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World Economic Outlook
The IMF in its April 2011 World Economic outlook puts to Rest The Double–Dip Recession. However, more than Expected Increase in Commodity Prices, backed by strong Demand Growth and Supply Shocks, Conjure up the The Worry of The 1970s style of Stagflation. Nevertheless, it is Unlikely to derail The Unbalanced Recovery.
Issue Date - 12/05/2011
Two-Speed Global Growth

Despite the new volatility caused by the fears about disruptions to oil supply; improving financial markets, buoyancy in activities in emerging markets and developing economies and growing confidence in advanced economies are reasons enough to project a good economic prospect for 2011-12. The global growth will reach about 4.5% during 2011-12; the real GDP is expected to expand by 2.5% in the advanced economies and by 6.5% in the emerging economies. It is thus apparent that the global growth will primarily remain two-speed. The low growth can be traced to both pre-crisis and crisis wounds. As an example, the US shifted its focus to fiscal consolidation without eliminating the inherent follies about fiscal sustainability.

Three Pronged Approach

Unemployment poses grave economic and social challenges, which is being further amplified in emerging and developing economies by high food prices. According to International Labour Organisation, ILO, some 205 million people are still looking for jobs, which is up by about 30 million worldwide since 2007. The report further highlights that the increase in unemployment has been very severe in the advanced economies, while in the emerging economies it is a particular concern. The low growth implies that it will remain so for many years to come. The policy response to this has been a three pronged approach: supportive macroeconomic policies, financial sector repair and specific labour market measures.


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