Even a fairly small external demand stimulus, a few hundred billion euros, acts as a catalyst for growth, and the impact multiplies upward strongly, as 2010 demonstrated.
However, trade benefits tend to be heavily skewed to Germany, creating further internal tensions in the eurozone.
However, although world growth should average 4-5% per annum, it is also likely to be far more volatile than consensus forecasts suggest, not just in the short term but over the long run as well.
Turbulence must be seen as normal, not an aberration.
If this materialises, even Europe can withstand a short, shallow dip back into recession.
Rapid growth of 5-7% in the developing world can continue to be four to five percentage points ahead of the weak pace of expansion expected in the advanced economies (as shown in the scenarios depicted in Figure 1).Perhaps such stories serve the same purpose as horror movies - sensationalism entertains.Arguably, those struggling to keep up with the demands of modern labour markets and daily stress may benefit from a "feel not-so-bad factor".The asymmetric relationship should perturb Europe - it is a wealthy continent, an advanced economy, but it needs the rest of the world for a stimulus that it cannot provide for itself. This regional malfunctioning, the lack of autonomous growth, is the really worrying part of its economic outlook, not the outcome for Greece.However, if the EU simply waits, some stimulus will come to the rescue. Reinhart, Vincent Reinhart, Klaus Abberger, Dean Baker, Justin Yifu Lin In 1937, in the midst of the US recovery from the Great Depression, President Roosevelt implemented spending cuts in pursuit of a balanced budget.Subsequently, the unemployment rate jumped nearly 6 percentage points over the next year and the US economy re-entered a major recession.Volatility is rather inconvenient for forecasters as it is difficult to predict - therefore it is often neglected.Even scenario analysis does not really address this point.There is a plausible claim that full bars, busy restaurants and heavy tourist traffic all point to an attempt to keep cheerful and keep going in the face of adversity - similar to the much vaunted "wartime spirit".True, indicators continue to present a mixed picture of the advanced economies, as 2010's better than expected growth has dropped back in 2011.