The Long and Winding Road to Recovery

SAO PAULO – The global economy has bounced back strongly from the nadir of 2009, but growth is still uneven and recent data in key advanced economies have been disappointing. So where is the global economy headed?

To be sure, the recovery was not expected to be smooth: historically, cleaning up after a financial crisis of this magnitude takes a long time, especially given high debt burdens, extended joblessness, and damaged banking systems. But risks to the world’s economic outlook have risen, and stepped-up policy actions are needed to keep the global economy on track.

It is against this background that the International Monetary Fund has released its updated forecasts and assessment of the global economy. This analysis comes in three complementary documents: the World Economic Outlook, the Global Financial Stability Report, and the Fiscal Monitor.

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.