Monthly Briefing on the World Economic Situation and Prospects, No. 21

World financial markets experienced another month of turbulence in June. Concerns about the sustainability of sovereign debt?in some European economies continued to linger, and there were increasing uncertainties about the consequences of the fiscal?consolidation measures announced by a number of developed countries. Equity markets in major economies erased all the gains?made in the early part of the year, and credit risk premiums edged up discernibly.?Recent data has also shown a waning of the recovery in the real economy. For example, the growth in industrial production?and trade in many major economies, although still positive, has declined significantly. GDP growth will likely decelerate in many?economies in the second half of 2010, as the effects of both the upward inventory adjustment and fiscal stimuli fade. The fiscal?impetus to GDP growth is expected to turn from positive to negative in many developed countries due to fiscal consolidation in?the coming quarters, although monetary policy in these economies is likely to remain accommodative.

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