Circulation_Notes_L34

8/7/2019 Circulation_Notes_L34

1/5Notes by Gautam Chitanis Pg 1

L34 Introduction continued

Some More Statistics



World Economy .v the world is becoming more homogenous means regional preferences gone.v ...distinctions between national markets are fading and may disappearv Ease of travel & technology make people aware/desire goods in other parts of the worldv In convergence, the tendency for everything is to become more like everything else

World Economic Outlook:Key Messagesv The global economy is beginning to grow again, but recovery is likely to be sluggish. The

slow recovery calls for sustained policy support until the expansion is firmly entrenched.v Financial market conditions continue to improve but remain tight, with the global financial

system remaining far from normal.v Expansionary monetary and fiscal policy will continue to underpin the global recovery, but tosafeguard price and financial stability and the soundness of public finances, credible exitstrategies will be needed.

v Two key factors for the medium-term: private demand replacing public demand; and demandin external surplus economies rising to make up for shrinking demand in external deficiteconomies.



Risks to the Outlook .given . . .v Private demand fails to pick upv Limited scope for continued policy stimulus

lead tov A worsening unemployment problemv Further hit on bank portfolios

Policy Priorities

v As recovery takes hold, focus will need to shift toward raising countries productive capacity.v Addressing unemployment calls for greater private sector-led growth.v Low integration with global economy means losing out on the upside potential.

Lessons Learnedv Government budgets with private enterprise investments are good partnerships for

development.v Projects need to be clearly defined at times both government, and private enterprise and

unwilling to spend scarce funds.v Dispute resolution processes not clear. A regulatory framework needs to be recognized.v Maximize local currency component in financing projects to reduce dependency on the dollar

v Policies to mobilize financial savings for financing infrastructure projects.

Recent Global Events .v More than ever before, global events are being felt around the world

o 9/11 attacks on the WTC and continuing global terrorismo SARS outbreak of 2003o Enron scandal and moreo Wars in Afghanistan and Iraqo Asian Tsunamiso Attack in Mumbai (Taj Hotel)

v BUT international business continues



To be continued next session ..The class is hereby requested to read the notes once before coming to the nextsession. Special emphasis to page 5 i.e. this page.

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Circulation_Notes_L34