World Economic Outlook, October 2012: Coping with High Debt and Sluggish Growth

World Economic Outlook, October 8, 2012

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Publication date: October 8, 2012
The October 2012 World Economic Outlook (WEO) assesses prospects for the global recovery in light of risks such as the ongoing euro area crisis and the "fiscal cliff" facing U.S. policymakers.
Reducing risks to the medium-term outlook implies reducing public debt in the major advanced economies.
In emerging market and developing economies, activity has been slowed by:
- policy tightening in response to capacity constraints,
- weaker demand from advanced economies,
- country-specific factors.
Policy improvements have raised emerging and developing economies' resilience to shocks.

Chapter 3:
- Explores 100 years of history of dealing with public debt overhangs.
- Central implication: reducing public debt in major advanced economies is necessary to lower medium-term risks.
Chapter 4:
- Explores in depth the resilience of emerging market and developing economies to shocks following policy improvements.
- Documents how capacity constraints, external demand, and country-specific factors have slowed activity.