{
  "title": "World Faces Weak Economic Recovery",
  "publication": "IMF Blog, July 16, 2012",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2012/07/16/world-faces-weak-economic-recovery",
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  "summary": "The global recovery continues, but the recovery is weak; indeed a bit weaker than forecast in April.",
  "sections": [
    {
      "heading": "Global overview",
      "content": "- The global recovery continues, but the recovery is weak; indeed a bit weaker than forecast in April.\n- In the Euro zone, growth is close to zero, reflecting positive but low growth in the core countries, and negative growth in most periphery countries.\n- In the United States, growth is positive, but too low to make a serious dent to unemployment.\n- Growth has also slowed in major emerging economies, from China to India and Brazil.\n- Downside risks, coming primarily from Europe, have increased."
    },
    {
      "heading": "Baseline forecasts and country specifics",
      "content": "- Europe: increasing divergence between core and periphery countries.\n  - Periphery Euro countries, including Italy and Spain, face a difficult adjustment.\n    - Fiscal consolidation is necessary, but weighs heavily on growth.\n    - Structural reforms will bear fruit only in the future.\n    - Banks face bad legacy loans and increasing non-performing loans reflecting depressed activity.\n    - High debt burdens make borrowing expensive for governments.\n    - The result is negative growth this year and next for both Italy and Spain.\n  - Core Euro countries, including France and Germany:\n    - Required fiscal consolidation is smaller; banks generally in better shape.\n    - Growth forecasts for 2012: 1% for Germany, 0.3% for France.\n    - Growth expected to be a bit higher for both in 2013.\n- United States:\n  - Recovery continues with mixed signals; fiscal consolidation and lower exports weigh on growth.\n  - Housing appears to be stabilizing.\n  - Forecasts: 2.0% growth for 2012, and 2.3% for 2013, a revision of -0.1% in both cases.\n- Emerging market countries:\n  - Growth has slowed more than expected in April.\n  - China: forecast revised from 8.2% to 8% for 2012.\n  - India: forecast revised from 6.9% to 6.1% for 2012.\n  - Brazil: forecast revised from 3.0% to 2.5% for 2012.\n  - Proximate causes vary, with lower exports and lower investment dominant.\n  - Expectation: soft landings, but at lower growth rates than in the past.\n- World growth aggregate:\n  - Forecast for world growth: 3.5% for 2012, 3.9% for 2013, down .1% and .2% respectively."
    },
    {
      "heading": "Downside risks",
      "content": "- The increase in downside risks is more worrisome than the small baseline revisions.\n- Main risk: vicious cycles in Spain or Italy strengthen, output falls further, and a country loses access to financial markets.\n  - Such an outcome could easily derail the world recovery.\n- Baseline forecasts assume policies will be implemented to slowly decrease the spreads on Spanish and Italian bonds from their current high to a still high, but lower level in 2013.\n  - Achieving this requires that the right policies be adopted and implemented."
    },
    {
      "heading": "What must be done — policy recommendations",
      "content": "- Two conditions for containing and resolving the Euro crisis:\n  1. Countries under pressure must follow through with:\n     - Fiscal consolidation\n     - Wage and price adjustments\n     - Structural reforms\n     - Bank recapitalization if and when needed\n     - Note: Spanish and Italian governments have taken important steps, but success requires financing at reasonable rates.\n  2. Other Euro members must help make the adjustment feasible by:\n     - Designing a euro level architecture\n     - Being willing, in the short run, to stabilize funding conditions in sovereign debt markets\n     - Progress was made in recent weeks, but more remains to be done.\n- United States:\n  - Short-run priority: avoid the fiscal cliff.\n  - Concern: lack of a medium term fiscal plan is worrisome and a source of future risks.\n- Emerging economies:\n  - No simple common advice; recommended posture is to \"be ready.\"\n  - Prepare to use both economic and macroprudential policies to respond to a complex external environment.\n  - Expect capital flows to remain highly volatile and exports to advanced countries to remain subdued.\n- Broader measures to support the recovery:\n  - Adopt the right pace of fiscal consolidation.\n  - Continue expansionary monetary policy.\n  - Get the financial sector back to health to decrease borrowing costs.\n  - Demonstrate solidarity, especially within the Euro zone.\n\nAuthored by Olivier Blanchard — July 16, 2012\n\n---\n\n Content in this bundle\n\n- iMFdirect 博客: 全球面临经济复苏疲软\n  - iMFdirect 博客: 全球面临经济复苏疲软 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - iMFdirect 博客: 全球面临经济复苏疲软 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 弱い世界経済回復; オリビエ・ブランシャール; iMF direct ブログ 2012年7月16日掲載\n  - 弱い世界経済回復; オリビエ・ブランシャール; iMF direct ブログ 2012年7月16日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 弱い世界経済回復; オリビエ・ブランシャール; iMF direct ブログ 2012年7月16日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Мир ожидает вялый подъем экономики; Оливье Бланшар; Блог iMFdirect; 16 июля 2012 г.\n  - Мир ожидает вялый подъем экономики; Оливье Бланшар; Блог iMFdirect; 16 июля 2012 г. (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Мир ожидает вялый подъем экономики; Оливье Бланшар; Блог iMFdirect; 16 июля 2012 г. (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/wp-content/uploads/2011/04/obspring-2011-weo2.jpg\n- عربي\n- global recovery continues\n- forecast in April\n\nSource: https://www.imf.org/en/blogs/articles/2012/07/16/world-faces-weak-economic-recovery"
    }
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    "[Structured JSON version](/en/blogs/articles/2012/07/16/world-faces-weak-economic-recovery/index.json)",
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    "Authors: Olivier Blanchard",
    "Published: July 16, 2012",
    "The global recovery continues, but the recovery is weak; indeed a bit weaker than forecast in April.",
    "In the Euro zone, growth is close to zero, reflecting positive but low growth in the core countries, and negative growth in most periphery countries.",
    "In the United States, growth is positive, but too low to make a serious dent to unemployment.",
    "Growth has also slowed in major emerging economies, from China to India and Brazil.",
    "Downside risks, coming primarily from Europe, have increased.",
    "Europe: increasing divergence between core and periphery countries.",
    "United States:",
    "Emerging market countries:",
    "World growth aggregate:",
    "The increase in downside risks is more worrisome than the small baseline revisions.",
    "Main risk: vicious cycles in Spain or Italy strengthen, output falls further, and a country loses access to financial markets.",
    "Baseline forecasts assume policies will be implemented to slowly decrease the spreads on Spanish and Italian bonds from their current high to a still high, but lower level in 2013.",
    "Two conditions for containing and resolving the Euro crisis:",
    "United States:",
    "Emerging economies:",
    "Broader measures to support the recovery:",
    "**iMFdirect 博客: 全球面临经济复苏疲软**",
    "**弱い世界経済回復; オリビエ・ブランシャール; iMF direct ブログ 2012年7月16日掲載**",
    "**Мир ожидает вялый подъем экономики; Оливье Бланшар; Блог iMFdirect; 16 июля 2012 г.**",
    "[https://www.imf.org/wp-content/uploads/2011/04/ob_spring-2011-weo2.jpg](https://www.imf.org/wp-content/uploads/2011/04/ob_spring-2011-weo2.jpg)",
    "[عربي](http://blog-montada.imf.org/?p=1541)",
    "[global recovery continues](http://www.imf.org/external/pubs/ft/weo/2012/update/02/index.htm)",
    "[forecast in April](http://www.imf.org/external/pubs/ft/weo/2012/01/index.htm)"
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