Global Economic Prospects, June 2010 : Fiscal Headwinds and Recovery

Market nervousness concerning the fiscal positions of several European high-income countries poses a new challenge for the world economy. This arises as the recovery is transitioning toward a more mature phase during which the influence of rebound factors (such as fiscal stimulus) fades, and gross domestic product (GDP) gains will increasingly depend on private investment and consumption. So far evolving financial developments in Europe have had limited effects on financial conditions in developing countries. Although global equity markets dropped between 8 and 17 percent, there has been little fallout on most developing-country risk premia. And despite a sharp deceleration in bond flows in May, year-to-date capital flows to developing countries during the first 5 months of 2010 are up 90 percent from the same period in 2009. The economic impact on long-term growth in developing countries of a forced pullback from growth-enhancing infrastructure and human-capital investment due to lower fiscal revenues, weaker official development assistance (ODA), and sluggish capital flows, are difficult to gauge, as are the effects on private sector growth of tighter financial sector regulations, and increased competition for capital from high-income sovereigns. Global economic prospects: crisis, finance and growth estimated that just the latter two factors could reduce developing country growth rates by between 0.2 and 0.7 percent for a period of 5 to 7 years.

Bibliographic Details

Main Author:	World Bank
Format:	Publication biblioteca
Language:	en_US
Published:	Washington, DC 2010-06
Subjects:	access to capital, asset classes, asset price, balance sheets, Bank claims, bank lending, banking system, bankruptcy, basis point, basis points, bond, bond flows, bond issuance, bond issuances, bond issues, bond markets, bond spread, bond spreads, bond yields, boost to growth, borrowing costs, budgetary support, capital account, capital account restrictions, capital flows, capital inflows, capital investment, capital investments, capital markets, capital outflows, carbon emissions, CDS, Central Bank, commercial banks, commodities, Commodity, Commodity price, Commodity Prices, consumer durables, corporate bonds, corporate borrowers, corporate yields, cost of capital, country risk, credibility, credit default, credit default swaps, credit ratings, creditor, creditor banks, creditors, Current account balances, current account deficits, debt crisis, debt flows, debt issuance, debt levels, debt obligations, debt ratio, debt repayments, Debtor, Debtor Reporting System, developing countries, developing country, developing country stock markets, developing economy, disbursements, domestic markets, durable, durable goods, Emerging market, Emerging market equities, equities, equity flows, equity market, equity market volatility, exchange rate, exchange rates, export growth, exporters, exposure, exposures, external debt, external financing, Federal Reserve, financial capital, Financial Crises, financial crisis, financial developments, financial health, financial institutions, financial integration, financial sector, financial sectors, financing requirements, fiscal consolidation, fiscal consolidations, fiscal deficit, fiscal deficits, fiscal policy, food price, Food prices, global economy, global equity, global equity markets, global exports, global financial markets, global financial system, global market, global markets, global trade, government accounts, government bonds, Government debt, government debts, government deficits, government expenditure, government spending, growth rates, human capital, income, indebted countries, indebtedness, individual firms, inflation, inflationary pressures, insurance, interest rate, interest rate differentials, interest rates, international bank, international bank lending, international bond, international capital, international capital flows, international capital markets, international financial institutions, international market, inventories, inventory, investment decisions, investment projects, Labor Market, lender, liquidity, loan, loan exposures, local currency, long term debt, long-term interest, long-term interest rate, long-term interest rates, long-term yield, long-term yields, loss of confidence, low-income countries, market access, market conditions, market expectations, Market Index, market indices, market prices, market valuations, market volatility, maturity, middle-income countries, Monetary Fund, monetary policy, moral suasion, net capital, Net debt, Nonperforming loans, oil price, oil prices, output, output gaps, pension, portfolio, power parity, principal payments, Private capital, Private capital flows, private capital inflows, Private creditors, Private Debt, private investment, private sector growth, public debt, public finances, purchasing power, rate of growth, real estate, real interest, real interest rates, remittance, remittances, repayment, reserves, residential mortgages, return, risk aversion, risk premiums, savings, security concerns, short-term debt, short-term interest rates, solvency, sovereign bond, sovereign debt, Sovereign risk, stock index, Stock market, stock markets, stocks, tax, trade deficit, transition countries, treasury, treasury note, treasury securities, volatility, wealth effects, world economy, World Trade,
Online Access:	http://hdl.handle.net/10986/12104
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