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Macroeconomic Shifts and Growth Prospects: A Detailed Analysis

Delve into recent macroeconomic developments in 2010 and 2011, exploring GDP contractions, fiscal deficits, inflation spikes, and growth projections. Understand the driving forces behind growth, sustainability concerns and necessary reforms to promote economic stability and progress.

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Macroeconomic Shifts and Growth Prospects: A Detailed Analysis

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  1. Recent Macroeconomic DevelopmentsOrhanNiksicThe World BankOctober 6, 2011

  2. Internal and external developments in 2010 shook the economy • GDP contracted by 1.4 percent • Public expenditures and fiscal deficit increased substantially (2pp, 3.5 to 6.5). • International food and oil prices fueled inflation.

  3. 2011: The economy is rebounding • GDP growth projected at 7 percent • Inflation is coming down • Fiscal deficit large, but smaller than projected earlier. • IMF program on track

  4. What is driving growth? • Gold • Power generation • Other industrial sectors (textiles and mineral processing) • Transport and communications, trade • Government sector

  5. Is growth sustainable? • Some sources of growth expected to dry out next year • External demand will be weaker & no fiscal stimulus • Structure of growth will have to change

  6. Growth prospective • It will moderate • Reforms are necessary to stimulate growth: • Governance • Macro-fiscal sustainability • Business environment • Privatization

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