The IFS has published the June Updates of their bimonthly reports, the World Economic Outlook and Financial Monitor.
Despite some unpleasant surprises, global growth attained an annualized rate of 4.3 percent in the first quarter of 2011, broadly as expected. The outturn was underpinned by many unanticipated offsetting factors.
Key among the negative surprises was the devastating effect of the earthquake and tsunami on the Japanese economy. Growth also disappointed in the United States. In contrast, growth surprised on the upside in the euro area, powered by more upbeat investment in Germany and France. Growth in emerging and developing economies, meanwhile, evolved as expected.
According to Fiscal Monitor, revenues were better than expected. This was reflected by greater tax buoyancy – due partly to a stronger recovery in equity markets – leading to sizable downward deficit revisions for the United States in 2011. There was also higher growth than expected in countries such as Belgium, France, Germany, Turkey.
The flipside of the fiscal coin is the stagnant or even negative growth of countries affected by natural disasters (Australia, Japan) or political shocks (Middle East and North Africa). What’s more, some countries are expected to accelerate their spending cuts in 2011, including Canada, Italy, Poland and the United States.
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