The Changing Competitive Environment of the World Economy

The world economy is likely to grow at a solid 4 percent in 2010, lifted by the above-potential growth performance of many emerging economies. However, a multispeed recovery could pose a threat to the desired rebalancing of the global economy. The United States may have to rely on stimulus measures to avoid a slowdown to 2 percent in 2011. While the devaluation of the euro may strengthen its export performance, government budget cuts might affect the Euro Area’s internal growth dynamics. Finally, despite resumption in the appreciation of the yuan, China’s movement toward a more consumer-driven economy will proceed slowly.