Global Economic Prospects for 2010 and 2011

In a new Peter G. Peterson Institute for International Economics paper, Michael Mussa boosts his forecast of global real GDP growth in 2010 to 4.5 percent and projects roughly the same for 2011, indicating a V-shaped recovery is underway.

“Looking ahead, if the recovery proceeds at even a moderately vigorous pace, it will be necessary to reemploy many of those who lost their jobs during the recession. As this happens, the average level of productive efficiency of the workforce is likely to decline somewhat; relatively less productive workers will predominate among those who are reemployed. Accordingly, the outsized gains in labor productivity that we have seen in recent quarters are unlikely to persist, and unit labor costs are likely to rise.”


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