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World's economy not expected to improve for months

A demonstrator holds a mask of Argentinian President Eduardo Duhalde in Buenos Aires on Thursday during protests against the nation's economic crisis. PHOTO: AP

Some economic predictions for next year: The US will not see a full-blown recovery before next summer; Asian economies are expected to accelerate later in the year; the Eurozone will pick up only slightly. In Latin America, economic turbulence in Brazil and Argentina will continue.

"Weak financial markets and tepid consumer demand should weigh on the global economy well into 2003," the Organization for Economic Cooperation and Development said in a November report.

In its latest review, the Paris-based OECD said the world's 30 largest economies should grow by 2.2 percent next year, compared with 1.5 percent this year. The new figures are a downward revision from the group's June report, which had projected 1.8 percent GDP growth this year and 3.0 percent growth during the next year.

The IMF also trimmed its expectations for global growth in its latest World Economic Outlook because of increased risks since last spring.

"There is a significant risk of a more subdued recovery, especially if the impact of ... equity market declines in the US and Europe proves greater than presently expected," the IMF said. Among other threats, economists cited a war with Iraq, a jump in oil prices and a possible destabilizing plunge in the value of the dollar.

The IMF had forecast the global economy would grow by 2.8 percent this year, up only slightly from 2.2 percent growth the year before, which had been the worst performance in a decade. Next year, the world economy is projected to rise 3.7 percent.

The global growth outlook depends critically on the US. Most economists there expect the US economy to grow about 3 percent to 3.4 percent next year, slightly above the estimated 2.7 percent growth this year.

After being socked about by the potent combination of a recession and the Sept. 11 attacks last year, the world's leading economy climbed back tentatively this year but remained sluggish and shadowed by doubt at year's end.

Unemployment is back at an eight-year high, consumer confidence has dropped in the past six months and the stock market's golden days of the late 1990s aren't ready to come out of mothballs yet.

A string of accounting frauds and scandals has shattered investors' faith in corporate America.

While some economic signs in the US are positive, most experts don't see a full-blown recovery before the second half of next year.

"The economy proved much more resilient than anybody thought, and prospects are better for more balanced growth next year," said Diane Swonk, chief economist for Chicago-based Bank One. "But it will probably be another six months before we start to feel a tingle about the economy again."

In Asia, most economies are expected to remain sluggish early in the new year, though some experts predict things will pick up later next year or, at worst, by 2004.
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