LGroup of Twenty

Meetings of G-20 Ministers and Deputies
September 3-4, 2009
London, U.K.

Global Economy Beyond the Crisis—
Challenges Over the Medium Term

Prepared by Staff of the International Monetary Fund

A fundamental challenge in the aftermath of the crisis will be to sustain solid global growth
given the damage caused by the crisis to productive potential and balance sheets. In thissetting, structural reforms take on renewed importance and rising structural unemployment
will need to be addressed. Financial deleveraging is likely to weigh on credit creation forsome time, and the financial system’s capacity for efficient intermediation and innovation
will need to be restored to support growth, while safeguarding financial stability. From thedemand side, the global economy faces a difficult rebalancing act—shifting the sources ofgrowth from public to private sector demand, and from internal to external demand in
external deficit countries affected by pronounced credit and housing cycles, matched bycounterpart adjustments in surplus countries that have been heavily reliant on export-led
growth.
I.

POTENTIAL OUTPUT AFTER THE CRISIS AND POLICY CHALLENGES

1.
The financial crisis has hurt medium-term growth prospects through bothsupply- and demand-side effects. From the supply side, the crisis is likely to have damaged
potential output through several channels: declines in capital formation, substantial andprotracted increases in unemployment, and disruptions to the financial system. Impaired
financial intermediation and innovation will challenge the global economy’s capacity for
growth for several years. The output effects are likely to be most severe in those G-20
economies directly hit by banking crises.
•

Experience for both advanced and emerging economies over the last 40 years indicatesthat output losses in the aftermath of banking crises are both sustained and significant.
As shown in the chart, GDP per capita 7 years
Output Losses After Banking Crises(in percent; deviation from pre-crisis trend)
after the start of the crisis tends to be about 10
10
percent lower (on average) compared to pre5
10crisis trends.

•

Protracted declines in capital accumulation,
employment rates, and productivity levels all
contribute, in broadly equal proportions, to theenduring loss of output. The fall in productivity
may partly reflect the financial system’s
diminished ability to allocate loanable funds
following a crisis, as well as accelerated
obsolescence of capital in most affected sectors(e.g., financial and housing industries).

1

-5
-10
-15
-20
-25
-30
-1

0

1

2

3

4

5

6

7

So urce: IM F staff estimates.
Figure repo rts mean difference fro m pre-crisis trend (o ver t-10 to t3); t-1no rmalized to 0; crisis begins at t=0. Shading indicates 90%
co nfidence interval fo r the mean (o range) and inter-quartile range(yello w).

For detailed analysis, see Chapter 4 of the World Economic Outlook (October 2009).

2•

Typically, growth eventually recovers, but there is substantial variation in post-crisis
output performance. The appreciable diversity of past outcomes can be seen by the interquartile range in the chart—reflecting various country factors, including policy responses.

2.
Macroeconomic policy support can help limit the damage to activity. Historicalevidence suggests that supportive and timely macroeconomic policies to limit the initial
depth of the downturn reduces the extent of medium term output losses.
3.
Effective structural reforms to enhance the flexibility of factor markets andsuccessful repair of the financial system are integral steps to mitigate the loss of output.
Past experience suggests that reform measures that facilitate resource reallocation, including
the capacity to reabsorb displaced labor, tend to mitigate the large disruptive effects of crises
on economic activity. In terms of the financial sector, measures to fix impaired
intermediation and strained balance sheets that typically accompany crises help mitigate
losses to productivity and, thus, potential output.
4.
Learning from this experience, structuralreforms in product and labor markets would help
address the substantial supply-side damage
caused by the current crisis. Many of the samechallenges from past episodes now confront policy
makers in the context of a crisis with truly global
reach.

Outlook for Unemployment Rates(Percent)
10

8

6
G-20
4

G-20 (Advanced)•

Labor market reforms have taken on renewed
G-20 (Emerging)importance after the crisis. Significant excess
200 01 02 03 04 05 06 07 08 09 10 11
capacity, mounting job losses, and a sluggish
Sources: IMF, World Economic Outlook.
economic recovery raise the risk of longer
unemployment spells (and decaying work skills). There is an increased need to shift laboracross sectors. In these circumstances, impediments to labor market flexibility could
translate into persistently high unemployment.

•

Redeployment of displaced workers would be facilitated by greater labor mobility fromailing sectors hit hard by the crisis to healthier sectors. Prior to the crisis, Europe’s
reform agenda met with some success in lowering high unemployment, including throughactive labor market policies (ALMPs) that helped improve labor market functioning andfostered wage moderation. As a complement to more comprehensive institutional
reform, cost-effective ALMPs targeting job search, matching, and training programs
would be particularly helpful in current circumstances. Additionally, policymakers willneed to ensure that unemployment benefits are generous but short in duration to provide
strong incentives for job search and re-entering the workforce.

•

Product market reforms—particularly in services—could open new employment
opportunities and boost productivity. Often supportive of labor market reforms, efforts tostrengthen competition policies in more insular sectors can be useful approaches to3strengthen productivity. Liberalization in services could be particularly beneficial asthese sectors tend to be less open and often have lackluster productivity growth. An
ambitious conclusion to the Doha round would also provide a timely boost to global tradeand confidence, reassuring markets that backsliding toward more protectionist measureswould be avoided.
II.

REMAKING THE FINANCIAL SYSTEM

5.
The future functioning of the financial system will be a key determinant of
global growth prospects. A healthy and dynamic financial system is crucial for efficientintermediation and innovation, which contributes to economic growth by channeling credit tohigh-return investment activities around the globe. New regulations and reforms will need to
strike the right balance between rebuilding key financial markets in support of growth, while
effectively safeguarding against future threats to financial stability.
6.
Policymakers face substantial reform challenges to effectively reduce the risk of
future systemic crises detrimental to growth and prosperity. The crisis has exposed major
fault lines in the financial system in terms of private incentives and risk management, as wellas in financial regulations and prudential oversight. Plans are being developed to address
deep flaws that led to a build-up of systemic risk, but a growing sense that the most severecrisis dangers are past could undermine support for a major overhaul. Four key areas where
policy progress or architectural reforms are needed include:•

First, the perimeter of regulation needs to be broadened and made more flexible,
covering all systemically important institutions. The limited perimeter gave incentives
for banks to create off-balance sheet entities to avoid some prudential rules andincrease leverage. Regulatory arbitrage allowed credit risk to be transferred tofinancial institutions that faced different regulatory requirement than banks. In bothcases, the regulatory system failed to detect or manage increasing systemic risk.

•

Second, prudential frameworks must play a greater stabilizing role over the businesscycle. Once the crisis started, mark-to-market rules and static regulatory capital ratios
forced financial institutions to quickly reduce the size of their balance sheets,
exacerbating fire sales and deleveraging. By contrast, during boom times these forces
worked in the opposite direction. An element of procyclicality would be addressed
through establishing minimum capital requirements according to stress-test scenarios
and an overall leverage ratio. Other proposals include countercyclical capital charges
or allowing regulators to alter capital requirements (or other regulatory requirements)
over the cycle, just as central banks adjust interest rates, although determining whencapital buffers need to be raised or reduced would be a formidable policy challenge.

•

Third, better mechanisms are needed to deal with institutions that are “too big or tooconnected to fail.” Proposals have been made to require such institutions to develop
resolution plans and to hold supplemental capital to compensate for their larger

4
contribution to systemic risk, but these proposals face significant operational
challenges. So far, the “too big or too connected to fail” problem has been aggravatedrather than remedied, as governments have supported sales of distressed banks tolarge rivals. Proposals worth considering further include giving authorities the power
to impose losses on senior creditors; separating commercial from investment banking;and applying enhanced competition policy to manage firm size.
•

Fourth, international coordination should be strengthened and financial
protectionism avoided. This will require greater supervisory and regulatory
cooperation and convergence. Robust arrangements (including consistent bankspecific resolution frameworks at national levels) will be needed to resolve crossborder institutions and counter incentives for beggar-thy-neighbor approaches.
Progress is being made on convergence under the auspices of the FSB. However,advancing reforms on cross-border bank resolution still faces major political hurdles,even within the European Union, where these issues are well-known and have been
debated for some time.

7.
Rebuilding key financial markets—notably, securitization—on a sounder footing
would strengthen growth prospects. It will be important to repair key market structures,
remedying weaknesses exposed by the crisis, to support intermediation and innovation while
limiting the future risks to stability. Notably, securitization needs to be rebuilt to deliver on
its promise to transfer and disperse credit risks
Global Securitization Issuances 1/(In billions of U.S. dollars)from the banking system to capital markets.
4000
This would enhance the lending capacity of the
3000
U.S.
financial system for a given amount of capital,
Non-U.S.
2000
alleviating pressures from bank deleveraging.
1000
However, securitization markets remain0
essentially closed or heavily dependent on
2000 2001 2002 2003 2004 2005 2006 2007 2008
Sources: IMF staff estimates based on data from Dealogic, JPMorgan
public support (e.g., U.S. and euro area central
Chase & Co.. Merrill Lynch, Mizuho Securities, DBRS, Standard & Poor's,
European Securities Forum; and Inside Mortgage Finance.
bank facilities or operations) due to fundamental
1/ Totals are for private-label securitization, including asset-backed
securities (ABS); collateralized debt obligations (CDO) and CDO squared;
flaws that have undermined market trust andand mortgage-backed securities (MBS).
confidence. To repair the incentive andinformation problems that led to the collapse of securitization markets, reforms should seek
to improve accounting standards and strengthen disclosure all along the chain ofintermediation, encourage simplification and standardization of products, improve
resolutions mechanisms after default, and realign incentives for issuers and rating agencies.
Policies are generally moving in the right direction, including to require more “skin in thegame” from issuers, but proposals will need to be carefully calibrated to avoid stifling market
activity. 2
2

For detailed analysis, see Chapter 2 of the Global Financial Stability Report (October 2009).

5
III. BALANCE SHEET ADJUSTMENT FOLLOWING THE CRISIS
8.
Balance sheet repair will weigh on global demand prospects long after the crisis.
Large financial losses and capital shortfalls in banks, reduced wealth and high indebtedness
in households, alongside ballooning deficits in the public sector in several G-20 economies
will all require a lengthy period of substantial balance sheet adjustment—particularly incountries with large public and external deficits and affected by large credit and housing
booms and busts. Repair in public and private sector balance sheets will imply shifts in theunderlying pattern of saving and investment. Specifically, higher saving (net of investment)
and smaller current account deficits are likely among many G-20 advanced economies.
Similar adjustment patterns are likely in much of emerging Europe, amid tighter externalfinancing conditions.
Global Saving, Investment, and Current Accounts(Percent of GDP)
Investment
Current account (lhs)

P rivate saving
P ublic saving

0.8

28

Advanced Econom ies

0.4

24

0.0

20

-0.4

16

-0.8

12

-1.2

8

-1.6

4

-2.0

0

-2.4

6.0
4.5

40

Em erging andDeveloping Econom ies

32

3.0

24

1.5

16

0.0

8

-1.5

0

-4 -3.0
95

98

01

04

07

10

13

-8
95

98

01

04

07

10

13

So urce: IM F, World Eco no mic Outlo o k.

9.
In the financial sector, the process of deleveraging that is already underway will
likely continue for some time, weighing on credit supply and spending. Notwithstanding
better-than-expected bank earnings recently and efforts to raise bank capital, the core balance
sheet problems of banks remain—including thin capital bases and troubled assets that lockup part of bank portfolios. Banks also remain exposed to further deterioration of asset quality
during what is likely to be a sluggish recovery.
•

Staff simulations suggest that deleveraging of bank balance sheets will likely
continue to restrain credit provision in G-20 advanced economies for some years,
weighing on domestic spending going forward.

•

Many G-20 emerging economies with large external deficits face continued tightexternal financing conditions (especially, cross-border banking flows) and continued
pressure on rollovers of maturing corporate debt and on new household borrowing.

10.
As the recovery takes hold, public sector accounts will need to be consolidated
significantly to achieve fiscal sustainability, restraining public demand. Following

6
exceptional public actions taken to stabilize the financial system and to support aggregate
demand, substantial efforts will be needed to reverse the deterioration of budgetary positions
and place public debt onto sustainable trajectories, particularly in the many economies withhigh public debt.3 For high-debt advanced economies in the G-20, an improvement in the
primary fiscal balance by 5½ percentage points of GDP is needed to reduce debt ratios after
2014, substantially larger fiscal adjustment than for emerging economies or low-debt
advanced economies.4 The amount of adjustment needed would be even larger if growth is
weaker over the medium term. High debt countries would be especially vulnerable todeterioration in market confidence and potentially higher interest rates that could raise publicborrowing costs, dampen investment, and reinforce the negative impact of the crisis on
productivity. Reform measures to contain pension and health care costs (especially,
entitlement reform) will be essential to place public finances on a sound footing without avery heavy tax burden that could adversely affect future growth.
11.
Overextended household balance sheets will also need to be strengthened,
implying higher private saving. In the United States, steep losses in both financial andhousing wealth—exceeding the decline seen during the 2001-02 downturn when housing
wealth was rising—will weigh on consumer demand.
Moreover, lower collateral values and tighter credit
U.S. Household Equity(ratios to disposable income)standards will reduce access to credit. Also, U.S.
Other equity (tangible assets o ther than real estateminus non-credit market liabilities)
household (mainly, mortgage) debt remains at historicFinancial assets minus credit market liabilities, o therthan mo rtgages
highs in percent of disposable income, against theReal estate assets minus mo rtgages
background of weaker growth prospects and risingsaving rate (% of disp. income)unemployment. This indicates that the recent sharp
recovery in U.S. household saving rates will need to besustained or even extended. Staff projections, envisage
U.S. personal saving rates rising to 8 percent of disposable
income over 2011 to 2014 (compared to 2 percent on
90 92 94 96 98 00 02 04 06 08
average from 2004 to 2007). Other advanced economies— So urce: Haver A nalytics.
e.g., the United Kingdom, Ireland, and Spain—and some3

For a detailed discussion of exit strategies and fiscal adjustment, see staff surveillance note on Global
Economic Prospects and Policy Challenges, August [28], 20094

Lower debt countries are assumed to be (i) advanced economies whose debt-to-GDP ratios are projected
below 60 percent in 2014, and (ii) emerging market countries whose debt-to-GDP ratios are projected below
40 percent. The required adjustments are based on a stabilization or reduction of the debt-to-GDP ratio from2014 onward—stabilization for lower debt countries and for the higher debt countries, reduction of the debt
ratio to 60 percent for advanced countries (halve for Japan) and to 40 percent for emerging market economies)in 2029. The analysis is illustrative and makes some simplifying assumptions: in particular, beyond 2014, aninterest rate–growth rate differential of 1 percent is assumed, regardless of country-specific circumstances;moreover, the projections are "passive" scenarios based on constant policies.

10
8
6
4
2
0

7
emerging economies (especially in Europe) will also need to see significant consolidation ofhousehold finances in the wake of significant housing and credit booms and busts.
12.
Corporate saving may also rise as businesses look to shore up balance sheets. In a
more uncertain credit environment, non-financial corporates may rely on retained earnings to
help finance investment. With excess capacity in production and an overhang of unsold
homes, investment is likely to remain subdued in many economies.
IV.

GLOBAL REBALANCING AND POLICY CHALLENGES

13.
To sustain solid global growth, higher saving in many advanced and someemerging economies will need to be accompanied by a rebalancing in the sources ofglobal demand. Namely, given weaker growth prospects in advanced trading partners
directly hit by the financial crisis, emerging economies (notably, in Asia) would have to
become less reliant on export-led growth and more reliant on domestic demand. On the
supply side, advanced economies such as Japan and Germany, as well as oil exporters, could
also support rebalancing through desirable reforms or policies that strengthen growthprospects from domestic sources.
14.
Global imbalances have narrowed sharply after the crisis, reflecting some
painful corrections (see chart). The U.S. current account deficit has narrowed quickly, as
household saving rates have jumped. Also, current
Global Imbalances
account deficits in advanced (Greece, Ireland,(Percent of World GDP)
Portugal, Spain (GIPS), and the United Kingdom) and
US
OIL
CHN
GER
JPN
EMA
ROW
GIPS
UK
CEE
emerging Europe (CEE) have narrowed sharply, as3
credit and housing booms have turned to busts.
2
Together with the United States, these economies
1
account for the bulk of the world’s current accountdeficits. Germany and Japan’s external surpluses have0
noticeably narrowed, alongside falling exports and-1
manufacturing; while surpluses have diminished for-2
oil exporters, as the value of oil revenues has dropped
statistical discrepancy-3
sharply. Emerging Asia (EMA)—notably, China—has
96 98 00 02 04 06 08 10 12 14
seen less adjustment in its external positions.
So urce: IM F staff estimates.
15.
However, imbalances—based on current policy trajectories—are projected towiden again in the WEO baseline, signaling the need for further underlying
adjustment.5 The recovery of oil prices is expected to boost saving and current account5

The global current account discrepancy is projected to rise over time (see chart), possibly reflecting some
excessive optimism over exports in country forecasts, although some increase in the discrepancy can be justified
by past trends.

8
surpluses of oil exporters, while lowering those of importers. The turnaround in the global
manufacturing cycle is expected to have similar implications for external surpluses inGermany and to a lesser extent Japan (because of the recent appreciation of the yen). Little
external adjustment is projected for the economies of emerging Asia, including China.
16.
Absent further policy adjustment, limited realignment in the sources of global
demand is likely to constrain growth prospects. In the WEO baseline projections, global
growth averages 4 percent over 2011-2014 compared to 5 percent over 2005-2008, but partof this growth is catch-up and underlying growth potential is even weaker. Moreover, therecovery could be even less robust if progress to facilitate rebalancing is even more limited(see discussion of a downside scenario below).
17.
Successful rebalancing to sustain solid growth will require more forceful policy
action in a broad range of external deficit and surplus countries. Rapid progress towardfixing the financial system is essential to support productivity and growth in advanced
economies. Given weaker growth prospects in key trading partners, emerging Asia (notably,
China) should step up structural efforts—such as financial reforms to improve access tocredit for smaller enterprises and households —to boost domestic spending, recognizing thestrength of household balance sheets. Also, strengthening social safety nets, as well as
pension and healthcare systems, are key policy elements to reduce precautionary saving.
Public investment spending (concentrated on “green” initiatives and infrastructure spending)in emerging Asia and oil exporters would help meet the need for additional infrastructure.
18.
Supply-side reform measures are also key to successful rebalancing. Structuralreform efforts to boost productivity in the non-tradables sector in key surplus countries could
enhance domestic growth prospects, as well as facilitate a shift in demand toward thedomestic economy. Among major advanced economies with sizeable external surpluses(notably, Germany and Japan), service sectors have tended to lag in productivity growthcompared to their U.S. counterparts—including in retail and distribution. In emerging Asia as
well, services have tended to fall behind manufacturing in terms of the progress made toward
productivity catch-up.
19.
More flexible exchange rate management in some countries would be a valuable
policy complement to demand- and supply-side measures. Stronger currencies would
boost purchasing power, helping expand the opportunity set for domestic consumers insurplus countries and encourage the needed shift in productive resources from tradable tonontradable sectors. As the counterpart, depreciating currencies in major deficit countries
would facilitate a needed adjustment away from overstretched domestic demand. To promote
this flexibility, strengthened country insurance mechanisms and multilateral liquidity
provision could help limit the incentives for self insurance through reserve accumulation that,along with inflexible exchange rates, has been a feature of export-led growth strategies in the
past.

9
20.
Joint implementation of policies in key surplus and deficit countries to advance
rebalancing would appreciably strengthen global growth prospects.6 As highlighted inBox 1, in an upside scenario based on strong pursuit of these policy actions, global growth isabout 1 percentage point higher on average than the baseline through 2014; and there is
gradual movement towards rebalancing, with current account ratios shifting by around one
percent of GDP in the U.S. and emerging Asia, and somewhat less elsewhere. Box 1 also
shows the impact of unsuccessful or misguided polices in a downside scenario, where
rebalancing is limited and growth is lower. With slow progress on key policies (including
repair of the financial system) and a drift toward protectionist measures, growth would be 1½
percentage points lower than the central projection over the next three years. The larger
losses than gains across scenarios reflect important policy constraints (i.e., zero bound on
nominal interest rates) in some regions, especially Japan, but also the United States.

6

The main policy requirements for rebalancing are consistent with recommendations and policy plans
highlighted in the Multilateral Consultations on Global Imbalances. See IMF Staff Report on the Multilateral
Consultation on Global Imbalances with China, the Euro Area, Japan, Saudi Arabia, and the United States; June29, 2007 (http://www.imf.org/external/np/pp/2007/eng/062907.pdf ).

10

BOX 1. GLOBAL REBALANCING AND GROWTH
Multi-region simulation analysis based on the Fund’s Global Integrated Monetary and Financial
Module (GIMF) highlights the risks to growth from key policy actions that could support smootherrebalancing. Private and public saving play crucial roles in the failure or success of the rebalancing
process.
1. Upside Scenario: This scenario assumes successful and well-targeted policies that lead to higher
growth and a more sustainable distribution of demand. The major economies succeed in repairing theirfinancial systems and intermediation, thereby increasing productivity. Emerging Asia permits asustained appreciation of both its real and nominal exchange rates to support domestic demand.
Government spending on “green” and infrastructure projects enhances productivity, especially inemerging Asia. The result is an upsurge in consumer confidence that reduces private saving in Japan,
emerging Asia and the remaining countries, and to a lesser extent in the euro area. In the United States
private saving increases, consistent with durable strengthening of household balance sheets.
Under this scenario, world GDP growth is about 1 percent higher over the medium term on average.
There is significant movement towards global current account rebalancing as net debtors’ current
account deficits improve and net creditors’ surpluses decline, with magnitudes equal to about
1 percent of GDP in the United States and emerging Asia, and less elsewhere. One reason is an
improvement of fiscal deficits worldwide, and especially in deficit regions. But more important is the
reduction in private saving rates in the surplus regions. This emphasizes the critical importance of welldesigned policies that can support confidence, and thus demand, in regions with traditionally highsaving rates, in order to permit a controlled and desirable increase in saving elsewhere that does notimperil the recovery.
2. Downside Scenario: This scenario highlights the risks of unsuccessful or misguided policies
leading to lower growth and wider current account imbalances than in the WEO baseline. In
particular, delays in repairing ailing financial sectors limits productivity growth. In emerging Asia,
policy does not succeed in redirecting demand towards domestic sources. Finally, protectionist
policies distort incentives and lower productivity worldwide.
Under this scenario, the global economy fallback into recession, before gradually returning towardbaseline growth rates. Growth is sharply lower initially, partly due to confidence effects, and
1¼ percentage points lower, on average, over the medium term (5 years). In some economies,
especially Japan, but also the United States, the contraction is exacerbated by monetary policy hitting
the zero lower bound on nominal interest rates. The goal of global current account rebalancing is evenfurther from resolution, as emerging Asia’s current account moves further into surplus, with theUnited States and the euro area experiencing current account deteriorations. This is partly due tohigher private saving in emerging Asia, combined with lower private saving elsewhere, the latter as aresult of the difficulties caused by the financial system and by protectionist measures. But higher fiscal
deficits in the euro area and the United States also add to current account deficits.

11

Global Scenarios(All variables in levels; x-axis in years)
Thin Solid = Pre-Crisis April 2007 WEO
SOLID = Current Baseline; DASHED = Upside Scenario; DOTTED = Downside Scenario

Real GDP

Current Acc’t to GDP Gov’t Deficit to GDP Priv. Savings to GDP

United States

United States(In levels, 2007=100)

160

160

140

140

United States(In %age points)

0

0

-2

United States(In %age points)

15

15

-2
10

120

120

-4

10

5
100

-6

-6

80

80

-8

-8

08

10

12

14

16

06

Emerging Asia
(In levels, 2007=100)

240
200
160

08

10

12

14

10

16

200

8

160

(In %age points)

6
4

4

2

2

14

16

06

Euro Area
160

0.5

140

140

120
100
80
06

08

10

12

14

08

12

14

16

06

14

2

80

-1.5

-1.5

0

10

12

14

16

08

10

12

14

4

10

10

3

3

8

8

2

2

6

6

1

1

4

4

0

2

10

12

14

16

(In %age points)

6

140

2

2

120

120

1

1

100

100

0

0

80

80

-1

-1
10

12

37

36

36
08

14

16

08

10

12

10

12

14

16

(In %age points)

20

20

19

19

18

18

17

17
08

10

12

14

16

14

26

24

24

22

22

20

16

(In %age points)(In %age points)

26

20
06

Other Countries
3

08

12

2
06

Other Countries

06

37

Japan

(In %age points)

4

08

40

38

06

12

06

16

38

16

5

0

14

39

Japan

(In %age points)

5

8

0
06

12

Euro Area(In %age points)

2

08

10

39

06

-1.0

06

08

(In %age points)

40

16

-1.0

16

16

14

100

140

14

12

4

3

12

10

12

Euro Area

160

10

08

Japan

(In levels, 2007=100)

08

0

4

Other Countries

06

0

-0.5

80

160

2

-0.5

100

12

2

120

100

10

4

6

120

08

4

6

120

14

12

Emerging Asia
6

0.0

140

16

14
06

0.0

160

18

16

16

8

140

06

10

(In %age points)

Japan

80

14

0.5

16

(In levels, 2007=100)

160

12

(In %age points)

6Euro Area(In levels, 2007=100)

160

10

6

80
12

08

8

120

10

20

18

Emerging Asia
10

80
08

0
06

120

06

5

0

Emerging Asia
240

22

20

-4

100

06

(In %age points)

22

08

10

12

14

16

Other Countries(In %age points)

6

20.0

4

4

19.5

19.5

2

2

19.0

19.0

0

0

18.5

18.5

-2

-2

18.0

06

08

10

12

14

16

20.0

18.0
06

08

10

12

14

16