Weo fmi 2011

Wo rld Ec o n o m ic a n d F in an c i al S u r v e y s

World Economic Outlook

Slowing Growth, Rising Risks

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World Economic and Financial Surveys

World Economic outlook

September 2011

Slowing Growth, Rising Risks

International Monetary Fund©2011 International Monetary Fund Cover and Design: Luisa Menjivar and Jorge Salazar Composition: Maryland Composition

Cataloging-in-Publication Data World economic outlook (International Monetary Fund) World economic outlook : a survey by the staff of the International Monetary Fund. — Washington, DC : International Monetary Fund, 1980– v. ; 28 cm. — (1981–1984: Occasional paper /International Monetary Fund, 0251-6365). — (1986– : World economic and financial surveys, 0256-6877) Semiannual. Some issues also have thematic titles. Has occasional updates, 1984– 1. Economic development — Periodicals. 2. Economic forecasting — Periodicals. 3. Economic policy — Periodicals. 4. International economic relations — Periodicals. I. International Monetary Fund. II. Series: Occasional paper(International Monetary Fund). III. Series: World economic and financial surveys. HC10.80 ISBN 978-1-61635-119-9

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ConTEnTS

Assumptions and Conventions Further Information and DataPreface Foreword Executive Summary Chapter 1. Global Prospects and Policies Slowing Global Activity Renewed Financial Instability More Uneven Expansion Economic Slack alongside Signs of Overheating Risks Are Clearly to the Downside Policy Challenges National Perspectives on Policy Challenges Multilateral Perspectives on Policy Challenges Appendix 1.1. Commodity Market Developments and ProspectsReferences Chapter 2. Country and Regional Perspectives The United States: Weakening Again amid Daunting Debt Challenges Europe: Enduring Economic and Financial Turbulence Commonwealth of Independent States: Moderate Growth Performance Asia: Securing a More Balanced Expansion Latin America and the Caribbean: Moving toward More Sustainable Growth Sub-Saharan Africa: Sustaining the Expansion MiddleEast and North Africa: Growth Stalling amid Uncertainty References Chapter 3. Target What You Can Hit: Commodity Price Swings and Monetary Policy Commodity Price Swings and Inflation Monetary Policy and Food Price Shocks: A Simulation-Based Perspective Policy Implications for Responding to Commodity Price Shocks Appendix 3.1. Economies in the Data Set Appendix 3.2. Technical Appendix References

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world economic outlook: Slowing growth, riSing riSkS

Chapter 4. Separated at Birth? The Twin Budget and Trade Balances Estimating the Strength of the Twin Deficits Link Insights from Model-Based Simulations Summary and Implications forthe Outlook Appendix 4.1 Data Construction and Sources Appendix 4.2 Statistical Methodology, Robustness Checks, and Selected Additional Results on Export and Import Responses Appendix 4.3 Global Integrated Monetary and Fiscal Model (GIMF) References Annex: IMF Executive Board Discussion of the outlook, August 2011 Statistical Appendix Assumptions What’s New Data and Conventions Classification ofCountries General Features and Composition of Groups in the World Economic Outlook Classification Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2010 Table B. Advanced Economies by Subgroup Table C. European Union Table D. Emerging and Developing Economies by Region and Main Source of Export Earnings Table...