World Bank2013-01-162013-01-162013-01-15978-0-8213-9882-1https://hdl.handle.net/10986/12124More than four years after the global financial crisis hit, high-income countries struggle to restructure their economies and regain fiscal sustainability. Developing countries, where growth is 1-2 percentage points below what it was during the pre-crisis period, have been affected by the weakness in high-income countries. To regain pre-crisis growth rates, they will need to focus on productivity-enhancing domestic policies rather than demand stimulus. Although the major risks to the global economy are similar to those of a year ago, the likelihood that they will materialize has diminished, as has the magnitude of estimated impacts should these events occur. Major downside risks include the loss of access to capital markets by vulnerable Euro Area countries, lack of agreement on U.S. fiscal policy and the debt ceiling, and commodity price shocks. In an environment of slow growth and continued volatility, a steady hand is required in developing countries to avoid pro-cyclical policy and to rebuild macroeconomic buffers so that authorities can react in the case of new external or domestic shocks.en-USCC BY 3.0 IGOaccountingarbitrageassetsbailoutbank lendingBank Loansbanking systemsbasis pointsbinding constraintbondbond issuanceBond Issuesbond spreadsBond Yieldsbondsborrowing costsbudget constraintbuffersbusiness confidencecapacity constraintscapital constraintscapital goodscapital inflowscapital marketsCapital outflowscapital requirementscapitalizationCDScentral bankCommoditiescommoditycommodity marketscommodity pricecommodity pricescommodity tradersconsumer demandconsumer goodsconsumer spendingCopyright ClearanceCopyright Clearance Centercountry capitalcountry debtcountry EquityCredit DefaultCredit Default Swapcredit squeezecredit squeezescrisis countriesCurrent account balancecurrent account balancescurrent account deficitcurrent account deficitsdebtDebt datadebt flowsdebt levelsdebt obligationsdebt restructuringdebt stocksdebtsdecline in investmentdepositsdeveloping countriesdeveloping countryDeveloping country Equitydeveloping economiesdeveloping economydomestic marketsdownside scenariodurabledurablesEconomic developmentsEmerging MarketsEmerging-marketEquitiesequity issuanceEquity IssuesEquity marketEquity marketsexchange rateExchange Ratesexpenditureexpendituresexport growthexport value Interest Ratesexporterexportersexposuresexternal shocksfinancial crisesfinancial crisisfinancial institutionsfinancial integrationfinancial marketfinancial marketsfinancial sectorfinancial sector developmentsfinancial sectorsfinancial systemsfinancing requirementsfiscal consolidationfiscal deficitsfiscal policiesfiscal policyfood pricefood pricesforeign banksforeign currencyGlobal Economyglobal financeglobal financial marketsglobal financial systemsglobal outputglobal tradeGovernment accountgovernment accountsGovernment budgetgovernment debtgovernment deficitgovernment deficitsgovernment expendituregovernment expendituresgovernment revenuegovernment revenuesgovernment spendingGross debtgrowth rategrowth ratesHigh-Income Countrieshigh-income countryhousehold savingshuman capitalimportimport demandIncomeincome growthincomesInflationinflation ratesinflationary pressuresinterest ratesInternational Bankinternational businessInternational capitalInternational capital flowsinternational financial institutionsinternational financial marketsinternational reservesInternational SettlementsInternational Tradeinvestinginvestment activityinvestment spendinglenderslevel of riskloanlocal currencylow-income countriesmacroeconomic policiesmacroeconomic policyMacroeconomic vulnerabilitiesmarket conditionsmarket pricemarket pricesMarket regulatorsmaturitymiddle-income countriesMonetary Fundmonetary policiesmonetary policynatural disastersNet capitaloil commoditiesoil priceoil pricesOutputOutput Gapoutput gapspolitical stabilitypolitical uncertaintyPortfolioportfolio capitalpost-crisis periodpower parityprivate banksPrivate creditorsPrivate debtprivate inflowspublic spendingpurchasing powerpurchasing power parityrate of growthreal interestreal interest ratesRegional traderegulatorsremittancesreservereturnrisk assessmentsrisk aversionsavingssavings rateshort-term debtsmall countriessovereign debtstock marketssustainable growthtechnological changetrade deficittrade financetradingtransition countriesTreasuryTreasury Yieldsvalue indexvolatile capitalvolatilityweightswithdrawalworld economyWorld TradeWorld Bank10.1596/978-0-8213-9882-1