Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 1: Toward a stronger Europe in the global economy
Horst Köhler1 1. THE GLOBAL ECONOMY The global economic outlook is improving. Led by the United States, prospects for a recovery are ﬁrming in the advanced economies. This is good news for emerging market and developing country economies as well, which have also beneﬁted from a supportive ﬁnancial market environment. But we know that risks remain. Chief among these risks is the excessive dependence of the world economy on growth in the United States and the resulting global current account imbalances. Resolving these imbalances in an orderly manner must be the primary objective of international economic policy. And this requires a cooperative approach involving all major countries and regions: ● ● ● ● In the United States, signiﬁcant monetary and ﬁscal stimulus is in the pipeline. But while ﬁscal policy has provided short-term support to the economy, going forward it will be critical to restore medium-term ﬁscal balance. In the euro area, indications of an economic recovery are still more tentative. But there are increasing signs of returning conﬁdence and it is encouraging that several euro area economies have initiated longoverdue structural reforms, buoying expectations. In Japan, recent data point to a much hoped-for ﬁrming of the shortterm economic outlook. And structural reforms in the corporate and ﬁnancial sectors must continue to be pursued vigorously to raise longer-term growth prospects. In emerging market economies, sound economic policies and structural reforms are bearing fruit in several countries. But vulnerabilities bear watching, particularly as a result of persistent high levels of public...
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