In China massive stimulus has aggravated existing imbalances. Further tightening of monetary policy is needed to tame inflation.
Elsewhere in the emerging world, monetary tightening is needed to check inflation. Growth is expected to remain strong on the back of robust domestic demand Brazil will slow as the cental bank tightens policy to control inflation
Russia’s recovery will be supported by higher oil prices
On the assumption that EU policymakers restore confidence in EMU, we now expect the euro to weaken somewhat less against the dollar in 2011
The yen will be supported by Japanese institutional investors’ home bias but a declining domestic savings rate will make it vulnerable in the medium term
Emerging market currencies will continue to be supported by wide interest rate and growth differentials with OECD economies
16 16 16 16 15 - China’s economy crashes - New asset bubbles burst, creating renewed financial turbulence - Tensions over currency manipulation lead to a rise in protectionism - Major sovereigns default as public debt surges - There is a sustained spike in oil prices
10 12 10 10 9 - Economic upheaval leads to widespread social and political unrest - The euro zone breaks up - Developed economies fall into a deflationary spiral - The global economy experiences a double-dip recession + Improved confidence prompts a stronger rebound in demand