IMF: Great Job, World Economy! (Except You, Europe)

More

.


The world economy is doing just great! If you ignore Europe and the United States.

That's the gist of the IMF's new global economic outlook, which projects emerging and developing economies like Russia, China and Brazil to grow about 50% faster than the developed world in the next year.

For the United States, the good news is that a strong China and India should bode well for U.S. export growth, which might hold over business production while our own demand recovers. Bad news: the IMF doesn't expect a high-octane recovery. In fact, it projects unemployment to average more than 9 percent through 2011. Slower growth means lower tax revenue. Lower tax revenue means higher projected deficits if we don't act. And that's where the IMF's deficit reduction suggestions come in.

It's the same old song. First, they approve of administration plans to freeze discretionary spending. Second, they call for tax reform, beginning with the elimination of the regressive mortgage interest deduction and continuing with a grab bag of ideas from a VAT to a bank tax. Third, they call for entitlement reform, beginning with raising the retirement age in Social Security.

Freeze spending, raise taxes, cut entitlements. A familiar trinity. But if unemployment remains stuck at 9 percent for another 12 months, as the report seems to suggest, it's hard to see the administration getting behind any effort to raise taxes or cut entitlement outlays to elderly folks who've seen their savings burned in the credit crunch.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In