Global Economic Update

Where is the global economy headed? Economy.com just released its latest global economic outlook. Here are some key tidbits.

The first quarter brought a deterioration in growth across most OECD economies that is likely accelerating during the current quarter. The slow pace of growth in the global economy during the first quarter owes to the pre-war plunge in sentiment and risk aversion on the part of businesses.

At the time, it was hoped that a surge in business and consumer sentiment following a quick end to the war in Iraq would propel a global rebound. Will it happen? The evidence for such a rebound is spotty at best. Conditions are bad and getting worse in the euro zone and Japan, weak in Latin America, and data out of Asia, aside from non-Asian exports, are likely to be very ugly for the April-to-June period. Aggregate growth will not fall to the paltry 1.1% of 2001, though Economy.com still anticipates a reduction in the rate of world growth of between 20 and 50 basis points for this year relative to last year.

And then there is SARS, which continues to slow tourism and business travel in general. The faster we get on top of this one, the better.

At this point, Economy.com is looking at a 1.9% growth rate for the world economy, a 2.3 percent growth rate for North American economy (U.S., Canada and Mexico), and a 2.2% growth rate for the U.S. economy for 2003. Let's see if it happens.

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