and mining investment. the decline in wage growth has contributed, at the margins, to a turnaround in the real exchange rate and helped cushion the effect of slower growth of domestic demand on employment growth. it has also helped to contain domestic cost pressures thereby offsetting the effect of the lower exchange rate on consumer prices. the demand for labour has improved over recent months, although some of that may reflect a “ catch - up ” after a period of weak employment growth last year. some forward - looking indicators are higher than they have been, though they are still at levels consistent with only moderate employment growth in the next few months. the bank ’ s latest forecasts are for employment growth to pick up gradually over the next two years. the unemployment rate is expected to remain elevated over that period, declining from later in 2015 when we anticipate gdp growth to be picking up to an above - trend pace. looking well beyond that horizon, demographic changes loom large and will play an increasing role in the discussion of labour market developments. as we ’ ve suggested on a number of occasions, in time it is likely that the availability of workers, not jobs, will be the main concern. 8 [ 8 ] and in that world, one imagines that real wages might grow a little more rapidly than otherwise, in order to encourage participation. see stevens g ( 2014 ), “ economic conditions and prospects ”, speech to the american chamber of commerce ( qld ) amcham iinet business luncheon, brisbane, 3 april ; and kulish m, c kent and k smith ( 2010 ), “ aging, retirement, and savings : a general equilibrium analysis ”, the b. e. journal of macroeconomics, 10 ( 1 ), pp 1 – 32. bis central bankers ’ speeches

more tranquil times. while financial markets have been turbulent, the recent data on economic activity suggest that the global economy is continuing to recover from the sharp downturn in late 2008 and early 2009. in its latest update, the imf is forecasting that the world economy will expand by 4¼ per cent in 2010 ( graph 1 ). this is a much better outcome than was expected 12 months ago, when the imf was forecasting growth of just 2 per cent. at the time, the outcomes that we have seen recently were viewed as a possible “ upside risk ”, although most observers thought the likelihood of this risk materialising was quite low. the main focus at the time, as it has been over the past week, was on the possible downside risks which were seen to be both very real and very serious. graph 1 we now know that the various policy measures that were taken did help arrest the collapse of confidence following the failure of lehman brothers. these measures on the fiscal, monetary and financial fronts provided reassurance that policymakers would not stand on the sidelines. in doing so, they helped reduce the extreme risk aversion that was evident at the time. they also had the more traditional effect of directly supporting spending in the economy when many people were reluctant to spend. while the global economy is recovering, the recovery has been quite uneven to date. in asia, it has been v - shaped, but in the countries of the north atlantic, particularly those in europe, it has been subdued ( graph 2 ). output remains below the level it reached in 2008 and, in many countries, it will still be some time before that earlier peak is reached again. graph 2 china continues to be at the forefront of the recovery. growth over the first few months of 2010 was strong, and recent indicators suggest that this momentum has continued. investment in the manufacturing sector and in infrastructure has, if anything, surprised on the upside ( graph 3 ). the main issue continues to be the potential for the chinese economy to run too hot, putting upward pressures on the prices of goods and services and on housing prices. recently, the chinese authorities have been responding to this risk, especially through steps to rein in the property market. graph 3 the picture is broadly similar elsewhere in asia, where there has been a sharp recovery in industrial production and exports ( graph 4 ). policy settings in the region remain stimulatory, particularly when viewed against the v - shaped recovery. over the past