The world economy [June 2003]

Low, Kenneth (2003) The world economy [June 2003]. Quarterly Economic Commentary, 28 (2). pp. 9-11. ISSN 0306-7866

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    The world economy has weakened slightly further again this quarter. This is primarily due to weaker economic data at the end of 2002 and for the first quarter of 2003. The expectation is for activity to strengthen in the latter half of 2003 and for GDP growth to intensify in 2005 relative to 2004. The factors that have stabilised the world economy are the relative pick-up in global equity markets, the re-alignment of currencies (this may lead to an improvement in imbalances in the world economy) and oil price stability, although the fall in oil prices is smaller than was expected. Clearly the situation in Iraq has resolved according to the US plan and this has reduced uncertainty significantly. Despite this the West still has to be vigilant to any terrorist threat. The economic consequences of the war however are relatively minor.