The International Monetary Fund in its June update to its “World Economic Outlook” that had been published on April 2011, already adjusted downwards its forecast for growth of the world output in 2011, from 4.4 to 4.3. This estimate, if true, and seen alone, does not seem to be too negative. In fact, for many people living in a developed world, this may seem a really good number. However, this number is not reflecting the more and more evident “two speed” recovery that the world is going through.  In fact, this 4.3% growth can be separated into a 2.2% growth for the “advanced economies”, and 6.6% for the “Emerging and Developing Economies”. And growth for the advanced economies was adjusted downward by 0.2% in relation to the 2.4% growth that was forecasted in April. This was explained by changes for the United States (from a 2.8% forecast in April to 2.5% in June), for Japan (because of the eartquake and tsunami the forecast went down from 1.4 in April to -0.7 in June), and the United Kingdom. The eurozone, instead, was adjusted upward from 1.6 to 2%, to a large extent because of an upward revision of growth for Germany, from 2.5 to 3.2%. However, emerging countries were adjusted upward by 0.1%, from 6.5 to 6.6%, and Central and Eastern Europe saw their forecast go up from 3.7 to 5.3%. There was also a small adjustment downard for Brazil (to 4.1 from 4.5%), and therefore for Latin America as a whole (to 4.6 from 4.7%), but overall the emerging countries are growing at healthy rates across the board, including an expected growth of 4.2% in the Middle East and North Africa and of 5.5% in Sub-Saharan Africa.
But, what can we expect from the next World Economic Outlook? With slower growth in the United States, the adjustment in stock markets and the tensions around the debt levels of several European countries, it is clear that downside risks have increased. We should be prepared, thus, for more adjustments downward for growth in the US and Europe, and for a deepening of the pattern where advanced economies and emerging countries “decouple” in the recovery more than what they “decoupled” during the crisis.