NATIONAL UNIVERSITY OF MODREN LANGUAGES

DEPARTMENT OF MANAGEMENT SCIENCE

LAHORE CAMPUS

ROLL NO: L-
ASSIGNMENT NO:
CONTEMPORARY ISSUES IN BUSINESS WORLD
SUBMITTED TO:
SUBMITTED BY:

MASTER OF BUSINESS ADMISNSTRATION

SESSION: 201-2021

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 World Economic Outlook (2018)
The steady expansion under way since mid-2016 continues, with global growth
for 2018–19 projected to remain at its 2017 level. At the same time, however, the
expansion has become less balanced and may have peaked in some major
economies. Downside risks to global growth have risen in the past six months and
the potential for upside surprises has receded.

Global Prospects and Policies

Global growth for 2018–19 is projected to remain steady at its 2017 level, but its
pace is less vigorous than projected in April and it has become less balanced.
Downside risks to global growth have risen in the past six months and the
potential for upside surprises has receded. Global growth is projected at 3.7
percent for 2018–19—0.2 percentage point lower for both years than forecast in
April. The downward revision reflects surprises that suppressed activity in early
2018 in some major advanced economies, the negative effects of the trade
measures implemented or approved between April and mid-September, as well
as a weaker outlook for some key emerging market and developing economies
arising from country-specific factors, tighter financial conditions, geopolitical
tensions, and higher oil import bills.

Global Recovery after 2008 Financial Meltdown

Output losses after the crisis appear to be persistent, irrespective of whether a
country suffered a banking crisis in 2007–08. Sluggish investment was a key
channel through which these losses registered, accompanied by long-lasting
capital and total factor productivity shortfalls relative to pre crisis trends. Policy
choices preceding the crisis and in its immediate aftermath influenced post crisis
variation in output. Underscoring the importance of macroprudential policies and
effective supervision, countries with greater financial vulnerabilities in the pre
crisis years suffered larger output losses after the crisis. Countries with stronger
pre crisis fiscal positions and those with more flexible exchange rate regimes

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experienced smaller losses. Unprecedented and exceptional policy actions taken
after the crisis helped mitigate countries’ post crisis output losses.

Challenges for Monetary Policy in Emerging Economies

Inflation in emerging market and developing economies since the mid-2000s has,
on average, been low and stable. This chapter investigates whether these recent
gains in inflation performance are sustainable as global financial conditions
normalize. The findings are as follows: first, despite the overall stability, sizable
heterogeneity in inflation performance and in variability of longer-term inflation
expectations remains among emerging markets. Second, changes in longer-term
inflation expectations are the main determinant of inflation, while external
conditions play a more limited role, suggesting that domestic, not global, factors
are the main contributor to the recent gains in inflation performance. Third,
further improvements in the extent of anchoring of inflation expectations can
significantly improve economic resilience to adverse external shocks in emerging
markets. Anchoring reduces inflation persistence and limits the pass-through of
currency depreciations to domestic prices, allowing monetary policy to focus
more on smoothing fluctuations in output.