"Economic activity and corporate earnings have made a strong recovery, most noticeably in the United States, but also in the other parts of the world," according to an IMF report released last week, writes David R. Francis in The Christian Science Monitor:
Worldwide economic growth could hit 4 percent or higher this year, well above what was forecast just months ago. A key reason: Low interest rates, set by many nations' central banks after America's stock market meltdown rippled around the world in 2000 and 2001, are bearing fruit in consumer demand.
A US recovery is now matched by signs of health in Japan. China and India, meanwhile, are roaring ahead so speedily that the talk is about when, not if, they become economic superpowers.
"This doesn't mean there aren't danger signs," notes Francis, "notably high oil prices and new risks of inflation. But some economists see the promise of growth matching the 4.8 percent pace last seen, by one measure, in 1984."
"The strongest performance in a generation," reckons Michael Mussa, a former International Monetary Fund (IMF) chief economist who forecasts world growth hitting 4.75 percent this year.
An underlying factor in this recovery: The balance of economic power in the world is shifting. When 10 more nations and their 70 million people join the European Community May 1, the EC's economy will be about the same size as that of the US.
Though the American economy was already coming back from recession a year ago, the recovery was jobless -- a trend that may now be turning around.
Another risk is a sharp fall in the dollar against the currencies of US trading partners. If the high US deficits in both international trade and the federal budget make foreigners wary of holding US financial assets, it could drive American interest rates higher, hurting the economy.
It's Bush's fault.
[via Allah Is In The House]
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