Picked up in Weitzenegger’s newsletter. To read many interesting news and articles, go to ‘The website for International Development Cooperation‘, and its (english) Newsletter.
Overview: Moderate world growth and the threat of macroeconomic imbalances Growth in the world economy improved lightly in 2006 relative to 2005, from 3.5 per cent to 3.8 per cent. It is driven by the strong performance by Asian economies, which continue to post growth rates above 8 per cent. In contrast, growth in advanced economies remains modest and is yet to reach the pre-2001 level. Key constraints to growth include the massive global macroeconomic imbalances along with tight macroeconomic stances in advanced economies, which prevent demandled recovery. High oil prices undermine growth in both advanced and developing countries through high production costs.
Developed countries, especially the United States, face the challenge of rising current account, government, and private sector deficits which threaten domestic economic recovery as well as global financial stability. The US current account deficit has risen systematically since the 1990s, reaching 6.6 per cent of GDP in 2006. Meanwhile, its budget balance has moved from a surplus in 2000 (1.9 per cent of GDP) to a deepening deficit that stood at 2.5 per cent of GDP in 2006. Moreover, the US private sector position continues to deteriorate due to insufficient savings partly driven by the easy credit that fuels consumption.
Download the ERA 2007 full version.
(You can also download separately the 6 chapters of part I and II).