Many developing countries remain severely indebted, and current per capita income levels remain below those of 1980 in much of Africa, Latin America and West Asia. Although it is possible that the stronger economic growth seen in the past three years represents a turning point for the world economy, recent improvements will be sustained only with appropriate national policies and international developments. Developed economies 4. The current economic recovery in the developed economies has been characterized by still modest economic growth, virtual stagnation of real wages and high levels of unemployment. At the same time, inflation has been reduced significantly and budget deficits are declining in a number of countries.
Structural problems persist, especially in labour markets and in social security systems.
Currently, only the United Kingdom and the United States have a lower level of unemployment than they averaged in the 1980s. Although economic growth is expected to strengthen in the near term, the extent of the recovery is constrained by a tight macroeconomic policy stance, which is intended to lay the foundation for stronger growth in the longer term. In many countries, Governments are finding it difficult to meet their previous commitments to provide social benefits, particularly because of demographic factors, and are consequently reviewing and revising their social programmes. Transition economies 5. The change from centrally planned to market economies, which began in many of the transition economies in 1989, has led to sharp declines in output.