Seven years after the 2008 financial crisis, the global economy remains mired in sluggish and uneven growth and subject to continued volatility in financial markets. According to the International Monetary Fund, global growth declined in the first half of 2015 compared to the second half of 2014—reflecting a further slowdown in emerging markets and a weak recovery in advanced economies. World trade growth has sharply decelerated, reflecting weak global demand and lack of progress on trade liberalization. Financial conditions remain easy in most advanced economies but have tightened in emerging markets. Prospects for short- and long-term growth remain uncertain because of a number of risks. These include risks posed by growth transition in China, capital flow reversals and funding challenges linked to potential interest rate hikes and dollar appreciation, and volatility in commodity prices. Boosting actual and potential growth is a key challenge for both advanced and emerging economies. This task will require raising investment from its present low levels and, in turn, calls for domestic structural reform and an environment conducive for trade and foreign investment. Addressing persistent low employment and growing inequality is a shared challenge for many economies. In order to ensure the sustainability of growth, it will be crucial to have climate impact and resilience reflect more clearly in growth strategies and in policies for energy development.
On September 25, 2012, the Japan Economic Foundation and the Global Economy and Development Program at the Brookings Institution jointly hosted a conference to discuss the prospects and policy challenges faced by the global economy, and in particular by Japan and the United States. The event participants included former senior officials of the Japanese government; senior officials of the World Bank, the IMF, and the Federal Reserve; noted academics in Japan and the United States; heads of Japanese corporations based in the United States; the chairman of the Japan Economic Foundation; and fellows of the Brookings Institution and other think tanks in Washington, D.C.