy in terms of promoting faster growth?

Mr. Decressin: - As far as fiscal policy is concerned, we understand that the objective of the Italian government is to reduce the deficit to 3 percent, or below, by the year 2013. In fact, Italy by the year 2013 is going to be pretty close to reaching that objective according to our forecast, closer than many other Euro Area economies. It will, however, still need some additional measures in order to reach that objective, given also the relatively subdued growth rate that we are forecasting for 2011 and 2012 of just between 1 and 1 1/4 percent.

Now, you asked why that is the case. Italy has been struggling with growth for a while. The growth rate has been relatively low for an extended period now and we trace it to structural rigidities in the economy. On that front, we have been pushing for policies to improve education, also the way the justice apparatus works, local services, and also to reform dual labor markets; that is to say, labor markets that offer strong protection to some but less protection to others.

Question - I want to ask about the Japanese economy and the earthquake and tsunami issue. You assumed that the power shortage and nuclear power plant accident would be resolved in a few months, two or three months, but some experts worry about it continuing much more, about half a year or more. Are you afraid that the Japanese economy would be growing more slowly?

Secondly, I want to ask about the supply chain issue. Japanese automobile (part makers) make parts and some US companies and other companies do not make products fully. What is your assessment about the supply chain?

Mr. Abiad - Let me emphasize that the uncertainty around the outlook for Japan is extremely large at this point, for several reasons. One is that there is uncertainty about the extent of the damage to capital. The official estimate is that the damage is about 3-5 percent of GDP or about double that of the Kobe earthquake, but there is still uncertainty around that estimate.

A second big uncertainty is the length of time it will take until both supply chain disruptions and power disruptions are resolved. Our projections assume that these disruptions will be resolved in just a few months, but there are clearly substantial downside risks to that.

On your other question about supply chains, in terms of potential spillovers to the region there are several channels through which spillovers can occur. One is through trade; a second is through finance channels; and a third is through Japan's role in the global supply chain. Analysis by the Asia and Pacific Department here, more details of which will come out in the Regional Economic Outlook later this month, finds that the first two channels are likely to have only modest effects in terms of spillovers, but the third channel, disruptions in the global supply chain, are likely to prove potentially more important.

Question: When we heard from you last October you talked about the importance of evenhanded surveillance and I am wondering how that is showing up in here. We are seeing in this report some rather stronger comments toward the emerging markets where it is like hard landing, the risks of perhaps a boom-and-bust real estate cycle in China taking down the whole region, and in the GFSR we also saw some rather stark criticism of housing policy. I am wondering what this is telling us about the IMF's attitude right now.

Mr. Blanchard - I would argue that surveillance continues to be evenhanded if you look at what we say about various countries. I think we are warning emerging market countries that they are getting to the point where things may be too good, and I think there is a long history of countries waiting too long to do something about it. It is not a criticism, it is more of advice.

In the case of advanced countries, I think we have been fairly clear, for example, about the need for medium-term fiscal consolidation in the US, just to take an example. I think we do not mince words there. So, I would argue that we are evenhanded.

Question: How do you think the raising of the oil prices could affect this forecast and when will be the breakdown of this prediction effect?

Mr. Blanchard: In general, for each country we have tried to estimate what the effect of an increase in oil prices of, say, 10 percent would be on growth and inflation, and our forecasts reflect that fact. If the increase were substantially larger, then you might think that the computation we have done would be incomplete. There are some implications at the global level in terms of changes in the external balances of various countries. We have taken all these into account. Again, for the type of increase we have seen, we do not see major effects on either growth or inflation.

Maybe Jorg wants to add something to that.

Mr. Decressin: Presently our forecast is based on the assumption that the average price across three different types of oil is at $108 per barrel. This average now is a bit above 110, so the changes since the forecast are minor.

Question: I would like to ask a question on inflation. In your report you are optimistic that the inflation rate in the developed countries is going to stay rather low, it is going to come down. I would like to ask you what that means in terms of policy advice to the European Central Bank which just raised its rates and which is expected to raise them further, and also to the Federal Reserve which for the moment is maintaining its expansive and accommodative policy stance and does not show any signs of stopping either quantitative easing or raising rates.

Mr. Blanchard: When we look at inflation in advanced or emerging market countries, what we see is clearly the direct effect of commodity prices, be it food or fuel, on headline inflation. The important question for monetary policy is how does it translate into core inflation, because core inflation is where inflation is going in the medium run.

We at this stage see a fairly major difference between the two groups of countries. In emerging market countries we have seen in some cases—not in all cases—an increase in core inflation. So far, in advanced countries, and I think this includes the Eurozone, we do not see much of a pass-through to core inflation. Is this a reason to relax? No. One has to be careful, but so far it does not look as if headline inflation has led to higher core inflation, which would be a reason to worry.

Question: I just wanted to get you to talk a little more about the impact of China and India and the forecasts for them, and also the new framework for capital inflows, how you think that may impact currencies in Brazil, China, and India.

Mr. Abiad: I will answer questions about China and India, and Jorg can talk about capital inflows in Brazil.

Our projections for China are for growth of 9.6 percent this year, which is just down slightly from 10.3 percent last year. Growth is expected to remain robust with drivers shifting increasingly from public to private demand. Consumption there is buttressed by credit growth and policy efforts to raise household income. China does help the region and strong growth in China will continue to help the region as well.

For India, our projections are for a moderation in growth there as well, to 8.2 percent this year from 10.4 percent last year. The outlook remains bright. Growth is moderating to near potential in 2011. The moderation is a result of the rebound in agriculture (that followed the 2009 drought) waning, and the effects of monetary and fiscal tightening beginning to be felt.

Mr. Decressin: On capital flows, what we have observed in various reports now, including Chapter 4 of the World Economic Outlook, is that these flows can be quite volatile and the volatility can do some damage to export sectors of countries. We have seen significant volatility re-emerge as of late because capital flows were very strong through the third quarter of this year, but then lost some of their steam in the fourth quarter, perhaps less so in Latin America than elsewhere but they did lose some steam.

What we have basically said is that, for as long as you have appropriate macroeconomic policies in place and you still have problems with capital flows causing excess volatility to your exchange rate, then measures to curb capital inflows or other macro-prudential measures are appropriate tools to deploy and that is what we are seeing in some of the Latin American countries, such as Brazil, for example.

Mr. Murray: We have a number of questions online regarding Argentina so. I see an Argentine journalist so I am going to call on her. It is probably a similar question.

Question: I have a question about the estimation of growth. The estimation of this year is about 2 points more than the previous estimation. On the other hand, there is the inflation estimation which is lower in your records. So, I want to know why and the assumption on that, and what is your general opinion about the health of the Argentine economy.

Mr. Decressin: As far as growth is concerned, we are seeing a stronger rebound in Argentina than what we had expected partly driven by very buoyant demand in the region, including in Brazil, that in itself is driven by higher commodity prices and also stronger capital flows than expected in October. All of this is spilling over to the countries surrounding these capital importers, such as Brazil and Chile, and so forth, and that is why you are seeing stronger growth also in Argentina. Fundamentally, the strong growth is good news for the economy because it will help lower unemployment, which is still fairly high. Over time we believe that policies in Argentina will need to become somewhat less procyclical than they are right now to rebuild policy space for the future. If that happens, then the economy will be also in good shape to weather new shocks if and when they arise.

Question: You said the recent commodity price spike would not derail global economic recovery. I wonder, in your view, what factors would derail the global recovery. What is the least of risks in the medium term in descending order in terms of the seriousness to derail the economy.

Secondly, the IMF Managing Director Strauss-Kahn recently talked about the re-examination of economics in the post-crisis era, saying Washington consensus is behind us. So, do you think the crisis makes the (salt & water economic school viewpoint more important and economics will become saltier in the post-crisis era?

Mr. Blanchard: Let me take your first question. My own view is that there is not any major downside risk at this point in the world economy in the way there was, say, a year or two ago, but there are reasons to worry. I think the main two are financial and fiscal. Clearly, the health of the financial system is still not good. It depends on where, but there are still a lot of things to do in the short run in Europe and in the medium run everywhere in redesigning the system. We are not out of the woods there.

On fiscal, what is needed especially in advanced countries is a very substantial fiscal adjustment and only a limited number of countries have put in place a medium-term fiscal plan which is fully credible. Again, if countries were to fail to do this, we could think of a crisis of confidence. We could think of problems in sovereign bond markets. Again, I do not think these are very high risks but these are things that governments definitely have to work on and watch for.

On your question about how the crisis may have changed either Washington consensus or economics in general, my sense is we have learned that the macroeconomy is much more complex than some of us had said or written about, and that macroeconomic policymakers have to use a much wider range of instruments than what they thought they needed before the crisis. Before the crisis there was a sense that moving the policy rate for monetary policy and having fiscal automatic stabilizers was good enough. We have learned that is not the case. We have learned that macro-prudential tools are essential and they are difficult to use. So, I think there is a shift in that dimension; that our task is much harder than it was. At the same time, we have many instruments we can use and we have not used, and we have to learn how to use.

Question: For Mr. Blanchard, a word on the banks in Europe and on Ireland, in particular. The widespread belief is that the Exchequer and the public are taking a lot of pain and many of the actors in Ireland, for example, are taking pain, but the only people who are not taking any pain are the senior bank bondholders. What is your view on the possibility of a so-called bonfire of the senior bond holders? Should they not share in the pain that is happening?

A supplementary to that is in connection with the EFSF loans. You urge there to be a lowering or an adjustment of the interest rates. In the context of what the German Finance Minister, the German Chancellor, the French President have said in connection with what they would want as a quid pro quo, in other words in the Irish case a lowering of corporate tax rates, what is your view on that?

Mr. Blanchard - Let me make general remarks about maybe not only Ireland but some of the other countries which are in potential trouble. I think it is very important to realize that Ireland, Greece, and Portugal have very difficult macro and fiscal adjustments to make, which are going to take many years; and that you do not want to judge whether they are working or not just after six months or after a year. You have to give time to time. In the best of cases this will take a long amount of time.

Now, when the programs for Ireland and Greece were designed, the governments made decisions as to the fact that they would repay the debt and that they would honor their guarantees. We designed the programs based on that assumption, and these are still the assumptions that we are using. Again, I think it will take some time to basically know how these programs are working or not. I think it is just too early to make an assessment.

Question: And in connection with the interest rates?

Mr. Blanchard: With respect to the interest rate, that is a very relevant question. Again, that is a point I made in my introductory remarks, which is what matters very much in this adjustment is R minus G, the interest rate minus the growth rate. It is very hard to get the growth rate up in the short run because many structural measures have to be taken. They take time. So, it looks much easier to decrease R, to decrease the interest rate. I think here, so far, these programs have been very good deals for the countries which have lent. I think that anything which could be done to decrease the interest rate that these countries pay would be very useful.

Question: I would like to ask you about an article in the Financial Times today that is forecasting that Spain will be the next country to fall after Ireland, Greece, and Portugal. Essentially the article is forecasting a big depreciation in housing prices and is saying that falling house prices and rising mortgage payments are bound to push up the still moderate delinquency rates and the number of foreclosures, and this will affect the Spanish saving banks. I wonder if you share any of these views and if you see any risk of housing prices in Spain really coming down.

Mr. Blanchard: First, I have not read the article. For housing prices, yes, I think there is some way to go for housing prices on the downside in Spain. My understanding is that the Spanish banks can take it without running into serious trouble. In general, I think that Spain is perceived as doing relatively well as these things go. Markets are making a clear difference between Spain and the program countries. The Spanish government has taken a number of measures which are significant both with respect to transparency of the financial system, the treatment of cajas, and labor market reforms. So, we think at this point Spain is doing exactly the right things. Again, in this case it will take many years before things are right again, but they will get there.

Question - [With regards to] housing prices, do you have any estimate of how much the prices could go down?

Mr. Blanchard - No. Again, I have not seen the article so I cannot comment on it. In general, housing prices in Spain had increased a lot. They have decreased between 10 and 20 percent. It is conceivable that they could decrease more.

Mr. Murray: I am going to take a question online. It is a question about income inequality. The question is, what do the rising prices of raw materials but very little wage inflation in advanced economies mean for income inequality going forward in these countries? Are we seeing also income inequality accelerate in the advanced economies while it is actually improving in the emerging markets?

Mr. Blanchard: This is not something that we look at closely in the WEO. Let me say a few things. Indeed, the increase in food prices or the increase in fuel prices tends to be regressive, affecting the poor more, who have a larger proportion of their consumption fall on these items, and that is a very relevant issue. This is particularly the case not so much for advanced countries but for emerging and developing countries where sometimes the share of food is close to 50 percent in those countries. The Fund has recommended targeted subsidies to the poor to try to alleviate the burden of these increases.

Mr. Murray: I am going to get back to a WEO-specific topic here from, again, online. The question is, what is the economic outlook regarding the Middle East and, in particular, the expected growth rate in 2011? Some details on the Middle East outlook.

Mr. Abiad: On the outlook for the Middle East, our projections for the Middle East are for growth of 4.1 percent this year, slightly up from 3.8 percent last year. There are a number of factors that are affecting the outlook in the Middle East. One is higher oil prices, which would benefit the oil exporters in the region, although it would adversely affect the oil importers in the region.

Another big factor is the continuing social unrest in some of these countries. There are potential spillovers even to countries where unrest is not present. There could be potential effects on tourism, and on FDI, and financial market volatility and increased borrowing costs are also potential factors to look at that will affect the outlook.

Question: It seems as though generally there is greater impatience, though you do not specifically say it, but implicitly throughout impatience with the G-20 moving on rebalancing both on the deficit issues and then the currency appreciation. Is that a fair assessment?

Secondly, just to raise [my colleague’s] point again, you do seem to take a tougher tone than the January update, particularly on the US, and raising issues about causing global financial instability. What has changed in the interim?

Finally, the US has said that it would meet its G-20 commitments on debt and deficit and debt-to-GDP ratio today. That is counter to the kind of indication you are giving.

Mr. Blanchard: Let me take the first point and maybe leave the other two to Jorg.

We truly believe that there cannot be strong, sustained, balanced world growth without rebalancing. In my introductory remarks I put it that way, which is that if the US is going to do the fiscal consolidation of the size that it has to do, then demand has to come from elsewhere.

Now, where can it come from? It can come from consumers returning to their bad old ways and the savings rate going back to zero. That is surely not what we want. For awhile it can come from investment but it will have to be very, very high and probably too high. So, it has to come from net exports. That just has to happen for the US to be able to sustain growth not only this year or next year but for the next ten years or so.

So, something has to happen in the rest of the world. That is central. It is happening but it is not happening at the speed at which we would like it to happen. We understand that the process of negotiation in the G-20 is much more difficult now than it was during the crisis. During the crisis interest rates were very closely aligned and countries agreed relatively easily. Now it is more complex. Countries have their own agenda. They do not always fit. So, is there impatience? No, but we continue to think that it is an essential part of what is needed to return to health.

On the US, maybe I will let Jorg answer.

Mr. Decressin: I do not think there is any change in the tone relative to the January update. In January, we already made very clear that the deficit in the US would be about twice as high as in the Euro Area in 2011, hitting around 10 percent. We highlighted the financial and general risks related to such a high deficit and also the fact that it could crowd out private activity over the medium term, once the recovery gathers significant speed. All you will find in this report is just a little more elaboration to explain these risks because our January update is simply a three- or four-pager.

Now, you asked about the US commitment vis-à-vis the G-20, which is to half the deficit by 2013. Here what we have observe is that there has been a significant loosening of policies in 2011. If you go back to our October forecast we had some tightening of about 3/4 percent of GDP penciled in for 2011 and what we have now is a loosening of such a magnitude, or even more, and that makes attainment of the objective for 2013 much more difficult because it will require a large fiscal withdrawal over 2012 and 2013.

Question: You mentioned the developed economies. I want to ask what will be your advice to the developing economies, small economies like Macedonia, who are faced with high prices of food and oil like every country in the world but faced with a high unemployment rate of 30 percent and above and a high rate of poverty of 30 percent and above. In this case we have modest growth of 0.6 only for the last year. What will be your advice to the policymakers there?

Mr. Blanchard: I surely do not know enough about Macedonia to give Macedonia-specific advice, but the advice is clearly that what Macedonia and other countries like Macedonia suffer from is not a shortage or not primarily a shortage of demand. It is relatively low productivity that they have to improve through a set of structural reforms. So, clearly structural reforms which trigger productivity growth are the way to go.

As far as macroeconomic policy is concerned, there is not much you can do with respect to food prices or fuel prices. You take them as given. Again, what you have to do is to make sure that they do not feed into inflation and so you have to use monetary policy to make sure this does not happen, and you have to have, as we have learned, responsible fiscal policy, because when things go bad—which they do—you need all the fiscal resources you can use. So, this is very standard, general advice, but it may well apply at least in part to Macedonia.

Question: I am a bit uncomfortable with all these remarks where growth in emerging and developing countries is something like 6.5 percent, but when you look at the inflation rate it almost doubled. For instance, in Uganda is at 11.1 percent. The core is at 7. Now, how is the health of these economies when the growth rate and inflation rate is almost the same?

Also, another question that I am asking you is about the depreciation of these currencies. The currencies across the other side in East Africa all depreciated against the dollar, making life more difficult than it used to be, because what they used to purchase with maybe $5 has now almost doubled, making it so hard.

Last question is about what you heard about controlling the capital flows. What is your take on that? I remember some time ago the control of capital flows due to liberalization of international capital market accounts, the Fund campaigned against it but now it is coming back again about the control of capital flows.

Mr. Abiad: Sub-Saharan Africa is actually one of the good-news stories in the current recovery. Growth there is strong, and the recovery of Sub-Saharan Africa from this crisis has been much better than it has been compared to past crises. That is, again, one of the good bits in this recovery. In addition, you are not seeing the same kind of generalized overheating pressures that you are seeing in, let us say, emerging markets in Asia and Latin America.

Having said that, it is true that high food and fuel prices are hurting these economies, and they are a concern. As Olivier said earlier, the way to address this is both through vigilant monetary policy to make sure that these pressures from high food and fuel prices do not spread into other products or to wages. But targeted subsidies will also be very critical, and that just goes back to the point of making sure that these economies have the fiscal room that is needed. They did prior to the crisis. It is one of the reasons why they were able to go through the crisis in a resilient manner, but those fiscal buffers need to be rebuilt.

Question: Mr. Blanchard mentioned countries that had a good crisis. Poland was one of them. In your forecast you are saying that in 2012 growth will slow down a little bit. I wanted to ask what the government has to do in Poland in order to sustain it.

My other short question regards haircuts in Eurozone countries. There are increasing calls to come to terms with the fact that haircuts are inevitable. I understand that the IMF does not think so yet. What would be your comment to that, to the haircuts?

Mr. Blanchard: Let me briefly answer the second part, which I have already answered. I have said that the programs we have designed are based on the assumption that debt will be repaid, and that is how they have been designed. On the first, let me just give it to Jorg.

Mr. Decressin: I think we see growth in Poland basically moving sideways. This year we had 3.8 percent, we see it at 3.8 percent in 2011 and 3.6 percent in 2012. You have somewhat lower growth because the economy is gradually reaching capacity constraints and so what you will see is possibly further increases in interest rates, also a normalization of fiscal policy, where the fiscal deficit is being gradually rolled back and that should in the end also lead to somewhat lower but more sustained growth over the medium term. We think that these are the priorities, namely to rebuild policy space again for new shocks.

Question: You talk about double digits not realized. In developing countries such as Liberia, whose government has been heavily reliant on double-digit growth, what has been the cost for double-digit growth not being possible? From the IMF's own standpoint, what can be the economic outlook of developing countries, like Liberia, emerging out of a war?

Mr. Murray: Can you repeat the last bit of your question? Developing countries in general or Sub-Saharan Africa? Post-conflict countries?

Question: Yes, right. What is the IMF's own policy advice to making sure that they reach over the gap because they have been heavily reliant on double-digit growth which was said has not been possible.

Mr. Decressin: I would say in these post-conflict countries the top priority is rebuilding. In many of them there is a significant need for external support and we count on this external support to be continued to be provided and then gradually one has to rebuild capacities to conduct macroeconomic policy and, from there on, implement more complex structural reforms that will then sustain stronger growth over the medium term.

Mr. Murray: I think we are going to have to wrap this up. I know there are a lot more questions that you may have. I see a few online that require a clarification of questions that are in the WEO. We will get back to you bilaterally on those. NewsMarket will have video clips of this briefing.

I thank you for coming today. If you have any follow-ups, send an e-mail to Media@IMF.org and we will get some clarifications for you.

Again, thanks for joining us Olivier Blanchard, Jorg Decressin, and Abdul Abiad. Thanks, everybody.