what we would not like to do is more fiscal consolidation than that or if activity were to slow down, we would be very reluctant to agree to further fiscal consolidation. we think where it's possible it should be left to play. this is a remark about spain and other countries as well. >> all right. gentleman back there. >> two questions. one for mr. blanchard. you said you were for exploring the scope of limited euro bonds. you could be a little more precise, please and explain how you would avoid having more problems in that case and secondly the world economic outlook says there's further

scope of monetary easing for the ecb. what would you say to countries like germany where there are fears of the beginning of price bottles, for example, in the housing sector and other segments. thank you. >> on the first one, clearly if you're going to have common bonds market you want to make sure that the fiscal policy of the countries is responsible. so before there was a fiscal pact i could see the extreme reluctance of some countries to actually participate. the opinion now has agreed to a fiscal pact which is a fairly tough one and i think most countries intend to abide by it. in this case it's more limited. i don't think at this stage there's a degree of trust and control which would allow for common euro bhoorngtds as a

whole. i think this is a goal. this is not something which can be done overnight. but there's a number of proposals around which are more limited in scope and even eliminate the hazard one that strikes me as a very good first step although not a solution to our problems. none of this is a solution to our bills. that strikes me as implying very little risk from participating countries and very useful step in the construction of the euro bonds market. the other proposals as you know, there's a german proposal which also makes a lot of sense and deals with moral hazard. the point is we should start now that the fiscal pact is in place there's more room for thinking about risk sharing air long these lines and this could make a substantial difference to the functioning of the eurozone,

starting as soon as this is put in place. on monetary policy, if i remember, monetary policy is not aimed at making germany right or wrong. it is aimed at the euro area. and, therefore, the goal of the ecb as it has said to have euro inflation remain within the target bed. this is its job. if for some reason this leads to pressure in one country or another we actually tend to think of this as largely desirable, that the countries which are doing better have related increase in prices for countries which are doing worse have related decrease in prices. we think that's part of the adjustment. if it leads to bubbles in the financial markets, then i want seems to me that countries in which this happens should use the macro prudential tools they have to actually address this

issue but this is not for temp cb to do by itself. the ecb should not be concerned about inflation in germany as opposed to inflation in the eurozone and so this is my answer. >> the woman over there, the lady in blue. right there. >> i have a question on the outlook of italy. you present a figure that is 1.9, minus 1.9 for this year. and i would like you to elaborate on the reason why it's going better and why it remains the worse performance in the eurozone and what should be done to close this gap?

>> we've mode ratedly revised up the outlook for italy relative to january and that's mainly because tensions in financial be markets have eased somewhat and also because the global outlook is slightly better than what it was in january. now, it still remains the worst, one of the worst performances in europe. 2012 will be a very difficult year for italy because they are implementing rightly a lot of fiscal adjustment and this is what is weighing on growth but ultimately it will put the economy on a trajectory for stronger growth in the future. this will, however, also require advancing the structure reform and again like in spain very positive steps being taken with respect to reforming the labor market and these reforms need to be pushed through.

and the third ingredient is to, again, increase the capital and liquidity buffers off the italian banking system. to wrap it up, we believe the policies have taken a decided turn for the better in italy, that the right policies are being pursued, and now it's a matter of being steadfast and then we also expect growth to return in 2013. >> the lady back there. >> yeah. i'm from argentina. i have two questions. first of all, the forecast for argentina is 4.2 for 2012 and 4 for 2013. i wanted to know if that is the official figure that was built around the statistic of the index or if you have some other information to do these forecasts. also, there's a lot of

difference between the statistics that you are using and your official one, that's the first question. the second is about the announcement that from the president yesterday that she would nationalize 51% of the oil company. i wanted to know what effect or effect it will have in the forecast, taking into account of course it will upset the investment climate. thank you. >> thomas? >> starting with the latter on the investment climate, i think they have to some investment cli man argentina over the past few years that's already built into the forecast. in general discretionary government intervention that's worsens the investment climate

makes it more predictable is unhelpful for investment and long term growth. in terms of our forecast for argentina, our country desk uses both official and unofficial figures. the difference is the largest in the area of inflation where the dax uses official figures and unofficial figures and argentina also has been asked by the imf to improve its inflation figures. >> okay. thanks. i'll go all the way back there and then we'll come to you. >> i know from experience that a self-critique is difficult, but i'm wondering if the imf now

believes that its push for fiscal consolidation in the last year was too strong and now europe is reaping the negative benefits or whether the imf suggested the appropriate fiscal balance and now europe was just -- europe was just too aggressive? >> self-critique is always difficult. but it is not relevant in this case. i think if i look back at what the fund has said since the very beginning of the second phase of the crisis which is a second is consolidation phase, first there's two things. is fiscal consolidation and second it should come for the

most part for steady improvement of a time, medium term, fiscal consolidation by putting in place rules which slowly limit spending or slowly decrease deficits. it has recognized that some initial measures have to be taken for credibility, quite apart from market pressure but even more so under market pressure. these principles where i think very clearly stated in a piece which came at the very beginning of fiscal consolidation calle cf the name was the best one but at least ten points that we made there, of the points that it just made and we're sticking to it. we basically think that what's essential is for governments to have a credible medium term plan. now, if you don't have a medium term plan, which is credible our don't have a medium term plan at

all, then you're forced and r rightly so to consolidate more do consolidate more quickly. this but you should go back and find medium term measures which are going credible and make a difference. i think we've been very consistent on this throughout. >> okay. a gentlemen there and definitely you and then you. yeah. >> good morning. i'm from the philippines. >> that's fine. >> the philippines seem to grow 4.2% in 2012 and 4.3% in 2013. what brought this up faster uptick for next year and on the other hand what are the down side risks to this? and just like italy, philippines is -- what needs done for philippines to have faster growth maybe even faster than

its neighbors. thank you. >> so, yes. the philippines growth as you said is projected to grow the 4.2% from 3.7% last year. there are various factors behind it. this is in an environment -- this is in an environment where global growth is pretty weak. what's supporting growth is basically strong domestic demand, strong government consumption, remittances and the implementation of various private/public partnerships. in terms of philippines performance relative to its neighbors, a key element is basically strengthening investment, both infrastructure investment by the public structure and improving the business climate. in terms of risks, the main risk

extremely is the reunification of the euro crisis. chapter one has some estimates of what impact such a scenario would have on asia. it could lower outout if our baseline by 1.25%. >> thank you put larry. >> a question in three parts here. what are the chances, do you think, of a country in the eurozone deciding it's had enough of austerity and leaving the ouro all together that's the first one. if that would happen what would the contagion risk be for the rest of the eurozone and thirdly what would the impact be on the rest of the global economy? >> we are working on doing everything possible so that this

does not happen, and my sense is that if i look end in countries like greece to public opinion there's very strong support for staying in the euro. the euro has costs and benefits at this stage. we see one of the costs that makes the adjustment, especially the competitiveness adjustment harder, and we tend to forget the benefits that people are aware that the euro has changed their life in many ways. so for the moment, there's no plan b. we basically are doing whatever we can to help countries succeed within the constraints of the euro. the cost to any country of leaving the euro unilaterally would be extremely large and would surely lead at least in

the short run to a very drop sharp in output. on the contagion risk i think this would be one of, if it were to happen, this would be one of the circumstances where the fire walls would be needed. the issue would be if that country goes out what happens to the others. and there would probably be pressure in a number of sovereign bond markets, and the issue would be what to do and in that context being able to give reasonable financing to the other countries would be essential and that's why the fun we're mobilizing could be used. hopefully if this was done then the damage to the world economy would be limited but, again, i want to repeat that we're really working under a scenario one

which countries stay and adjust. >> thank you. this gentleman in the second row here and then howard. >> i'm from palestine. i would like to ask about the forecast on the arab countries in light of the crisis in jump and the arab spring. how did the arab spring and the crisis in europe affect the economies of the other countries. thank you. >> thomas? >> in terms of the impact on the outlook for the arab countries, i think it's helpful to distinguish between the oil exporters and the non-oil importers in the region. starting with the latter, 2011 has clearly bean difficult year. on the one hand there's been unrest not in all countries but there's been sort of contagion so to speak in declines of confidence uncertainty which

undermine investment which have held back aggregate demand in these economies. at the same time there has also been a decline in tourism for a number of countries also again in countries directly affected by the unrest and other countries. in contrast oil exporters have generally been less affected except for the face of libya as we know. they have instead benefitted from higher oil price, a number of oil exporters have increased oil production, notably saudi arabia which has provided a boost to growth in 2011. looking forward, we seen in the naun oil import engineers, we see restoration of confidence which should be some relief on investment, on domestic private

demand. what we'll be waiting a bit on growth is that uncertainty has also led to uncertainty about policies, have put pressure on exchange rates in part, and has necessitated fiscal adjustments. so there will be some fiscal adjustment, for example, if you look at jordan there has been some reduction in subsidies on food expenditure items which will reduce private expenditure. in oil exporters in contrast to higher oil prices will benefit them. the higher production which took place mostly in the latter part of 2011 will spill over into growth in 2012 so oil exporter will do well. >> thank you. howard. the gentleman back there. no, back there. yes. >> thank you. howard snider with "the washington post". i was wonder if you could give

us a little bit more precision on your guidance in case where countries are phasing this schizophrenia. i want seems like you're saying anchor expectation in the medium term but yet that's not rewarded by markets which seem to pose somewhat of a difficult choice. you either risk your risk current growth and satisfy the markets or risk the market backlash. in that want case which seems spain is up against which risk is better to take? >> you're absolutely right. this complicates the life of policymakers no end. damned if you do, damned if you don't. that's right unless you're willing to get out of this very simple trade off. if you can establish credibility through a larger set of measures, i suspect that this will spill over to fiscal. so i have a sense, for example to be very concrete that the

measure that everybody agreed should have been taken years ago but was not because of political implications, but which is now adopted just playing a very tough game and making sure that the measure grows through, i think that government is likely to acquire substantially more credibility than by cutting infrastructure spending by 1% this year. so i think that that's why governments have to do -- i mean the markets listen and they think you have to convince them that that you have -- that you're credible, that you know what you're doing. so you can do this by passing some structural reforms and sending a signal that you're tough. and you can do this by passing medium term fiscal measures and try to do so in a credible way, and explain and explain and explain. but otherwise, if you don't do this, yes, indeed, you have a

very hard act to perform. >> thank you. the gentleman in red over there on right. yes. >> good morning. i'm from jamaica. two questions quickly. the world chick outlook revise the growth for jamaica this year to be down minus 1 to minus 0.5% from september's forecast, which was 1.7%. what are the factors that led to that downward we vision and secondly, in regards to the euro area, what are the risks to the caribbean in general and jamaica in particular especially given that spain, spanish companies especially hotels have a lot of investments in the caribbean and in jamaica in particular and a lot of them are lever anded and a lot of banks will be deleveraging to improve their balance sheets? what are the contingencies for jamaica in that regard?

>>. >> thomas? >> on the downward revisions to growth if latin america and in general and in jamaica in particular, most of the downward revisions in 2011 looking backwards and now for 2012 are explained by the changing global environment. so in that sense, jamaica is not different from most other countries in latin america where lower commodity prices, lower demand from advanced economies as -- weigh on growth. in terms of contagion from the exposure to be european banks and other companies, it's clear that this has put additional sort of depressed growth. looking forward, the question is always whether this -- whether there are substitution for this exposure. what we have seen in latin

america in general is yes, there are subsidiaries of spanish banks, but they have been so far relatively less affected by the delever anding of european banks, partly because they're mostly locally funded. so in that sense they're a bit shielded. clearly to the extent that spanish -- spanish firms operated in caribbean are constrained by the financial conditions in europe, that could weigh on growth if jamaica. on the other hand, there's always substitution that these companies for operations outside the euro zone can look for funding elsewhere. so one has to weigh at nav effects against the substitution. so that depends very much on company-specific circumstances. >> thank you. we've received a lot of questions online. many of them have been already answered but let me take one. rather broad-ended question.

what about the situation in germany? this is with deutsch german tv. >> well, germany, has -- we've also marked down the growth forecast for germany relative to last september so the euro area crisis has had a large effect on germany as well notwithstanding ta they're in a much better position to cope with it. in our view, there is enough fiscal adjustment in germany. germany has space to adjust much more slowly than the rest of the euro area is doing so appropriately so much less than in the euro area. it can loosen up if the situation in the euro area were to become worse. and like others in the euro area, it also faces its share of structural challenges. for example, the batching sector is still very much influenced by the public sector and this something that will need to be

reformeded over the medium term. there's a need for structural reforms to raisin investment. not only would it boost activity in germany and there be help the rest of the euro area, it would also reduce the large current account surplus that is germany has and there be help internal rebalancing in the year area. >> we'll take two or three more questions. there's a lady way at the back there. >> thank you. i'm from reuters. i have a question. is china widening the trading ban for u.n. welcome? how much further appreciation is needed and will it help global rebalancin rebalancing? >> well, first, we welcome the widening of the band. we've said that additional exchange rate flexibility would be helpful in terms of addressing one key challenge

that china faces he which is to rebalance the internal economy from one that is driven bech by investment in exports to one driven by consumption which is also what their 12 to five-year plan is envisaging. and as far as the exchange rate and its valuation of what more is needed is concerned, we have significantly revised down our projection for the current account surplus of china over the medium term. if you go to our last world economic outlook, we foresaw that the current account surplus of china in 2016 was going to be around 7% of gdp. our present forecast is closer to 4%. now, what this means for the extent to which the b is aligned with fundamentals is still not entirely clear to us because we are in the process of changing our methodology for assessing

the current -- sustainable current accounts and exchange rates. we will need to look at all other economies and come to a verdict. and we expect to do so, to be ready to do so soon. thank you. >> all right. the lady back there in the last row. yes. >> thank you. i'm from tvsi. i have a question about japan. as you mentioned on the report, japan has serious energy problem right now. could you explain how much, how deeply you are concerned about that and what will be the impact on the world economy? thank you. >> yes, that is -- that is one of the risks facing the japanese outlook right now. nuclear energy which you still account for about 30% of energy supply in japan has been cut

dramatically. only one nuclear plant out of the ones that were operational is still operational. we don't have estimates of what that -- what impact that has. we look at energy shortages as basically a risk to the baseline along with the other risks coming externally from the euro area crisis and a possible oil shock emanating from tensions in the middle east. >> all right. we'll take one last question. shall we end with you? yes, you. on greece. >> morning, i'm michael nad year everywhere greece. seems weise are talking about outlook, if you can tell us what is the prediction or outlook for greece and the second question is that also some people in -- analysts in europe start already talking about a third program. what is your opinion, sir?

>> well, on the outlook for greece, which is what is directly relevant for this press conference which is on the world economic outlook, we're seeing growth negative in 2012 after contracting by about 7% in 2011, we expect the greek economy to contract by another 4.7% in 2012. and there are really two key factors here at play. the fishes is a very large fiscal adjustment that is taking place. and the second is a significant reduction in minimum wages which is one ingredient in rebuilding competitiveness of the greek economy, but which in the short run will be weighing on demand and therefore, subtracting from growth but in the long run should help bring growth back up again and improve the competitiveness of the greek economy. >> all right. i want to end by olivier, would you like to make any final