The uncertainty surrounding world economic prospects for the coming year and beyond is unusually high. This is largely because the course economic policies will take in major OECD economies remains unclear. Worst­case outcomes can be forestalled provided monetary policy remains very supportive, sovereign debt and banking sector problems in the euro area are contained, and excessive fiscal tightening is avoided where there is room to proceed gradually, not least in the United States. But even then unemployment would stay high through 2013, there would be no prospect of recovering the output foregone with the crisis, and public budgets would remain on unsustainable paths across most of the OECD. Even under a more optimistic scenario, underpinned by a decisive resolution of the crisis in the euro area, the need to work off the divergence in cost competitiveness among member countries could still produce economic and political headwinds. On the other hand, failing to address such divergence would keep in place the fundamental imbalances that have led to the current crisis. More generally, growth needs to be lifted in most advanced economies and made more sustainable in most emerging markets.