Adjustment in the Global Economy

José De Gregorio

Published: September 2011

This article discusses the global adjustment process and the current challenges for policymaking, with a special focus on the asymmetries and their implications for economic policy. It reviews the uneven recovery faced by developed and emerging economies. Emphasis is made on the situation of China and the US, especially in terms of the implications of their adjustments to the global economic tensions. The article also puts a highlight on the challenges that the emerging economies face, in terms of exchange rate appreciations, capital inflows and inflation pressures and their implications for economic policy management. Policymakers in emerging economies should secure a strong and sustainable growth, and containing inflationary pressures is a key factor in this endeavor.