GLOBAL ECONOMIC PROSPECTS
Global Economic Prospects: Fall 2009
Sixteenth semiannual meeting
Michael Mussa, Peterson Institute
Nicholas R. Lardy, Peterson Institute
Peterson Institute for International Economics, Washington, DC
September 17, 2009
Senior Fellows Michael Mussa and Nicholas Lardy presented the Institute's sixteenth semiannual Global Economic Prospects program on September 17, 2009. Mussa projected the course of the world economy over the rest of 2009 and for 2010, while Lardy assessed the prospects for China, a likely main driver of global recovery.
The world economy obviously stands at a critical point. "Green shoots" of recovery are sprouting in the United States, and there are signs that the "V-shaped" pattern projected by Mussa in April, could be evolving. With booming growth in the second quarter, China is again leading the way. At the same time, questions arise concerning the sustainability of the US recovery and whether private demand will pick up when the official stimulus programs begin to wane in late 2010.
One key theme of discussion was the interaction between surplus China and deficit America in leading the global recovery. It is widely agreed that, relative to the recent expansion, China needs more emphasis on domestic demand and the United States must achieve smaller external deficits if their pickups are to be sustainable as well as robust. There are favorable signs that this is happening, and a key question is the need for policy changes to build on, and extend, this progress.