Monthly Briefing on the World Economic Situation and Prospects, No. 16

• The global economy started 2010 on a positive note, with continuing recovery in?industrial production and international trade, led by Asian developing countries; however, economic policymakers may face even tougher challenges in 2010?
• The significant increase in government indebtedness in Greece and other EU?countries may threaten global financial stability
• Rain shortfalls in large parts of Africa will form a major threat to food security during?2010
• The devastating earthquake in Haiti presents serious economic challenges, including?those of a long-term nature; addressing them will require a sustained international?effort and debt forgiveness

The world economy started 2010 on a positive note, with further signs of continued recovery. Both international?trade and industrial production stayed on their upward trends. Most economies showed positive gross domestic product (GDP) growth in the last quarter of 2009. The recovery remains uneven and fragile, however. Financial stability?remains tentative and credit supplies are still very tight in many economies. In addition, in countries such as Greece,?Spain and Ireland, worsening public finances have led to lower ratings for sovereign debt. This situation has triggered?concerns over renewed financial turmoil with possible global implications, as fears for sovereign default in the euro?zone could put the European currency under pressure and shock financial markets. In recent weeks, the euro depreciated from about $1.45 to $1.39 per dollar.

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