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The 2011 global economy: up or down?

The impact of the global recession has been felt across pretty much every sector. Defence and security are feeling the pinch and this will continue for some time. But is there any hope for an improvement in 2011? We ask an expert from the International Monetary Fund how the economy may react.

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I think the global recovery

is proceeding,

and, what we’ve seen

in terms of development,

is pretty much

what we had expected.

That said, we’re seeing

a recovery that is very fragile

and that is very unbalanced, and,

of course, this is not what we want.

We’re projecting 4.8 for this year

and 4.2 for the coming year.

Most of that growth is coming from

emerging, developing economies.

These are economies that have

weathered the crisis very well,

where activity is proceeding

and is growing quite robustly,

unlike advanced economies

where the recoveries are sluggish.

Within the IMF,

one of the things which has emerged

in the recent summit of the leaders

was an agreement

on the change in the quotas

and the quota arrangements

within the IMF,

and now, for the first time, I think

we are going to see the bricks

in the top 10 countries in the IMF,

and I think that reflects

the rise of their economic power,

which we’ve seen recently.

There’s been a lot

of talk about currency wars,

but I like to think about it

in perhaps simpler terms.

The appropriate response

to the shift in demand is,

for many countries,

to let their currencies appreciate.

So, it’s just about

this realignment of currencies

that is part

of the needed adjustment,

which we need

to see at the global level.

It’s even more important

to kind of address the medium

to long-term problems.

I’m thinking of age-related spending

and addressing some of these issues,

and entitlement reforms

can help in that direction.

We have seen consumer confidence

at fairly high levels

in emerging economies,

and these are

the economies that are doing well.

It’s in a lot

of the advanced economies

where it’s more of an issue.

Although, we’re far from the trough

of where we were

at the time of the crisis.

I think in terms of the drivers

of consumer confidence

in different countries

it's different things.

I think in the US, in particular,

it’s seeing a stabilisation,

and a pick up in the housing market

is going to be important.

I’m optimistic. I think that the crisis

has revealed a lot of flaws

and a lot of gaps

in regulatory frameworks,

in financial systems,

in economic systems,

that has made people aware.

And I think because now we are

faced with these difficult tasks,

I think there is understanding that

there is not going to be a quick fix.

I think the global recovery

is proceeding,

and, what we’ve seen

in terms of development,

is pretty much

what we had expected.

That said, we’re seeing

a recovery that is very fragile

and that is very unbalanced, and,

of course, this is not what we want.

We’re projecting 4.8 for this year

and 4.2 for the coming year.

Most of that growth is coming from

emerging, developing economies.

These are economies that have

weathered the crisis very well,

where activity is proceeding

and is growing quite robustly,

unlike advanced economies

where the recoveries are sluggish.

Within the IMF,

one of the things which has emerged

in the recent summit of the leaders

was an agreement

on the change in the quotas

and the quota arrangements

within the IMF,

and now, for the first time, I think

we are going to see the bricks

in the top 10 countries in the IMF,

and I think that reflects

the rise of their economic power,

which we’ve seen recently.

There’s been a lot

of talk about currency wars,

but I like to think about it

in perhaps simpler terms.

The appropriate response

to the shift in demand is,

for many countries,

to let their currencies appreciate.

So, it’s just about

this realignment of currencies

that is part

of the needed adjustment,

which we need

to see at the global level.

It’s even more important

to kind of address the medium

to long-term problems.

I’m thinking of age-related spending

and addressing some of these issues,

and entitlement reforms

can help in that direction.

We have seen consumer confidence

at fairly high levels

in emerging economies,

and these are

the economies that are doing well.

It’s in a lot

of the advanced economies

where it’s more of an issue.

Although, we’re far from the trough

of where we were

at the time of the crisis.

I think in terms of the drivers

of consumer confidence

in different countries

it's different things.

I think in the US, in particular,

it’s seeing a stabilisation,

and a pick up in the housing market

is going to be important.

I’m optimistic. I think that the crisis

has revealed a lot of flaws

and a lot of gaps

in regulatory frameworks,

in financial systems,

in economic systems,

that has made people aware.

And I think because now we are

faced with these difficult tasks,

I think there is understanding that

there is not going to be a quick fix.

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