Posted on 04/06/2005 7:08:48 PM PDT by blam
World economy 'is headed for slowdown’
By Malcolm Moore, Economics Correspondent (Filed:
07/04/2005)
The global economy is at a “turning point” and will start to slow after growing at the fastest pace for four years, the World Bank warned yesterday.
Last year, the world’s economy expanded at 3.8pc, led by the United States, China, India and Russia, according to the Global Development Finance report. Developing countries saw their economies grow by 6.6pc – the fastest rate in 30 years – but the World Bank said the good times would soon be over.
“2004 was an exceptional year for developing countries. This is the best environment that developing countries have seen in a very long time,” said Uri Dadush, director of the bank’s development prospects division. “It is not going to be as good in the future. Interest rates are going to rise. World growth is likely to slow somewhat from the very high levels of the last year or two,” he added.
The bank is forecasting that developing countries will see a sharp slowdown in their growth to 5.2pc next year, with growth in the world as a whole slipping back to 3.1pc. The World Bank said the global economy would be hampered by a rise in US interest rates, lower public spending and by the effects of a strong euro.
In 2004, more money flowed into developing countries than at any time since the financial crises of the late 1990s in Asia and Latin America. Loans and investments increased by $51 billion (£28 billion) to $301.3 billion last year.
The bank is now worried that high budget and trade deficits in the US could drive up interest rates and raise the cost of borrowing for poorer countries. The US trade deficit is now $666 billion, while the budget deficit stands at $412billion.
If rates rise, “and we think that that is what ultimately will happen if there is no policy adjustment, then all developing countries will suffer”, said Hans Timmer, a bank economist.
He added that Latin America is especially vulnerable. The World Bank’s 4pc growth forecast for the region “would completely disappear” if interest rates gained 2pc, he said.
“The US has to engage in more aggressive fiscal consolidation than it is currently,” said Mr Dadush.
He also called on Asian countries to work on revaluing their currencies, many of which are tied to the dollar. “Asian countries in particular should look at and revalue their exchange rate regime and the very rapid increase of reserve accumulation.”
Well it must be true if an economist says it. They've predicted 12 of the last 3 recessions accurately.
$666 Billion deficit, huh? LOL.
Absolutely, this came right from Uri Dadush, director of the bank’s development prospects division. Of course the guy in the next cubicle thinks Uri's a jerk but that was yesterday's news.
"but the World Bank said the good times would soon be over."
...note to self, buy gold, bottled water & canned soup. We're doomed.
What really constitutes "the economy"? Do they include all commerce legal or otherwise? Does this mean the centroid of humanity is slowing down and we are getting lazy? Is it just all smoke and mirrors with abstract numbers but no basis in reality?
If for any reason we buy less from China, etc., they lower their prices and employ fresh slave labor.
Just sitting and watching. Pity those who have stretched their credit to the max. Remember Howard Ruff? He will eventually be proved right, and it will be harsh. It didn't happen as soon as he said it would, but sooner or later it will.
It took awhile but the ultimate reason for the article showed up.
The net worth of the US consumer is at the highest point since economists have kept track. You chicken littles with your doomsday talk need to move.
May I suggest France? You would fit right in.
Paper worth can go to zero. For everyone at once. It isn't locked in until it is sold, and that is Cramer's main point of wisdom.
Yup, we're doomed..
note to self: buy diamonds, champagne, and caviar, instead of gold, water, and canned soup. Use credit cards, for maximum purchasing power!
>end sarcasm
So you have your bunker, your gold and your MREs left over from Y2K eh?
Yup. He published Ruff Times didn't he. I don't owe anyone anything, everything I have is paid for.
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