At the time this Report is being released, the world economy continues to emerge slowly from the most serious economic crisis of the post–World War II period-one that has deeply transformed the global economy and highlighted the increasingly important role that emerging markets and developing economies play in the global economy. As advanced economies are searching for ways to speed up their economic engines, emerging and developing countries have been important drivers of the global economic recovery. As a result, the nature of the relationship between advanced economies and emerging ones has evolved, and emerging and developing countries have created stronger ties among themselves. Among the advanced economies, two patterns seem to emerge: the United States, Canada, and Japan are expected to grow at a gentle pace, while the prospects for the euro zone are more uncertain, especially as tight credit conditions continue to limit domestic demand. More generally, the new global economic landscape raises questions as to the very distinction between advanced and emerging economies, particularly when it comes to growth and competitiveness.
Against this background, the past year has seen some progress in rebuilding global confidence, so recovery looks more assured today than it did just one year ago. Many of the tail risks that concerned us in the last edition have not come to pass, in particular in the United States, which did not fall off the "fiscal cliff"; in Europe, where the breakup of the euro zone was avoided and where sovereign bond differentials have drastically narrowed; and in China, where fears of a hard landing have receded for the time being. Despite this more positive global outlook, some uncertainty remains. In advanced economies, the potential consequences of a tapering and eventual halt of quantitative easing in the United States, the aggressive yet still incomplete financial and structural measures adopted in Japan, and the persistent unemployment and economic recovery challenges in Europe are factors that could put future economic performance at risk.