World GDP grows
to drop to 2.2% in 2002
The terrorist blitz on the United States on September 11 will
result in a fall of 2.2 percent in gross domestic product (GDP)
worldwide next year and of 1.2 percent in Britain an economic
research unit has predicted.
Projections of worldwide GDP for
2002 have been sliced by $466.71 billion (746.73 billion euros),
the Centre for Economics and Business Research said in a report.
The projections compound fears
of a looming global economic recession in the wake of the attacks,
which flattened the twin towers of the World Trade Center in
New York and killed more than 6,000 people.
"The predictions we made three
months ago were already more pessimistic than those of most
economic analysts and had the terrible events not happened we
would have left the numbers more or less unchanged," report
author Douglas MCWilliams said.
"Although the outlook is highly
uncertain, we are clear that in the short term the world economy
has been dealt a blow which will depress world growth for at
least the next nine months and possibly for longer",
MCWilliams said the projections
are based on three factors that there are no further terrorist
attacks, that expected reprisals by the US do "not destabilise
the world economy further", and public spending in the US is
increased.
'US economy
towards recovery'
US Secretary of Commerce Donald
Evans forecast recently that the US economy would soon recover
from what the described as "mild shock" of the September 11
terrorist attacks on New York and Washington.
"The US economy was growing at
a low rate prior to the attack of September 11. The attack was
a mild shock to the US economy", Evans said, adding that he
continued "to have great confidence in the longer-term fundamentals
of the US economy".
"I expect some time in the next
12 months for us to return to the kind of acceptable growth
rate we experienced in the 1990s–which would be somewhere in
the 3.5 percent range," he added.
Evans was speaking at the end
of the four-day trip to Russia, during which he discussed boosting
US investment in the Russian economy with senior Russian officials
and businesspeople.
US carmakers
urges ASEAN to stick to free trade plan
Southeast Asia must stick to plans
to open up its auto industry by 2003 under regional a free trade
plan and not resort to protectionist barriers to cope with a
global slowdown, United States carmakers said recently.
Officials from General Motors Corp
and Ford Motor Co. told a two-day auto conference in Kualalumpur
the region must also speed up integration under the ASEAN Free
Trade Area (AFTA) to compete with emerging giant China.
Under AFTA, tariffs on automotive
and other products will fall to between zero and five percent
at the start of 2003. Malaysia has obtained a reprieve for its
auto industry until 2005.
Ford's ASEAN (Association of South
East Asian Nations) operations president Gerald kania said there
was talk Malaysia may further delay lowering car duties under
AFTA, which would "wreak havoc" on the region's manufacturing
integration plans. "We believe, although this is not confirmed,
that the five percent duty level will not be when they enter
but three years later in 2008," he said.
"ASEAN can only be competitive
if it is viewed as one region... but Malaysia's delay closes
the largest passenger car market in ASEAN to regional integration,"
he said.
Kania said ASEAN's auto sales,
estimated at just over a million vehicles this year in five
key markets Thailand, Malaysia, Indonesia, Philippines and Vietnam-still
lag China's 2.4 million.
He said "forced local content rules
and parasitic texes" in ASEAN had kept vehicle prices artificially
high and suppressed production volume.
He urged Malaysian national carmaker
Proton and other regional producers not to "protect themselves
with nationalism" but seek out strategic alliances to boost
their competitiveness.
Russian economy
appears well capable
Oil-rich, expanding steadily and
embarking on the path of reforms, the Russian economy appears
well capable of withstanding whatever upheavals may come about
as a result of terror attacks, analysts say.
For many, the echoes set up by
the airliners crashing into the twin towers of the World Trade
Center in New York have created a real threat of recession in
the US economy, and by extension the world economy.
But the economic repercussions
for Russia of the September 11 attacks are seen to cut in different
directions.
On the one hand, the boost to oil
prices is bound to favour the Russian oil industry, the third
largest in the world.
The budget, the trade balance and
the oil production companies on which life in many of Russia's
far-flung regions depends can only benefit.
On the other hand, a world recession
would mean a fall-off in demand for raw materials, including
oil, and would affect the Russian economy.
For the moment "the gains and the
losses balance out," Mikhail Delyagin, head of the Institute
for Globalisation Problems, said, nothing that "even if oil
prices don't rise, they're most unlikely to fall."
At worst the overall effect of
the differing trends would be "marginally negative," said Alexei
Zabotkin, of the United Financial Group investment bank. Moreover
Russia has other assets that could enable it to resist or even
benefit from the recessionary trend.
Despite its huge surface area and
its immense wealth in natural resources, notably gas, oil and
precious metals of many kinds, Russia accounts for barely one
percent of the world's gross national product and one percent
of world trade.
German govt
slashes growth forecast
German Finance Minister Hans Eichel
is no longer expecting a sharp pick-up in the economy next year
and has cut his forecast for growth to 1.5 percent from 2.25
percent previously, the business daily Handelsblatt reported
recently quoting government sources.
The German economy, the biggest
in the 12 country euro zone, has been hit hard by the global
downturn owing to its heavy dependence on exports.
The government has been forced
to admit that gross domestic product (GDP) was unlikely to expand
as strongly as first throught this year but has nevertheless
insisted that economic activity would pick up again strongly
in 2002.
At the end of August, Eichel conceded
his previous forecast of 2.0 percent growth this year would
not be met.
Recent press reports have said
the minister had actually been expecting growth of no more than
1.0 percent this year even before the September 11 terror attacks
in the U.S.
German inflation
slows
Inflation in Germany the biggest
economy in the 12 country euro zone, appears to have slowed
again in October, data for a key German regional state showed
recently.
Consumer price data for the south-western
state of Baden-Wuerttemberg whowed that inflation in the region
stood at 2.3 percent on a 12 month basis in October, the same
rate as in September.
But using a monthly comparison,
the region's consumer price index (CPI) slipped by 0.2 percent
in October from the figure for September.
