Monthly Briefing on the World Economic Situation and Prospects, No. 34

August 2011

Summary:

  • Economic growth is decelerating markedly in many regions; global manufacturing production is stagnating
  • Equity markets have tumbled and exchange rate volatility has resurfaced with continued sovereign debt problems and stalling economic growth prospects in the United States and Europe
  • Food emergencies are affecting millions of people in Africa and Haiti
Agreements to raise the debt ceiling in the United States and create space for sovereign debt resolution in Greece and other peripheral European countries have momentarily mollified default concerns. Yet, considerable uncertainties remain. In the United States, the agreement to raise the debt ceiling in exchange for caps on discretionary spending between 2013 and 2021 reinforced concerns of continued economic weakness. Equities in major markets fell in the days before the agreement and global equity markets underwent a precipitous sell-off in the next week, losing about 20 per cent in just several days, the largest fall since the recovery from the global financial crisis began. Adding to significantly dimmed prospects of global economic growth, Standard & Poor’s downgrading of US public debt from AAA to AA+ weakened market confidence.

 

Download the World Economic Situation and Prospects Monthly Briefing No. 34

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