It is suggested that these countries could boost expenditures to some extent in areas where social returns are high like education, health, infrastructure and social security. Given economic interlinkages, all countries and regions will have a role to play by increasing the flexibility of their economies and adapting to changing global demand patterns.
Let me quote our own Mid-term Review of the Annual Policy Statement announced on October 31, 2006, “Global imbalances have continued to widen during 2006. With some central banks actively reassessing their stance now, the potential drainage of global liquidity would test the resilience of world financial markets and weigh upon the outlook on the global economy.