By Olivier Blanchard
(Versions in عربي, 中文, Español, Français, Русский, 日本語)
After the speech by the IMF’s Managing Director in Berlin yesterday, my main messages on the global outlook will not surprise you.
Starting with the bad news–the world recovery, which was weak in the first place, is in danger of stalling. The epicenter of the danger is Europe, but the rest of the world is increasingly affected.
There is an even greater danger, namely that the European crisis intensifies. In this case, the world could be plunged into another recession.
Turning to the good news–with the right set of measures, the worst can definitely be avoided, and the recovery can be put back on track. These measures can be taken, need to be taken, and need to be taken urgently.
And now the numbers, starting at the epicenter:
The IMF’s forecast for growth in Euro Area for 2012 is ‑0.5 percent—this marks a decrease of 1.6 percentage points relative to our September 2011 projection. In particular, we predict negative growth in Italy (‑2.2 percent) and Spain (‑1.7 percent).
We have also revised downwards our forecasts for other advanced countries, although by less. Only for the United States, is our forecast unchanged at 1.8 percent.
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