To offset the collapse in demand from industrial countries, they had stimulated domestic demand.

It also means getting the balance between domestic and external demand right, and appreciating the sensitivity of medium and long term growth to the composition (and size) of domestic aggregate demand.

And Germany is slowly acquiescing to a prudent relative expansion in domestic demand.

Rebalancing demand, from investment and exports to domestic consumption

The reason, of course, is the strong increase in Chinese domestic demand.

The impact on growth will almost certainly be negative, even if domestic demand compensates fully for the decline in external demand.

Long term growth depends not on foreign demand, but on domestic supply.

China s GDP growth fell dramatically, owing to the collapse of external demand.

Second, the Chinese production mix does not correspond to domestic demand, and investment in long products has outpaced demand growth.

A vibrant rural sector generates local demand for locally produced goods and services.

Energy hungry America has long depended on the global market to meet domestic demand.

If excessive domestic demand was the problem, the solution should now be on its way.

But what we have seen since 2007 is an overshooting of the contraction in consumer demand and domestic investment.

In this sense, China has a rare opportunity to expand its growth potential by stimulating domestic demand.

This time, the loss is estimated at 3.4 of GDP, implying a larger increase in domestic demand if the right public policies are pursued.

The weaker peseta would stimulate demand for Spanish exports and reduce Spain s imports, which would boost domestic demand and reduce unemployment.

They demonstrate clearly that China is prepared to compensate for export weakness by stimulating domestic demand.

With domestic demand still weak, more export demand is just what the doctor ordered for an anemic economy.

Thus, India s high growth rates will have to remain dependent on strong domestic demand.

Or an undervalued exchange rate can help to export the lack of domestic demand.

Expansion in domestic demand resulted in an increase of 22 per cent in imports.

Rebalancing demand, from investment and exports to domestic consumption

Together, these changes could lower total demand by nearly 2 of GDP.

They doubt that an alternative development strategy based on boosting domestic demand would succeed.

This did not work very well, because investment was constrained by deficient domestic aggregate demand relative to capacity.

That sustained demand provided an important stabilizer for the domestic economy, which the Baltic states did not have.

Both contribute to aggregate domestic demand, and the structural shifts on the supply side will be driven by the right mix of aggregate demand, with the low return component on the investment side removed.

Accumulating excessive debt usually entails moving some part of domestic aggregate demand forward in time, so the exit from that debt must include more savings and diminished demand.

As a result, for a given increment of domestic demand, China is far more predisposed toward foreign sourcing.

It intends to boost domestic demand and is committed to moving gradually toward greater exchange rate flexibility.

Indeed, the central challenge of economic development is not foreign demand, but domestic structural change.

Countries like China that have large surpluses will have to rely much more on domestic demand to fuel their economies.

To enhance domestic demand, Asia, including China, must reallocate resources and structurally transform the economy.

It is a challenge for oil exporters among the ESCWA member countries to combine sustainable domestic demand creation with economic diversification.

With China s trade to GDP ratio and exports to GDP ratio already exceeding 60 and 30 , respectively, the economy cannot continue to depend on external demand to sustain growth.

But, during a period of weak domestic demand, structural reforms might actually exacerbate short term problems.

Indeed, China s 12th Five Year Plan is aimed at reducing dependence on exports and boosting domestic demand.

And the collapse of housing starts has lowered construction spending by another 200 billion.

Indeed, three quarters of Canada s exports go to the US, while foreign demand accounts for a quarter of its GDP.

And, as GDP growth has become increasingly dependent on government led investment, currency demand has continued to rise.

Devaluation renders exports more competitive, thus substituting external demand for the domestic demand that is being compressed.

A wide range of official measures could be employed to support domestic demand while protecting medium term fiscal sustainability.

America s domestic demand shortfall reflects rising savings, balance sheet damage in the household sector, unemployment, and fiscal distress.

But domestic demand did not call for the same goods, and the goods that were locally demanded were already in short supply before the crisis.

Reinforcing social safety nets, broadening and deepening financial markets, and supporting small and medium size enterprises would also strengthen domestic demand.