The Current Global Economic Situation, Outlook and Policy Options, with Special Emphasis on Fiscal Policy Issues

The paper provides an account of the current global economic situation, outlook and policy options. Medium-term prospects are mediocre and fraught with considerable downside risk. Fiscal and monetary policy options for the main industrial countries to improve global economic performance are outlined. The worries about the United States fiscal position are shown to be exaggerated. It is also argued that while the United States economy is well on course to become a net external debtor, it has not yet reached that position. In the longer run, prosperity or depression will be determined to a large extent by policy choices.