MERCOSUR Report No. 12 (2006-2007)

In an international context that has started showing signs of increased instability, the pace of global economic growth seems not to have been significantly affected, at least at the time of writing the present report. Growth forecasts for the global economy for this year are only slightly below those for 2006 (5.2% as against 5.4%). World trade continued to expand faster than GDP growth, while foreign direct investment (FDI) flows made up the ground they lost in 2001-2003, approaching the record values of 2000. Although, toward mid-2007, there was serious disruption in the international financial market, the swift, emphatic reactions of the central banks of the United States and Europe are highly likely to contain the more negative effects of this on the dynamics of the world economy. There was also continuous growth in much of the developing world, particularly China.