Forecasts of the Scottish economy [March 2003]

Low, Kenneth (2003) Forecasts of the Scottish economy [March 2003]. Quarterly Economic Commentary, 28 (1). pp. 15-21. ISSN 0306-7866

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    The world economy weakened towards the end of 2002 and at the start of 2003. Geopolitical tensions and substantial falls in equity markets were the two main sources of concern. Economic performance for 2002 is significantly poorer than most economic commentators estimated. The situation in Iraq now appears to be more certain. While conflict is never a sought after outcome (if there is a short and clearly resolved conflict) then it will clear most of the uncertainty that has persisted in world markets. There are signs of recovery in the US and some emerging signs of recover y in the Euro Area. Germany is a drag on Euro Area growth in the short-run. Japan remains weak but at least it is improving. There also appears to be a firm commitment by the Japanese government to eliminating non-per forming loans (NPLs). Global inflationary pressures are relatively muted. The outlook for world growth is promising. The recovery is likely to boost world trade and strengthens domestic demand.