It is the interplay between the global economy and the U.S. economy on which I would like to focus today. In a world of increasing economic interconnections, the challenges facing the United States—and all of us—are greater; but so too are the opportunities. The question is how we can best come together—business leaders, labor groups, policymakers and others—to find the solutions that we need to secure a lasting, balanced, and widely shared recovery.
The Current State of the Global Economy
The advanced economies are in a better shape than 6 months ago.We see that growth is picking up here in the United States. For the first time in a long time, the Euro Area is also beginning to grow, although there is still much to be done. And while Japan’s reform efforts are ongoing, it is also doing better thanks to aggressive policy support
Emerging market countries are the other side of the story. In large part, they helped keep the global economy afloat during the crisis. Now, while still dynamic, their momentum is slowing. For some, this may be a shift toward more balanced and sustainable growth. For others, it reflects the need to address imbalances that have made them more vulnerable to the recent market turbulence.
The Global Economy and its interconnections and spillovers. The growing importance of global trade.
The Current State of the Global Economy
The advanced economies are in a better shape than 6 months ago.We see that growth is picking up here in the United States. For the first time in a long time, the Euro Area is also beginning to grow, although there is still much to be done. And while Japan’s reform efforts are ongoing, it is also doing better thanks to aggressive policy support
Emerging market countries are the other side of the story. In large part, they helped keep the global economy afloat during the crisis. Now, while still dynamic, their momentum is slowing. For some, this may be a shift toward more balanced and sustainable growth. For others, it reflects the need to address imbalances that have made them more vulnerable to the recent market turbulence.
The Global Economy and its interconnections and spillovers. The growing importance of global trade.
Since 1980, the volume of world trade has increased fivefold. And trade has grown in importance for global production. World exports relative to output grew from 20 percent in 1995 to 30 percent in 2008, before falling during the Great Recession, and recovering somewhat since.
There has also been the rapid acceleration of financial integration.
We all have a large stake in these interconnections. What happens elsewhere in the world—be it the success of recovery in Europe or the continued smooth functioning of supply chains in Asia—matters increasingly for the United States. The converse is also true. What happens here matters increasingly for the global economy.
Source: Christine Legard
Managing Director,International Monetary Fund
