Chapter 1 Global Prospects and Policies
- International Monetary Fund. Research Dept.
- Published Date:
- April 2007
Although the global economy has sustained strong growth in recent quarters, turbulence in financial markets has clouded the prospects. The baseline projections for global growth in 2008 have been revised down by almost ½ percentage point relative to the July 2007 World Economic Outlook Update, although growth would remain a solid 4¾ percent, supported by generally sound fundamentals and the strong momentum in the emerging market economies (Figure 1.1). However, risks to the outlook lie firmly on the downside, centering around the concern that financial market strains could continue and trigger a more pronounced global slowdown. Thus, the immediate task for policymakers is to restore more normal financial market conditions and safeguard the continued expansion of activity. Additional risks to the outlook include potential inflation pressures, volatile oil markets, the impact on emerging markets of strong capital inflows, and continued large global imbalances. Key longer-term issues relate to addressing obstacles to sustained growth from population aging and the increasing resistance to globalization.