Three high-level I.M.F. employees, including its chief economist Olivier Blanchard, have co-authored an article to explain where they think the global economy is headed: “The headline numbers do not look so bad. We expect global growth to be around 4.5% in 2011 and 2012, although the two-track recovery will continue, with advanced economies chugging along at around 2.5% annual GDP growth, while emerging-market and developing economies motor ahead at an impressive 6.5% rate.”
What’s the Big Idea?
Despite these initially optimistic numbers, the economists believe government action is needed to ensure future growth: “A more robust global financial system is urgently needed. There has been some progress on bank repair, but it is too slow, especially in Europe. In some cases, funding challenges remain, and balance sheets have not been fully cleansed. The pace of recapitalization needs to be stepped up, and the new round of “stress tests” for European banks will mark a clear line in the sand.”