December 2010

Summary:

• European sovereign debt crisis is spreading to larger economies 
• Increased volatility in equity and foreign exchange markets
• Uneven economic recovery during the third quarter

The euro area’s sovereign debt crisis continues, despite the agreement reached on November 28th which put together a bailout package worth  85 billion euro ($111 billion) for Ireland. European Union officials also agreed on a mechanism to smooth bond restructurings after 2013, but investors are speculating that European nations will not be able to cut deficits fast enough before that target date, especially as economic growth prospects remain gloomy.

Download the World Economic Situation and Prospects Monthly Briefing No. 26