Unbalanced but Converging – The Pre-crisis Growth Process and its Implications for the Post-crisis Recovery* ADALBERT WINKLER M ore than one year after the collapse of Lehman Brothers the world economy seems to be heading for a recovery. This is good news. However, up to now the return to growth has been largely based on anti-cyclical policy measures( imf 2009c) and not on sustainable, private­sector-led investment and consumption. Thus, the question of how a new process of private-sector-driven growth will look is still open. This is an important question as the crisis has been interpreted as an inevitable consequence of the unbalanced character of growth which characterized the pre-crisis years. Will the new growth process follow a similar pattern? Or will it meet the criterion set by the Pittsburgh G-20 summit and be more balanced(G-20 2009)? Imbalances of the Pre-crisis Growth Process Pre-financial crisis growth was accompanied by widening current ac­count balances. The unbalanced pattern of growth was most evident with regard to the so-called»global imbalances,« that is, the rising cur­rent account deficit of the United States and the rising surpluses of Asian countries, in particular China, as well as resource-rich countries(Fig­ure 1). Rising current account imbalances were also a feature of European growth processes. 1 While some countries, including Germany, were re­cording high and/or rising current account surpluses, the eu Member States in the south(Greece, Portugal and Spain) and east(the new eu * The paper is based on an impulse statement at the international seminar»Cohesive Growth in Europe after the Crisis,« organized by the Friedrich-Ebert-Stiftung, Berlin, October 23, 2009. 1. Indeed, on both sides – surpluses as well as deficits – some European countries recorded even higher imbalances than those observed in the us –Asian context. The largest imbalances – expressed as a share of domestic gdp – were recorded in the small oil-producing countries of the Gulf and the Mediterranean. ipg 1/2010 Winkler, Cohesive Growth after the Crisis 45