I've had a few days to get through this now, yeah I know I'm a bit fucked in the head, I spend (part of) my spare time reading tedious reports, anyways their forcast doesn't look too good.

- One of the things highlighted during the summit is that the EU & US must act against their public deficits and debt.

Here is a longer read for those interested, 115 pages. http://www.imf.org/external/pubs/ft/...pdf/fm1202.pdf

Here is a short summery.
STORYLINE:

The International Monetary Fund (IMF) presented a gloomier picture of the global economy than a few months ago, saying prospects have deteriorated further and risks increased. Overall, the IMF's forecast for global growth was marked down to 3.3 percent this year and a still sluggish 3.6 percent in 2013.

In its latest World Economic Outlook, unveiled in Tokyo ahead of the IMF-World Bank 2012 Annual Meetings, the IMF said advanced economies are projected to grow by 1.3 percent this year, compared with 1.6 percent last year and 3.0 percent in 2010, with public spending cutbacks and the still-weak financial system weighing on prospects.

Growth in emerging market and developing economies was marked down compared with forecasts in July and April to 5.3 percent, against 6.2 percent last year. Leading emerging markets such as China, India, Russia, and Brazil will all see slower growth. Growth in the volume of world trade is projected to slump to 3.2 percent this year from 5.8 percent last year and 12.6 percent in 2010.

"The downward revisions are widespread. They are, however, stronger for two groups of countries: first, for the members of the Euro zone, where we expect growth in 2013 to be very close to zero, and, for three of the large emerging market economies -- namely China, India and Brazil," said IMF Chief Economist Olivier Blanchard.

Release of the closely watched forecast opens a week of intense activity in Tokyo, where more than 10,000 central bankers, ministers of finance and development, private sector executives, academics, and journalists are gathered to discuss global economic issues at the World Bank-IMF annual meetings being held in the Japanese capital. Two other key economic assessments will be issued, the Global Financial Stability Report on the state of the financial sector and the Fiscal Monitor, which examines public finances.

The IMF said that its forecast rested on two crucial policy assumptions—that European policymakers get the euro area crisis under control and that policymakers in the United States take action to tackle the "fiscal cliff" and do not allow automatic tax increases and spending cuts to take effect. Failure to act on either issue would make growth prospects far worse.

Blanchard offered policy strategies to bolster the recovery.

"Continue with accommodating monetary policy, which is a very powerful force for growth on its own, and then limit the adverse effects of the brakes. Continue with fiscal consolidation and here our advice still holds: don't do it too slow, don't do it too fast," said Blanchard.

He pointed to the Euro zone as the "main issue" in the near term and praised a growing realization that Euro zone countries need an "ambitious architecture."
"In the shorter term, however, more immediate measures are needed. Spain and Italy must follow through with adjustment plans, which reestablish competitiveness and fiscal balance and maintain growth. To do so, they must be able to recapitalize their banks if needed without adding to their sovereign debt. And, fundamentally, they must be able to borrow at reasonable rates," said Blanchard.

The forecast said that monetary policy in advanced economies was expected to remain supportive. Major central banks have recently launched new programs to buy bonds and keep interest rates low. But the global financial system remains fragile and efforts in advanced economies to rein in budgetary spending, while necessary, have slowed a recovery.

The recovery is forecast to limp along in the major advanced economies, with growth remaining at a fairly healthy level in many emerging market and developing economies. The IMF said leading indicators do not point to a significant acceleration of activity, but financial conditions have recently improved in response to euro area policymakers' actions and easing by the U.S. Federal Reserve.

But Blanchard held out hope for a brighter outlook.

"If uncertainty is indeed partly behind the current slowdown, which I believe, and if the adoption and implementation of these measures decreases uncertainty, then things may actually turn out better than our forecasts not only for Europe but also in the rest of the world."

The WEO offered forecasts for different regions of the world:

• In the United States, growth will average 2.2 percent this year. Real GDP is projected to expand by about 1½ percent during the second half of 2012, rising to 2¾ percent later in 2013. Weak household balance sheets and confidence, relatively tight financial conditions, and continued fiscal consolidation stand in the way of stronger growth.

• In the euro area, real GDP is projected to decline by 0.4 percent in 2012 overall—about ¾ percent (on an annualized basis) during the second half of 2012. With lower budget cuts and domestic and euro area–wide policies supporting a further improvement in financial conditions later in 2013, real GDP is projected to stay flat in the first half of 2013 and expand by about 1 percent in the second half. The "core" economies are expected to see low but positive growth throughout 2012–13. Most euro area "periphery" economies are likely to suffer a sharp contraction in 2012, constrained by tight fiscal policies and financial conditions, and to begin to recover only in 2013.

• In Japan, growth is projected at 2.2 percent in 2012. The pace of growth will diminish noticeably as post-earthquake reconstruction winds down. Real GDP is forecast to stagnate in the second half of 2012 and grow by about 1 percent in the first half of 2013. Thereafter, growth is expected to accelerate further.

• Fundamentals remain strong in many economies that have not suffered a financial crisis, notably in many emerging market and developing economies. In these economies, high employment growth and solid consumption should continue to propel demand and, together with macroeconomic policy easing, support healthy investment and growth. However, growth rates are not projected to return to precrisis levels.

• In developing Asia, real GDP growth will average 6.7 percent in 2012 and is forecast to accelerate to a 7¼ percent pace in the second half of 2012. The main driver will be China, where activity is expected to receive a boost from accelerated approval of public infrastructure projects. The outlook for India is unusually uncertain: for 2012, with weak growth in the first half and a continued investment slowdown, real GDP growth is projected to be close to 5 percent, but improvements in external conditions and confidence—helped by a variety of reforms announced very recently—are projected to raise real GDP growth to about 6 percent in 2013.

• In the Middle East and North Africa, activity in the oil importers will likely be held back by continued uncertainty associated with political and economic transition in the aftermath of the Arab Spring and weak terms of trade—real GDP growth is likely to slow to about 1¼ percent in 2012 and rebound moderately in 2013. Due largely to the recovery in Libya, the pace of overall growth among oil exporters will rise sharply in 2012, to above 6½ percent, and then return to about 3¾ percent in 2013.

• In Latin America, real GDP growth is projected to be about 3¼ percent for the second half of 2012. It is then expected to accelerate to 4¾ percent in the course of the second half of 2013. The projected acceleration is strong for Brazil because of targeted fiscal measures aimed at boosting demand in the near term and monetary policy easing, including policy rate cuts equivalent to 500 basis points since August 2011. The pace of activity elsewhere is not forecast to pick up appreciably.

• In the central and eastern European economies, improving financial conditions in the crisis-hit economies, somewhat stronger demand from the euro area, and the end of a boom-bust cycle in Turkey are expected to raise growth back to 4 percent later in 2013. The Commonwealth of Independent States will grow at 4.0 percent this year, with Russia posting growth of around 3.7 percent.

• Sub-Saharan Africa is expected to continue growing strongly, averaging above 5 percent. Most countries in the region are participating in a strong expansion, with the exception of South Africa, which has been hampered by its strong links with Europe. Recently some food importers in the region have been hit by the sharp increase in global food prices for a few major crops.
For the Swedes:
At a time of record public debt-to-GDP ratios among advanced economies, Sweden is noteworthy for its strong public finances. At the trough of the recession in 2009, Sweden had a fiscal deficit of only 1 percent of GDP; the deficit narrowed soon after, and by 2011 its debt-to-GDP ratio was below precrisis levels. What lessons can be drawn from Sweden’s experience during the global financial crisis? Four stand out.

1. The building up of fiscal buffers during good times, together with credible fiscal institutions, provides room to maneuver during bad times. On the eve of the crisis, Sweden enjoyed a fiscal surplus of 3.5 percent of GDP, compared with an average deficit of 1.1 percent of GDP among advanced economies. Indeed, the debt-to-GDP ratio in Sweden had fallen from 70 percent in 1998 to 40 percent in 2007. The strength of the fiscal accounts was built on more than a decade of reform through spending rationalization to trim social benefits and improvements in the tax system to generate revenue. When the recession hit (with real GDP contracting by 5 percent in 2009, compared to an average
decline of 3.5 percent across advanced economies), the government had enough fiscal space to allow automatic stabilizers to operate fully and to implement stimulus measures without jeopardizing fiscal sustainability. The fiscal balance went from a surplus of 3.5 percent of GDP in 2007 to a relatively small deficit of 1 percent of GDP in 2009, most of which corresponded to the implementation of discretionary measures (including policies in immediate
response to the crisis as well as the implementation of tax cuts adopted during earlier reforms). The authorities’ expansionary policy was not called into question by markets because of the low level of the deficit and the credibility of Sweden’s comprehensive fiscal policy framework—including a top-down budget process, a fiscal surplus target of 1 percent of GDP over the output cycle, a ceiling for central government expenditure set three years in advance, a balanced-budget requirement for local governments, and an independent fiscal council.

2. Central bank credibility allows monetary policy to be used aggressively. During the crisis, the Riksbank lowered its target short-term interest rate nearly to zero and implemented sweeping liquidity measures, including long-term repurchase agreement operations and the provision of dollar liquidity. It had the flexibility to move aggressively in large part because of strong performance under its inflation-targeting regime.

3. A flexible exchange rate can help absorb the shock. During the crisis, the krona fell in value against both the dollar and the euro as investors flocked to reserve currencies. It depreciated by 15 percent in real effective terms from mid-2008 to early 2009, supporting net exports and helping prop up economic activity.

4. Decisive action to ensure financial sector soundness is crucial. Swedish banks were badly hurt by the financial
crisis, despite their negligible exposure to U.S. subprime assets. Bank profitability fell sharply in 2008–09, and two of the largest banks—both increasingly funded on wholesale markets and exposed to the Baltics—saw their loan losses spike and their share prices and ratings decline accordingly. The authorities took fast action to calm depositors and interbank
markets, including a doubling and extension of the deposit guarantee and introduction of new bank recapitalization and debt guarantee schemes.