Chapter 1 Global Prospects and Policy Issues
- International Monetary Fund. Research Dept.
- Published Date:
- April 2006
World output increased briskly in the first half of 2006, and global growth is projected at 5.1 percent for the year as a whole before moderating to 4.9 percent in 2007 (Figure 1.1 and Table 1.1). Nevertheless, inflationary concerns, tighter conditions in financial markets, and further jumps in oil prices to new highs have highlighted downside risks as the global economy enters the fourth year of this current expansion. Other notable sources of uncertainty include the threat of an abrupt slowdown in the U.S. housing market; lingering doubts about prospects for growth in the other advanced economies; and questions about the resilience of emerging market countries in a more challenging global environment. Moreover, large global imbalances continue to prompt concerns, while the potential for protectionist pressures has increased now that the Doha Round seems to be deadlocked. Against this background, policymakers will need to respond flexibly to events and act with foresight to head off potential strains, recognizing the importance of spillovers across countries and the benefits of taking a joint approach to managing global risks and promoting a robust world economy.