June 2002

Policy and Economic Analysis

 Global Economic Outlook, 2002 - 2003

Table of Contents
Highlights 1
Introduction 2
World Economic Growth 2
World Trade 4
North America 5
United States 5
Canada 6

Latin America 6
Mexico 7
Brazil 8

Argentina 8

The European Union 9

United Kingdom 10
Germany 10
France 11

Italy 11

Eastern Europe 12
Russia 13

Asia Pacific 14
ASEAN-4 (Thailand, Indonesia, Philipines, Malaysia) 15
Newly Industrialized Countries (S. Korea, Singapore, Hong Kong, Taiwan) 15
Japan 16
China 17
India 18
Australia 18

Middle East 19
Africa 19

Appendix
21
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University of Alberta Libraries

[Link]
 Global Economic Outlook, 2002 - 2003

Highlights

• According to international forecasting agencies, the world economy grew

between 2.1 and 2.5 percent in 2001 , its lowest rate since 1992. This was
largely the result of the high tech meltdown, falling manufacturing output, high
oil prices, low growth in capital spending and the events of September 1 1 .
These factors also caused world trade volumes to decline marginally in
2001 , after increasing by more than 12 percent in 2000.

• Despite continued weakness in the manufacturing sector, stronger household

spending and increased inventory stability should boost world economic
growth half a percent higher in 2002, leading towards an even higher increase
of about 4 percent in 2003. World trade growth will be weak in 2002, but is
expected to exceed 7 percent in 2003.

• After increasing by only 1 .5 percent in 2001 , Canada’s economy is expected

to expand more rapidly this year and in 2003, fueled by strong domestic
demand, inventory rebuilding and higher exports. Forecasts are for GDP
growth of 2.5 to 3.2 percent in 2002, and for 3.4 to 4 percent in 2003.

• Following a short-lived recession, the US economy started expanding in the

fourth quarter of 2001 leading to surprisingly strong growth in the first quarter
of 2002 - a result of strong consumer and government spending and inventory
rebuilding. The US economy is anticipated to grow by 2.3 to 3 percent this
year and by 3.4 to 3.7 percent in 2003.

• Japan’s economy fell by 0.5 percent in 2001 , pulled down by lower exports
and investment and a contraction in manufacturing output. The outlook is for
weak growth over the medium term because of sluggish domestic demand
and the need for further restructuring.

• Most other Asia Pacific economies experienced a reduction in growth levels

during 2001 , although the outlook has improved for 2002 and beyond. A US
- recovery bodes well for countries dependent on high tech exports, such as
Malaysia, Singapore and Taiwan, all of which were in a recession in 2001 .

• The European Union’s economy expanded by about 1 .6 percent in 2001 as

Germany and a number of smaller economies fell into a recession. Similar
growth is forecast for 2002, leading up to a recovery in the second half of
2002 and a return to more normal growth levels of about 2.8 percent in 2003.

■ With Argentina and, to a lesser extent, Mexico in a recession, Latin America

expanded by only 0.5 percent in 2001 . Similar growth is forecast for 2002, as
the Argentinean crisis deepens, partly because of the recent devaluation, and
as political turmoil pushes Venezuela into recession.
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Introduction 2000. Economic growth in 2001 was the

lowest since 1992, a result of the high
The outlook presented in this report is tech meltdown, high oil prices and low
based on the latest forecasts from the growth in capital spending, which also
International Monetary Fund (IMF), impacted world trade. Global
Export Development Corporation (EDC), manufacturing output declined steadily
Economist Intelligence Unit (EIU), Kiel throughout 2001.
Institute of World Economics (Kiel),
OECD, World Bank (WB), and the Asian The World Travel and Tourism Council
Development Bank (ADB). (WTTC) estimated the impact of
September 1 1 events on global tourism
The report has a particular emphasis on revenues in 2001 at a loss of 4.8 percent,
with a further decline forecast for 2002.
regions that are of interest to Alberta
exporters, and those that are facing The WTTC expects the tourism industry
special economic circumstances, such as to see very strong output growth in 2003.
recessions or structural reforms. All regions had lower growth in 2001 ,
with the Latin and North American, Asian
World Economic Growth and Western European regions
experiencing the largest declines. The
speed at which the slowdown in the US
Because of the recent economic turn-
around inNorth America, most spread to other regions took most
forecasters have become more bullish forecasters by surprise.
about the outlook for world growth.
Since the beginning of the year, global
growth forecasts for 2002 have been
World GDP Growth, 2000 - 2003
Estimates and Forecasts
raised by about Vz percent, with North
America accounting for almost all of
the increase.

Although the events of September 1 1

did add to the global malaise caused
by the recession in the manufacturing
sector, and the high tech meltdown in
particular, their effects were much
smaller than initially feared. The main
initial impacts were on tourism and on
the global manufacturing industry,
which cut inventories to the bone.
However, consumer demand returned
to normal levels quickly, especially in
the US. First quarter 2002 results Note: World GDP growth rates are based on exchange
rates at Purchasing Power Parity.
show a strongly expanding US
economy, led by resilient consumer
Even though many economies, including
spending, restocking of inventories and a
huge boost in defense spending. the US, Japan and Germany, were in a
recession last year, the IMF judged that
the slowdown fell short of being a global
recession. Unlike in 1982 and 1991,
In 2001 , the world economy is estimated
to have grown by between 2.1 and 2.5 global per capita GDP growth was
percent, compared with 4.7 percent in positive (at least 1 percent) in 2001 .
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 Global Economic Outlook, 2002 - 2003

US data show weak growth of 1 .2 For 2003, world growth is forecast at

percent in the US in 2001 , down from 4.1 around four percent. Higher growth is
percent in 2000. Most Asian, South forecast for all regions, especially for
American and European economies also Latin America and the EU.
registered much lower than expected
growth rates in 2001 . Although the chance of a global
recession has diminished greatly in
Economic growth in 2002 is expected to recent months, significant downside risks
be approximately Vz percent higher than to these forecasts remain. These
in 2001 , at 2.6 to 3.1 percent. Although concerns include:
the global manufacturing industry and • The huge US trade deficit and
especially the high tech sector may see private sector debt which, combined
little if any growth this year, household with higher interest rates, could
spending and increased inventory potentially lead to another US
slowdown.
stability will boost growth. The OECD’s
Composite Leading Index for its member • If corporate profits turn out to be
states, all major developed countries, lower than is currently reflected in
has been strengthening since November many financial markets, stock prices
and stood nearly 3.9 percent higher in could drop again.
March than in October 2001 . • A dramatic increase in crude oil
prices, for instance as a result of
Much higher growth is expected in the increased unrest in the Middle East,
NAFTA region, as the US and Canada caused by an escalation of the Israel
performed much better than expected in - Palestine confrontation or a US
the first part of 2002. Mexico is expected invasion of Iraq. This could fuel
inflation and reduce economic
to emerge from last year’s recession, but
will likely have the lowest growth of the growth in countries dependent on oil
three NAFTA economies.
imports.
• Additional terrorist attacks on the US
The recovery in the European Union or other western economies.
(EU) is anticipated to start in the second • Structural imbalances in Japan are
half of this year. The EU’s four largest hampering its economic recovery,
economies will have lackluster growth of and its problems could spill over to
less than two percent. its major Asian trading partners.
• Another round of declines in the
Japan is forecast to remain in a demand for IT equipment could
recession, but most other Asian
cause economic growth to fall
economies will see stronger growth.
sharply in major IT producers, many
China of which are located in Asia.
[Link] India will remain Asia’s growth
• Spill-over effects from the economic
crisis in Argentina to other South
Although most Latin American countries American countries.
will perform better in 2002 than in the
previous year, overall growth for the • Expansion of the India-Pakistan
conflict.
region will remain low as a result of
recessions in Argentina and Venezuela.

Slightly lower, but still strong, growth is

forecast for the Middle East and Eastern
Europe, while Africa should see higher
growth.
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World Trade
World Trade Growth, 2000 - 2003
Growth in world trade volumes peaked in Estimates and Forecasts
2000, at just over twelve percent. Trade
growth was especially strong for the
Information Technology (IT) sector,
particularly for semi-conductors and
mobile phones. In 2001, however, trade
volumes declined marginally, because of
the high tech meltdown, recessions in the
manufacturing sectors of industrialized
countries and the terrorist attacks.

September 1 1 events affected world

trade as a result of increased risk and
uncertainty, and higher shipping and
insurance costs. Although it is likely that
these events will continue to have a 2000 2001 2002 2003
downward impact on trade flows for
some years to come, especially on cargo
moving by air, the impact has so far been According to Canada’s Export
less than expected. Development Corporation (EDC),
countries with the greatest export
According to the World Trade potential for Canada include:
Organization, countries and regions with - The US and Mexico because of their
NAFTA ties;
a high dependency on exports of IT
equipment, such as East Asia and the - China and India with huge
US, had large export declines in 2001 . A populations and booming economies,
number of IT dependent countries in East that will nearly double over the next
Asia had record reductions in exports ten years;
and industrial output. - A number of smaller emerging
markets, such as South Korea,
World trade is forecast to increase by Hungary, Chile, Brazil and Poland,
between 1 .8 and 3 percent in 2002, with with a maturing and stable political
most of the growth coming in the second system and increasing openness to
half of this year, when world industrial foreign direct investment.
output is expected to rebound. North
America, Australia and a number of
Asian tigers, such as China, South Korea
and Malaysia, will increase imports
significantly. The developing world, hit
hardest by the 2001 slowdown in trade,
will experience a stronger recovery in
trade flows than the developed world in
2002.

Higher growth of around seven to nine

percent is forecast for 2003. All regions,
with the exception of major oil producers
in the Middle East, will have increased
trade flows.
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North America There are some risks to the recovery.

The US, a net importer of energy
The economies of North America were products, is sensitive to a spike in oil
already slowing when the terrorist attacks prices that could arise from escalating
helped push the US into a mild tensions in the Middle East or a potential
recession, pulling the Canadian economy US led attack on Iraq. The possibility of
down with it. But, in recent months, the another stock market correction and
economic prospects for both Canada and imbalances in the economy, specifically
US have improved significantly and there the high current account deficit and the
is growing evidence that a recovery is growing levels of household and
now taking place. corporate debt, are other causes for
concern. Lastly, the April unemployment
United States rate came in at a higher than expected 6
percent, up from 4.5 percent a year
earlier. Further unemployment increases
The United States experienced a
recession during the second half of 2001 , could pose a threat to consumer
but because it was one of the shortest confidence and weaken private
spending.
and shallowest on record, the economy
escaped with a positive growth rate of
With so many underlying risks, a wide
1 .2 percent for the year. The terrorist
variety of forecasts, ranging from 1 .3 to
attacks weakened activity in some
sectors, particularly in the tourism and 3.0 percent, have emerged for 2002 US
airline industries, but the overall effect GDP growth. Consumer spending will
remain strong, growing about 3 percent,
was more moderate than initially feared.
[Link] estimates that the attacks and government spending will increase
to finance military efforts, but investment
caused a % percent decline in economic
and export levels will stay weak.
output in 2001 , but that the impact in
2002 and beyond will be minimal.
The US economy will pick up steam in
2003, reaching about 3.5 percent growth
Cushioning the impact - and now leading as investment spending and exports
the recovery - was resilient consumer recover.
spending, which grew by 6.1 percent in
the fourth quarter of 2001 , benefiting U.S. GDP Growth, 2000 - 2003
from interest rate and tax cuts, wage Estimates and Forecasts
growth, auto incentives and lower oil
prices. percent

An’expansion
for is taking
the first quarter cameform.
in atGDP
a verygrowth
strong annualized rate of 5.8 percent.
Both consumer and business confidence
have recovered. Firms are beginning to
rebuild depleted inventories and
industrial production is climbing to meet
growing demand. The manufacturing
sector as a whole has emerged from its
recession, although the high tech and
industrial machinery sub-sectors have
not yet started to recuperate.

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 Global Economic Outlook, 2002 - 2003

Canada slowdown in inventory depletion and a

robust residential market. For the year
Affected by the US downturn, Canada 2002, growth of 2.5 and 3.2 percent is
saw its economic activity slow to only 1 .5 forecast. Substantial employment gains,
percent growth in 2001 , mainly because far exceeding those of the US, during the
of inventory draw-downs and weak first four months should have a positive
business investment. The economy impact on consumer spending.
contracted slightly in the third quarter, However, overall growth in consumer
although this was more than offset by an spending could be lower than in 2001 , as
expansion in the fourth. Because of most auto incentives are now no longer
weak US demand, exports fell 3.7 available and new car sales are likely to
percent in 2001 , led by a drop in drop as a result.
machinery and equipment shipments.
However, net exports rose strongly, as Business investment is expected to
imports declined even more than exports. improve, and growth in residential
construction and government investment
Consumer spending grew 2.5 percent in will be robust. Exports should rebound,
2001 , owing partly to substantial but growth will be modest.
monetary easing and federal and
provincial tax cuts announced in the GDP is expected to grow by a much-
previous fiscal year’s budget. Most improved 3.4 to 4 percent in 2003 as
provinces have followed with additional exports increase sharply and domestic
tax cuts, providing further boosts to demand strengthens, as a result of
disposable income and spending. In strong growth in business investment
particular, residential investment and and consumer spending and the
auto sales have been robust as a result replenishing of inventories.
of low mortgage rates, auto incentives
and rising consumer confidence.

Canada’s GDP Growth, 2000 - 2003

Estimates and Forecasts Latin America
percent
The Latin American economy slowed
significantly in 2001 , mainly because of
the US slowdown, the crisis in Argentina,
lower oil prices and reduced consumer
confidence and demand.

Argentina, currently in the middle of an

economic crisis, suffered the region’s
largest reduction in output in 2001 .
Mexico’s economy also contracted, with
weak US demand driving down its
exports. Brazil’s slowdown was largely
related to the shortage of electrical power
and its impact on industrial output.
Meanwhile, Venezuela’s economic
The Canadian economy grew by a higher prospects have faded amid escalating
than expected annualized rate of 6 political turmoil and a large reduction in
oil output.
percent during the first quarter of 2002,
mainly because of higher net exports, a
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Contagion from the Argentina crisis was aimed at reducing inflation and public
more confined than initially feared, sector debt. This has won favor among
although there was some reduction in foreign investors as indicated by the
foreign investment flows to countries with recent rise in the peso against the dollar
strong economic ties to Argentina, such and the improved government bond
as Brazil and Uruguay. The risk of ratings. However, these austerity
further spillovers persists, especially if measures did not provide any stimulus to
policy actions fail to improve current jumpstart the economy, and Mexico
conditions. remained mired in recession in the first
quarter of 2002.
Latin America’s GDP Growth
2000 - 2003 As the US economy recovers, Mexico is
Estimates and Forecasts
expected to experience higher
percent investment and export levels later this
year. But with employment contracting in
2001 and the unemployment rate
reaching its highest level in three years,
consumer spending may not gain
momentum until 2003. Even though
Mexico remained in a recession during
the first quarter of 2002, GDP growth is
forecast to come in at 1 .7 to 2 percent
this year.

Mexico’s GDP Growth, 2000 - 2003

Estimates and Forecasts

The economy in Latin America will percent

remain weak in 2002, with growth rates
forecast at -0.1 to 0.9 percent, but could
reach between 3.6 and 3.8 percent
growth in 2003 as exports and consumer
spending recover.

Mexico

Like Canada, Mexico was highly affected

by the US slowdown in 2001 . The
economy shrank by 0.3 percent as weak
2000 2001 2002 2003
demand in the US, the country’s largest
trading partner, contributed to a 6
percent decline in total export levels. In
addition to a weaker external sector, In 2003, the economy should achieve a
domestic demand was flat, with higher higher growth rate of between 3.5 and
consumer spending offsetting a decline 5.5 percent growth, led by improvements
in investment.
in consumer spending, business
investment and renewed strength in
The government has embarked on
cautious monetary and fiscal policies exports.
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Brazil Only a slight improvement in economic

growth is forecast for 2002, ranging from
After registering strong growth in 2000, 1 percent to 2.5 percent, as the country
the Brazilian economy advanced only 1 .5 continues to suffer from weak consumer
percent in 2001 , as weak domestic demand. Exports will also drop, but
demand, a decline in capital investment investment levels should improve.
and inventory reductions more than
offset a strong rise in exports levels. Growth should accelerate again to
between 3 and 4 percent in 2003 as
A shortage of electrical power - caused foreign inflows recover and private
by under-investment in additional consumption strengthens.
capacity and insufficient rainfall - limited
industrial output in 2001 . But the easing
of the energy crises and the ending of Argentina
power rationing last March will likely have
Argentina entered into a recession in
a positive impact on economic growth for 1999 and, since then, has only seen its
2002.
economic situation deteriorate further.
Brazil still faces some risks. Because of Real output dropped by 4.5 percent for
all of 2001 , plummeting 10.7 percent in
its large current account deficit, the
the fourth quarter alone. Poor export
country is highly dependent on foreign
competitiveness, a result of having the
capital flows, and is therefore sensitive to
currency tied to the US dollar, high
speculation among foreign investors. interest rates and fiscal tightening have
Although financial contagion has been
largely contained, there is the looming been major factors behind the country’s
risk of additional spillover effects from weak performance.

Argentina, the country’s second largest Under the influence of poor export
export market. In addition, uncertainty
performance and mounting foreign debts,
over presidential succession in this
the government
to the lifted
US dollar in the currency’s
December 2001 . peg
year’s election may make foreign
investors and the financial markets
uneasy. The resulting devaluation, coupled with
the worldwide economic recovery, should
eventually boost exports, but in the near
term, a lack of available financing is
Brazil’s GDP Growth, 2000 - 2003
Estimates and Forecasts limiting production levels and shipments
abroad. Another result of the devaluation
percent
is a return to the soaring inflation levels
the country faced during the early 1 990’s.
The freeze on bank withdrawals, along
with low consumer confidence and high
unemployment, will pull down private
spending levels in 2002. An even larger
reduction in investment is expected
because of heightened risks and lack of
available credit. Government spending
will decline in effort to reduce the fiscal
deficit, only exacerbating the problem of
weak domestic demand. Overall, real

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 Global Economic Outlook, 2002 - 2003

output is expected to decline by 5 to 12.5 third quarter, when domestic demand is

percent. forecast to recover.

The outlook for 2003 is for much

improved growth of -1 to 2.1 percent. Euro Zone’s GDP Growth, 2000 - 2003
Estimates and Forecasts
These forecasts assume, for the most
part, IMF acceptance and successful
percent
implementation of the government’s
economic program.

The European Union

Economic growth in the European Union
slowed to about 1 .6 percent in 2001 , and
actually declined in the final quarter.
Germany was the first European country
to enter a recession, in the third quarter,
and was followed by a number of the
region’s smaller economies, such as
Finland, Belgium and Denmark. Most
other EU countries had much lower
growth than in 2000 but managed to
avoid a recession.
Recent economic indicators have been
The global slowdown caused much lower mixed, with weaker than expected
growth in exports, especially to the US. business confidence in Germany and
High crude oil prices added to the GDP growth in the UK and Italy, but
stronger consumer confidence in Italy
region’s problems. Investment fell and and business confidence in the UK. The
inventories were drawn down. Moreover,
unlike in North America, consumer EU’s retail and industrial sectors were
demand also weakened sharply, weak during the first quarter, but the euro
especially in Germany, Austria and region’s Purchasing Managers Indices
Scandinavia. have recently started to show signs of
strength. Early indications are that the
The European Central Bank is not likely growth leaders for 2002 will be France
to stimulate the economy by further rate lag. Italy, while Germany continues to
and
cuts because of concerns over
stubbornly high inflation. April headline
inflation was 2.4 percent: higher than the Economic growth in 2003 is forecast to
2 percent target. As a result, a rate be higher than in 2002, at between 2.7
increase in June cannot be ruled out. and 2.9 percent, close to long term
potential. Consumer spending,
For 2002, most forecasters surveyed are investment and especially exports should
expecting similar growth in the EU strengthen.
economy as in 2001 of 1 .4 to 1 .8
percent. The region’s economic upturn Over the longer term, structural changes
will lag that of North America by about
will be needed to improve the region’s
half a year, and will be largely dependent productivity. Barriers to entry and labour
on the US recovery. A return to normal market rigidities remain in many member
growth rates is not expected until the states, and tax reform will be vital.
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However, record private household debt

This year’s transition in the 12 countries
of the euro region to a common currency is a major concern. Public spending was
occurred smoothly. The changeover had boosted in 2001 and will again see
only a marginal impact on inflation. Over strong growth in 2002.
the long run, it will have a positive effect,
as it increases price transparency across
the region, and therefore reduces price U.K.’s GDP Growth, 2000 - 2003
Estimates and Forecasts
differentials, and lowers transaction
costs. It may also boost intra-regional
trade. percent

A risk to the outlook for the EU is a major

appreciation in the euro, which could
occur as a result of the over-valuation of
the US dollar. This could hamper the
EU’s recovery, as it would likely result in
lower exports.

United Kingdom

The UK’s economy was less affected by

the global slowdown than its EU
partners. The economy expanded by 2.3
percent in 2001 , as a result of strong Much stronger export and investment
domestic demand. Consumer spending growth, and further increases in public
in particular remained strong, partly spending could lead to higher growth in
because the Bank of England reacted 2003 of 2.6 to 2.8 percent.
quickly to the global slowdown by cutting
interest rates aggressively. However, net Germany
exports declined, as imports grew much
faster than exports, and the
Germany experienced a recession in the
manufacturing sector fell into a second half of 2001 , as a result of falling
recession.
domestic demand caused by very low
growth in consumer spending, high oil
The UK appears to be lagging behind in
its recovery relative to most of its EU prices, a decline in investment and very
large inventory draw-downs. September
partners - first quarter GDP was 1 1 events exacerbated the economic
unchanged. The manufacturing and
situation. The manufacturing,
energy industries had unexpectedly large
construction and agricultural sectors
production declines and exports
were slightly down from 2000. However,
continued to decline. Therefore, growth the external sector ensured that
in 2002 will likely be lower than in 2001 ,
at about 1 .8 to 2 percent. economic growth for the year was
positive, as export growth far exceeded
Exports are expected to remain weak for import growth. Former East Germany
was hit especially hard.
the remainder of 2002, and investment
should decline. Strong consumer
Although the outlook for Germany for
demand could lead to the Bank of
2002 is an improvement from the
England increasing interest rates later
this year and in 2003, which should country’s 2001 performance, it continues
to be the worst of all EU members. GDP
reduce growth in consumer spending.
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 Global Economic Outlook, 2002 - 2003

is forecast to increase by 0.7 to 1 .2 lowered overall GDP growth. France’s

percent in 2002. manufacturing sector bucked the global
trend and managed to grow marginally.
Domestic demand should remain weak in
2002: consumer spending has already For 2002, lower growth of between 1 .4
experienced its third consecutive and 1 .6 percent is forecast. First quarter
quarterly decline in the first quarter of GDP growth was stronger than expected,
2002 and investment spending is yet low by historical standards,
expected to drop. Export growth will also investment could decline in 2002 and
be lower than in 2001 , but much higher imports will grow faster than exports
than import growth. The turnaround (hence a decline in net exports). Growth
could be in inventory levels, which, after in consumer spending will be lower than
their sharp decline in 2001 and the first in 2001 , because of low consumer
quarter of 2002, are expected to be built confidence and rising unemployment.
back up, thereby providing the largest Business confidence has been falling for
boost to economic growth. As a result, almost a year, but inflation remains low.
the manufacturing sector is expected to
recover. Construction, on the other Higher growth of 2.6 to 3 percent is
hand, will suffer another decline. expected in 2003. A stronger global
economy will lead to much higher export
Higher growth of 2.4 to 2.7 percent is growth, while investment is also
forecast for 2003, as domestic demand, expected to make a positive contribution
especially investment and private toItal
GDPy growth.
consumption, will see much higher
growth. The manufacturing, construction
and service sectors will also perform
much better than in 2001 and 2002.
Italy’s economic growth declined to 1.8
percent in 2001 , with all major GDP
Perhaps the greatest downside risk to components experiencing marginal
the current outlook is posed by the increases. Manufacturing output
proposed strikes by IG Metall, Germany’s declined slightly and the tourism industry
metal workers union. Although inflation suffered a decline in the fourth quarter.
pressures will not likely be increased
significantly by an excessive agreement, In 2002, growth is expected to be slightly
business confidence could be dented (it lower than in 2001 , at 1 .3 to 1 .7 percent.
fell against expectations in March), and First quarter GDP growth was weaker
investment could take even longer to than expected, as industrial output
recover. Employment growth could also continued to decline. Stronger growth of
suffer, as could Germany’s attractiveness 2.8 or 2.9 percent is forecast for 2003,
for foreign investment. when growth in consumer spending,
business investment and exports should
France return to more normal levels.

Italian productivity growth continues to be

In 2001, France’s economy expanded by lower than in most other EU countries,
2 percent, although GDP declined in the
fourth quarter. Consumer spending and which threatens Italy’s long-term
investment held up better in France than competitiveness. Its relatively small IT
in the EU as a whole, and net exports sector could also constrain the
also contributed to growth, as a result of economy’s future growth potential.
declining imports. As in many other
economies, inventory draw-downs
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 Global Economic Outlook, 2002 - 2003

Eastern Europe The Baltics, i.e. Estonia, Lithuania and

Latvia, had another very strong year in
Economic growth remained strong in the 2001 , also a result of strong domestic
Eastern European region at just over 4 demand, as well as exports to Russia.
percent (this excludes Turkey).
However, this was about 2 percent lower The Balkan region’s economy grew
than in 2000, as a result of the slowdown strongly in 2001 by nearly 5 percent.
in Western European markets. Capital One of the Balkans’ main economies,
investment and consumer spending Romania, recovered strongly, expanding
by just over 5 percent, because of strong
remained strong. The region’s recent growth in all goods producing sectors (for
strong performance has been attributed
to the successful implementation of example agricultural output rose more
market reforms and strong productivity than 20 percent). Bulgaria’s output also
grew by about 5 percent in 2001 , mainly
gains. as a result of a very large increase in
capital investment.
If Turkey is included in Eastern Europe’s
2001 GDP growth rate, the region’s
growth drops by approximately 2 percent, Turkey’s economy was in a deep
recession in 2001 , with output falling by
as a result of Turkey’s steep recession. more than 7 percent, as a result of
banking and currency crises. Although
All sub-regions registered positive growth
in 2001 , but growth was exceptionally net exports grew strongly, domestic
strong in the CIS (former Soviet Union), demand fell by one fifth: investment
especially in the break-off states, such as dropped by a third and consumer
Kazakhstan and the Ukraine. spending by ten percent. GDP is
expected to increase by 2 percent in
GDP growth slowed the most in Russia, 2002 and could grow by more than 4
falling from 9 percent in 2000 to 5 percent in 2003, because of stronger
percent in 2001 . Most other CIS domestic demand.
countries had stronger growth than in
2000, as they were little affected by the The outlook for the rest of Eastern
global slowdown and received a boost Europe remains positive, and all
countries are forecast to see their
from the strength of domestic demand in
Russia. economies expand in both 2002 and
2003, as exports to Western Europe
The Polish economy came to a standstill recover in the non-CIS region and
in 2001 , growing by a mere 1 .1 percent, consumer demand strengthens in the
mostly due to high interest rates. CIS. Forecasts for this region are for
growth of just under 3 percent in 2002,
Hungary’s economy expanded by 3.8
percent in 2001 , and will likely see and 4 percent in 2003.
slightly lower growth in 2002, as a result
of lower public spending and a strong The CIS region could see growth of
currency. about 4 percent in both 2002 and 2003.
The region’s economic prospects depend
The Czech Republic had strong growth on the outlook for Russia, which
of about 3.5 percent in 2001 . Strong accounts for two-thirds of the CIS
investment and consumer spending economy, and has been increasing its
caused a more than five percent increase imports from the other states as a result
in domestic demand. of strong domestic demand. Trade within
the region will likely strengthen further as
Russia’s crude oil export revenues are
12
Alberta Economic Development
Policy and Economic Analysis
June 2002
 Global Economic Outlook, 2002 - 2003

high enough to sustain a higher level of The 2002 outlook is for economic growth
imports. to moderate to 3.5 to 4 percent, as net
exports continue to decline and growth in
Strong investment growth and consumer domestic demand falls to 5 percent. The
spending will lead to GDP in the Balkans outlook assumes continued strong
expanding by slightly over 4 percent in growth in crude oil output, although
2002 and close to 5 percent in 2003.
production growth in Russia’s core
Similar growth is forecast for the Baltics, sectors is expected to be substantially
mainly as a result of strong investment lower than in 2001 . Modest GDP growth
growth. For both regions, lower growth of 3.3 percent was achieved in the first
in 2002 is the result of low export growth, quarter of 2002.
especially to the EU.

Although growth in domestic demand is Russia’s GDP Growth, 2000 - 2003

Estimates and Forecasts
expected to remain strong, Hungary and
the Czech Republic are forecast to have
slightly lower growth of about 3 to 3.5 percent
percent in 2002, partly because their
strong currencies are contributing to
weak export demand. Higher growth of
about 4 percent can be expected for
2003 as exports to Western Europe rise
more strongly.

First quarter results suggest that

Poland’s economy will not perform much
better in 2002 than it did in 2001 .
Austerity measures in the March budget
could further dampen domestic demand,
and could limit GDP growth in 2003 to
about 2.5 percent.
For 2003, most forecasters call for
Russia growth of 4 percent. Domestic demand
will remain strong although probably
Russia’s GDP increased by 5 percent in weaker than in 2002, and net exports
2001 , as a result of very strong growth in could make a positive contribution to
private consumption and investment. GDP growth.
Strong domestic demand also caused a
surge in imports, which led to a large Russia has made substantial progress in
decline in net exports. The trade its market reforms and the transformation
balance, however, remains in a large to a market economy now seems
surplus position, as a result of strong oil irreversible. The pace of reform
exports. accelerated in 2001 , with reform of the
tax, pension, land, bankruptcy, labour
Russia’s recent economic success was and customs codes. This bodes well for
caused by the policy reforms that were the country’s long-term outlook.
introduced after the 1998 financial crisis, However, more reform is still needed,
the currency devaluation that also and implementation and enforcement of
followed the crisis, and strong commodity past reforms have not yet been fully
prices, especially for crude oil. achieved.

13
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 Global Economic Outlook, 2002 - 2003

One factor clouding the long-term outlook

Growth by major country/trading bloc in
is the country’s dependency on oil 2001 was as follows:
exports. A one dollar increase in oil
prices could boost GDP by as much as Vz ■ The ASEAN-4 (Indonesia, Malaysia,
percent. Another factor is the sharp Philippines and Thailand) grew by
increases in labor costs over the past few about 2.5 percent. Malaysia’s growth
years. While Russia’s labor costs are tumbled to 0.4 percent, Thailand’s to
still low, if the trend of large wage less than 2 percent, while the other
two economies were growing by close
increases continues, Russia’s
international competitiveness could to 3.5 percent. Exports declined in all
suffer. four countries.
■ The NIC (newly industrialized
countries) region of Hong Kong, South
Asia Pacific Korea, Taiwan and Singapore,
expanded by less than 1 percent. The
In 2001 , the Asia Pacific region, which economies of Hong Kong, Taiwan and
includes such diverse economies as Singapore were in a recession, while
Japan, China, India, the ASEAN South Korea grew by 3.3 percent.
(Association of South-East Asian ■ China expanded by 7.3 percent.
Nations) and Australia, saw much lower ■ Japan was in a recession, with a 0.4
growth than in the previous year. The percent GDP decline.
entire region expanded by about 1 .5 ■ India grew strongly by about 5
percent at purchasing power parity
(estimates vary depending on what ■ percent.
Australia’s GDP increased by 2.4
economies and how the economies were
combined). percent.
The outlook for the Asia Pacific region
has turned more positive recently. This
The region’s weak growth was largely the
result of lower exports, especially of ICT is borne out by first quarter results for a
equipment, such as semi-conductors, number of the region’s economies, such
telecom equipment and computer as South Korea and Taiwan. For 2002,
peripherals. This in turn led to a sharp most forecasters are expecting growth
decline in ICT investment in the region. for the entire region to be close to last
In the US, which accounts for about a year’s 1 .5 percent. This low forecast
results from the Japanese economy
quarter of East Asia’s exports, imports
declined by 2.8 percent in 2001 . accounting for a large share of the
Consequently, a number of the region’s region’s economy and a further
high tech producing economies, such as deterioration in its economic
Singapore, Taiwan and Malaysia, were in performance. However, most of the
a recession.
region’s other economies will have
respectable growth, although still low by
The recent recovery of the US economy historical standards.
bodes well for Asia’s prospects. US
technology imports rose by more than 80 Higher growth of more than 3 percent is
percent (on an annualized basis) forecast for 2003, as a result of much
between the fourth quarter of 2001 and stronger domestic demand. Both
the first quarter of this year. Partly as a consumer spending and investment will
result of this, a number of countries, such likely see much higher growth than in the
as South Korea, Malaysia and China, past few years.
started to see strong export growth
towards the end of the first quarter.

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 Global Economic Outlook, 2002 - 2003

ASEAN-4 increased exports. Stronger domestic

and foreign demand will raise 2003 GDP
The ASEAN-4 will see slightly higher growth to close to 4.5 percent. The
growth of just over 3 percent in 2002, country’s new administration is making
and will return to near normal growth good progress in economic and fiscal
levels of over 4 percent in 2003. The reform. This should result in stronger
region’s tourism industry has been hit domestic demand starting in 2003.
hard by the September 1 1 events, as
well as regional instability. The World
Travel and Tourism Council is Malaysia’s growth forecasts range from
3 to 4.5 percent for 2002, and about 5 to
forecasting a substantial decline for this 6 percent for 2003. For Malaysia, growth
industry in 2002, especially in Indonesia in domestic demand, especially
and Thailand. investment, is expected to far exceed
that of the foreign sector, due to recent
Thailand’s economy could expand by tax reform and public spending. Exports
2.5 to 3 percent in 2002, largely because started to recover in the first part of 2002,
of a large boost in public spending. For but imports are expected to grow faster
2003, growth of 3 to 3.5 percent is in both years.
forecast, as both domestic and foreign
demand increase. Economic recovery Newly Industrialized Countries
hinges on the recovery of the global ICT
sector, as Thailand’s ICT exports The NIC region is forecast to expand by
account for 60 percent of total exports. approximately 3 to 3.5 percent in 2002,
The large public debt that has been and by up to 5 percent in 2003. This
accumulated during the past few years recovery will be mostly export driven.
could pose risks for the Thai economy
over the longer term. The South Korean economy expanded
by 3.3 percent in 2001 . Exports and
Indonesia’s outlook is for growth of investment declined, especially in the
between 3 and 4 percent for all of 2002, ICT sector, but private consumption
because of strong oil prices and public remained relatively firm. The US
spending, and export growth in the recovery should lead to a modest
second half. However, recent flooding rebound in exports for 2002. Consumer
will limit production in the first half of demand is strengthening and public
2002. Stronger domestic demand could spending will increase sharply because
boost GDP growth to between 3.5 and of major international sporting events
4.5 percent in 2003. Foreign investment being held in Korea. As a result, overall
prospects remain weak because of GDP growth is forecast at 4 to 5 percent.
regional violence and concerns about Stronger export growth, especially to the
security. Progress in political and US, China and Japan, and inventory
economic restructuring has continued, for restocking, could cause GDP growth to
instance through decentralization and rise even further to at least 5 percent in
privatization. The current regime has 2003. In addition, recent corporate and
also shown a willingness to address financial restructuring has made the
difficult political issues, such as those Korean economy more competitive.
related to human-rights and the
prosecution of high-profile individuals. Singapore’s economy, which is heavily
dependent on ICT exports, was in a
The economy of the Philippines will also recession in 2001, with GDP declining by
grow by about 4 percent in 2002,
2 percent. Manufacturing output fell by
because of strong domestic demand and
more than 1 0 percent, and inventory
15
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Policy and Economic Analysis
June 2002
 Global Economic Outlook, 2002 - 2003

draw-downs caused a large decline in also led to declines in the manufacturing

domestic demand. First quarter growth, sector. Capital investment also declined,
however, was much higher than consumer spending stagnated and
expected, and growth for all of 2002 is deflation continues to remain a problem.
forecast to come in at 3 to 3.5 percent, Japanese travel to North America
as exports increase and inventories are continues to be affected by the events of
restocked. Stronger domestic and September 1 1 , and private companies
foreign demand and inventory restocking have increased their security measures.
could boost 2003’s GDP growth to Most forecasters are expecting Japan to
between 5 and 6.5 percent.
emerge from its recession sometime in
2002. However, because of the severity
Hong Kong’s economy grew by only 0.1
percent in 2001 , also as a result of lower of the declines throughout 2001 , Japan’s
exports as well as weak domestic GDP will likely be lower for the full year
demand. Growth is forecast to remain of 2002 than it was in the previous year.
low in 2002, at 1 to 2 percent, due to Forecasts for 2002 range from 0 growth
weak domestic demand. Exports, to a 1 .5 percent contraction. Although
especially to China, are expected to exports could stage a recovery and
strengthen throughout the year. Higher inventory rebuilding will make a positive
growth of between 3.5 and 5 percent is contribution to GDP, consumer spending
forecast for 2003, as domestic and and investment are expected to decline.
foreign demand strengthen. In the longer
run, Hong Kong is facing
competitiveness problems, caused by Japan’s GDP Growth, 2000 - 2003
Estimates and Forecasts
structural changes, primarily its
integration with the mainland.

In 2001 , Taiwan’s GDP declined by 1 .9

percent, because of large declines in ICT
exports and investment, which was partly
caused by a shift of production towards
mainland China. Weak growth in
investment, consumer spending and
exports will limit 2002’s GDP growth to 2
to 3 percent. Inventory restocking could
supply boosts to the economy in 2002
and especially in 2003. While stronger
investment should contribute to an
expansion of 4 to 5 percent in 2003, the
relocation of manufacturing plants to the 2000 2001 2002 2003

mainland may continue to hamper the

country’s long run growth potential. Machinery orders, a leading indicator of
investment, retail sales and wages
Japan continued to decline in the first months of
2002, and business failures were on the
Japan’s economy was in another rise.
recession in 2001 , with output declining
by 0.4 percent. Fourth quarter results The recovery will continue into 2003, and
were especially weak, with a 4.5 percent will be based on higher exports and
GDP decline. 2001 exports fell by more
than 6 percent in volume terms, which 16

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Policy and Economic Analysis
June 2002
 Global Economic Outlook, 2002 - 2003

inventory restocking. GDP growth of 0.3 Japan’s retail, construction and

to 1 .7 percent is forecast. distribution industries remain inefficient
and unproductive. Barriers to entry, the
Japan’s economy will remain sluggish in ability of unprofitable companies to
the medium term, as domestic demand remain in business, and the absence of
consolidation all contribute to this
remains weak. The economy’s large
excess capacity has led to deflation. For situation persisting over at least the
example consumer and asset prices medium run. Restructuring is taking
have been falling since 1999 and are place in the manufacturing sector, which
expected to continue to fall over the near should lead to increased productivity and
term. The EIU is forecasting GDP efficiency.
growth to average only 0.8 percent
through 2012. China
Even though interest rates have been As expected, the global slowdown did not
lowered to close to zero percent, this has affect China as much as other Asian
not led to increased spending. Deflation countries. The Chinese economy
makes it profitable to postpone spending, expanded by 7.3 percent in 2001 , again
as prices will be lower in the future. led by robust growth in investment and
Relatively high real interest rates also net exports, although both export and
reduce the demand for loans. In
import growth was much lower than in
addition, the public sector cannot boost 2000. Growth in private and public
the economy by sharply increased consumption, although strong, was lower
spending, as Japan’s national debt to than in 2000. Industrial output increased
GDP ratio already exceeds 130 percent. sharply, as did foreign direct investment
The recent devaluation of the yen the a World
(FDI), partlyto as
accession of China’s
result Trade
increases Japan’s export Organization (WTO).
competitiveness, but Japan may not be
able to fully capitalize because of the In 2001 , China passed Canada to
large trade surplus with the US. Rising
become the world’s fourth largest trading
exports to the US would further add to nation, after the EU, the US and Japan.
the US’ current account deficit problems.
However, the devaluation of the yen Similar GDP growth of 7 to 7.4 percent is
should increase import prices and could forecast for 2002. A sharp decline in net
contribute to ending Japan’s deflationary exports, as import growth is expected to
problems. outstrip export growth, could be offset by
higher growth in government spending
Although the government has made and investment. Rising unemployment,
some progress in restructuring, more still caused by a slowdown in the agricultural
should be done and implementation sector, will hold back consumer
needs to be sped up. Restructuring of spending, and is also putting a significant
the banking sector is progressing, yet the strain on the public purse.
sector remains in a near crisis situation,
as a result of its reluctance to foreclose Economic results for the first quarter of
on bad loans and the ensuing default 2002 were good, with higher GDP growth
risks. On-site inspections in March of of 7.6 percent, partly because of
this year of a large number of banks increased government and private sector
showed that the banks’ bad loans spending, and falling consumer prices.
problem is even worse than feared.

Alberta Economic Development 17

Policy and Economic Analysis
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 Global Economic Outlook, 2002 - 2003

Slightly higher growth of between 7 and 8 the early nineties. The Indian economy
percent is forecast for 2003, as increased continued to expand strongly by 5
growth in consumer demand should percent in 2001 . Although the global
more than offset a declining trade slowdown led to lower growth in exports,
surplus. India was not affected as badly as many
other nations, as it does not have a
strong IT export base. Domestic demand
China’s GDP Growth, 2000 - 2003 remained firm, with inventory building
Estimates and Forecasts
providing a major boost.
percent

For 2002, higher growth of 5.5 to 6.1

percent is forecast, as domestic demand
and investment in particular strengthen.
Slightly higher growth is expected in
2003, mostly because of stronger growth
in consumer spending. The major risk to
India’s forecast is the escalation of
border violence between India and
Pakistan in Kashmir. A war between the
two nations cannot be ruled out.

On-going economic reforms, albeit at a

slow pace, should contribute to even
stronger long-term growth.

Import growth will likely continue to Australia

exceed export growth over the medium
term, because of China becoming a Australia’s economy performed better
member of the WTO. than most other developed economies,
growing by 2.4 percent in 2001 .
Accession to the WTO has accelerated Consumer demand increased more
reform of foreign trade and investment strongly than in the previous year, and
legislation. Yet, there are a large number net exports rose as a result of a decline
of bureaucratic hurdles left for foreign in imports.
companies to overcome. These hurdles
will slowly start to be eliminated as a In 2002, GDP growth is expected to rise
result of WTO membership and a to 3.4 to 4 percent, because of higher
declining government bureaucracy. The growth in domestic demand, especially in
domestic private sector remains relatively consumer spending and investment. Net
small, and more enabling legislation is exports could decline, as the strong
needed for this sector to absorb its share domestic economy will provide a boost to
of the large numbers of new labor market imports.
entrants and laid off government
workers. For 2003, slightly higher growth of 3.7 to
4.3 percent is forecast. Domestic
India demand is expected to remain strong
and the global recovery should provide a
India has been one of the fastest growing major boost to exports.
economies in Asia during the past ten
years as a result of economic reforms in
18
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Policy and Economic Analysis
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 Global Economic Outlook, 2002 - 2003

Middle East and the Israel - Palestine conflict.

Exports grew strongly, but domestic
Because of declines in crude oil demand was weak. Growth of less than
production, weakness in EU export 2 percent in 2002 is forecast, as
markets, a sharp decline in tourism domestic demand and the tourism sector
revenues and a recession in Israel, remain weak and exports decline.
economic growth in 2001 in the Middle Increased domestic demand, strong
East, including North Africa, fell from exports and a better tourism outlook
more than 4 percent in 2000 to close to 3 should lead to higher growth for 2003.
percent. Strong crude oil prices provided
the major boost to the region’s economy. Iran’s GDP increased by more than 4
percent in 2001 , because of high oil
In 2002, lower oil production, weakness prices and increased oil production and
in EU export and tourism markets and investment. Recent reforms will boost
regional instability will dampen the the non-energy sector in 2002, but crude
oil volumes will remain flat. As a result,
region’s growth prospects. Most
forecasters therefore expect similar or slightly lower growth of about 4 percent is
slightly lower growth than in 2001 . forecast for 2002. Higher growth is
However, the region will benefit if oil expected in 2003, because of stronger
prices remain near their current levels. crude oil production and prices.

Higher growth of at least 4 percent is Israel’s economy was in a recession in

forecast for the region for 2003. The 2001 , partly because of lower IT exports
and tourism revenues. Low growth of
economic resurgence will be broad-
based, but prospects have improved less than to 2 percent is expected for
2002 and another recession year cannot
particularly for the non-oil producing
countries. be ruled out, as regional violence
negatively impacts tourism, consumer
confidence remains low and investment
The major risk to this outlook is of a
continues to decline. Assuming an
further deterioration in the region’s improvement in regional stability, higher
stability as a result of an escalation of the
Israel - Palestine conflict or a possible growth of at least 3 percent is expected
US invasion of Iraq. for 2003, as exports and investment
spending recover.
Saudi Arabia’s economic growth fell
from more than 4 percent in 2000 to
about 2 percent in 2001 , because of oil
Africa
production cutbacks. Further cutbacks
and regional insecurity could reduce In Sub-Saharan Africa, 2001 GDP growth
growth to less than 1 percent in 2002. was about 2.5 to 3.5 percent.
However, this is premised on crude oil Commodity prices, for instance for
prices for all of 2002 being significantly coffee, cotton and cocoa, declined
below current levels. Higher growth of sharply, exports increased marginally
more than 3 percent is forecast for 2003 and tourism receipts were lower.
as crude oil export volumes increase and However, crude oil prices remained high
prices remain stable. and agricultural production was strong in
many countries. The strongest growth
was recorded by Mozambique,
Egypt’s economy is expected to have
grown by 2.5 to 3.5 percent in 2001 . The Botswana, Chad, Equatorial Guinea and
number of tourists visiting Egypt fell by Ethiopia.
19
1 6 percent, as a result of September 1 1

Alberta Economic Development

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 Global Economic Outlook, 2002 - 2003

Oil exporting countries, such as Angola, coffee exports, will continue to under-
Nigeria and Congo, again had strong perform in2002 and little improvement is
GDP growth. Countries with political expected for 2003. According to the
unrest or civil strife, such as Zimbabwe, World Bank non-oil export commodity
the Democratic Republic of Congo (DCR) prices for the sub-Saharan region have
and Cote d’Ivoire, had declines in GDP. fallen by nearly 60 percent in real terms
since 1980.
Economies dependent on non-oil
commodities, like Kenya and Mali, had
low growth. Ongoing economic reforms The region’s economic powerhouse,
have resulted in sustained and robust South Africa, had low growth of 2.2
economic growth in recent years in percent in 2001 , because of the weak
Botswana, Uganda, Tanzania, Senegal global economy and low gold and
and Cameroon. platinum prices. Growth of about 2.5
percent is forecast for 2002, as net
Similar or slightly higher growth is exports are expected to decline, and of 3
forecast for 2002, as exports and tourism to 4 percent for 2003, as both foreign and
remain weak, and of 3.5 to 4.5 percent domestic demand improve.
for 2003, as commodity prices and export
volumes strengthen. African countries that are forecast to do
well include Angola, Uganda, Tanzania,
Ghana, Mozambique, Sudan, Senegal,
Most of the region’s oil producers are
expected to see lower growth than in Ethiopia, Mauritius, Chad, Botswana and
2001 , although Angola could see GDP Cameroon.
increase by more than 10 percent in
2002 and by close to 7 percent in 2003, A long-term concern for the region is the
as oil production continues to increase. HIV/AIDS epidemic. In 1999,
For Nigeria, the region’s second largest approximately 9 million sub-Saharans
economy, low growth is forecast for this carried the virus. The IMF estimates that
year, because of oil quota cutbacks, but economic growth in Kenya is lowered by
stronger growth for 2003, as oil at least 0.75 to 1 .5 percent a year as a
production is expected to recover. result of the epidemic, which has affected
14 percent of its adult population.
The end to unrest in Cote d’Ivoire and Another study estimates that by 2005, 30
the DCR will lead to a positive economic
percent of South Africa’s work force will
be infected.
performance in 2002 and especially
2003. Congo will likely be in a recession
this year, because of the recent outbreak The IMF has identified the following
of fighting. As the economic and political
crises continue in Zimbabwe, the factors that positively impact the region’s
future economic performance:
economy will remain in its steep - The Heavily Indebted Poor Countries
recession for at least another year. initiative, which now provides debt
There is a risk of spill-over effects from relief to 20 of the region’s poorest
the Zimbabwean unrest to other countries.
Southern African countries.
- The New Partnership for African
Development.
Most countries, which are dependent on
- Ongoing economic reforms.
non-oil commodities, will again have low - Lower inflation.
growth in 2002, but should perform better
in 2003. Kenya, heavily dependent on

20
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Policy and Economic Analysis
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 Global Economic Outlook, 2002 - 2003

Appendix
Economic Growth Forecasts by Agency, Region and Country
(Gross Domestic Product Growth Rates in Percent)
2000 2001 2003
2002
World
4.7 4.2
Economist Intelligence Unit 2.4
4.6 2.1 3.1
Export Development Council 2.6 3.6
4.0
2.5
International Monetary Fund 4.7 2.8
1.2 1.3
World Bank 3.9
4.8 3.6
Kiel Institute of World Economics 2.2 2.7 4.1
-0.7
Note: All world GDP growth rates are based on exchange rates at Purchasing Power Parity, except for the World
Bank forecasts, which are based on actual exchange rates. -0.2
-0.8
World Trade Volumes
12.8 2.3
Economist Intelligence Unit 7.2
2.5
International Monetary Fund 12.4 1.8 6.6
World Bank 13.1 8.3
2.5
OECD 12.7 0.0 9.5
Kiel Institute of World Economics 13.0 0.0
3.0 9.2

North America (US, Canada and Mexico) 1.0

Export Development Council 2.2 3.5

United States
1.2
Economist Intelligence Unit 4.1 3.0
1.2 1.8 3.7
Export Development Council 3.3
4.1 1.2 2.3
International Monetary Fund 4.1
1.2 1.3
World Bank 4.1 3.4
2.3 3.7
Kiel Institute of World Economics 4.1 1.2 2.5
1.2
OECD 4.1 3.5
3.7
1.2
Asian Development Bank 4.1 3.0 3.0

Canada 1.5 2.8 4.0

Economist Intelligence Unit 4.4 1.5 2.5 3.4
Export Development Council 4.4
1.5
International Monetary Fund 4.4 1.5 2.5 3.6
Kiel Institute of World Economics 4.4 4.0
3.5
1.5 -0.1
1.7
OECD 4.4
3.2

Latin America (incl. Mexico)

Economist Intelligence Unit 0.3 3.6
4.0
3.7
International Monetary Fund 0.7 3.7
Kiel Institute of World Economics 4.3 0.9
0.7
0.6 3.7
World Bank 3.8 0.6 0.5 3.8

21

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 Global Economic Outlook, 2002 - 2003

-0.3
2000 -0.3
2001 2002 2003
-0.3
-0.3
Mexico -0.3 1.9 4.8
Economist Intelligence Unit 6.6 2.0 3.5
6.6
Export Development Council 4.9
International Monetary Fund 6.6 1.7
Kiel Institute of World Economics 6.6 1.8
3.0 4.5
5.5
6.6
OECD

Brazil 1.5 1.5

4.4 2.5
Economist Intelligence Unit 3.8
4.4 1.5
Export Development Council 1.5 3.3
2.5 4.0
International Monetary Fund 4.4 1.5 1.0 3.5-1.0
4.4 -4.5 -8.0
2.5
Kiel Institute of World Economics -0.8 1.5
-4.5
OECD 4.4 -10.0 3.0
-0.8 -4.5 -5.0
-0.8 -4.5
-0.8 -12.5
Argentina
Economist Intelligence Unit 2.1
Export Development Council 1.5
International Monetary Fund
Kiel Institute of World Economics 0.5

Europe 1.5 1.3 2.6

3.5
Economist Intelligence Unit

Euro Region 1.5

3.5 1.5 2.8
Economist Intelligence Unit 1.5
1.7 2.7
Export Development Council 3.4 1.5 2.9
International Monetary Fund 1.4
3.4 1.2
World Bank 3.5 1.4 3.3
2.8
1.5
Kiel Institute of World Economics 1.4 2.9
3.5
3.4 1.6 1.3
OECD 1.5
Asian Development Bank 1.7
3.4 3.0
United Kingdom 1.8 2.6
Economist Intelligence Unit 3.0 2.2 2.8
Export Development Council 3.0 2.2 2.8
2.0
2.4
International Monetary Fund 3.0 2.2
1.8
Kiel Institute of World Economics 3.0 2.2 1.9
2.8
2.7
OECD 3.0 2.2

Germany 2.6
3.0 0.6 1.2
Economist Intelligence Unit
International Monetary Fund 3.0 0.6 0.9
Kiel Institute of World Economics 3.0 0.6 0.9 2.7
0.6 2.5
OECD 3.0
0.7 2.4

22

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 Global Economic Outlook, 2002 - 2003

2000 2001 2003

2002

France 1.5
3.6 2.0 2.6
Economist Intelligence Unit
3.6 2.0 2.9
International Monetary Fund 2.0 1.4
1.5 3.0
Kiel Institute of World Economics 3.6
OECD 2.0
3.6 1.4 3.0

Italy 1.8 2.8

2.9 1.7
Economist Intelligence Unit 2.9
2.9 1.8 2.9
International Monetary Fund 1.4
1.3
Kiel Institute of World Economics 2.9 1.8 2.8
1.5
OECD 2.9 1.8

Eastern Europe 4.4 4.1

Economist Intelligence Unit 6.6
6.6 3.8 3.2
International Monetary Fund 2.9 3.9 4.4
4.4 3.0 4.3
Export Development Council* 4.1 3.9
4.3
Kiel Institute of World Economics 5.6
3.2
2.2
World Bank* 6.4 3.2
* Includes Turkey

Eastern Europe (excl. Russia) 2.3

3.5 2.4 3.8
4.0
Economist Intelligence Unit*
International Monetary Fund 3.8 3.0 4.1
3.1 4.3
Kiel Institute of World Economics 3.0 2.8
2.9
3.7 2.9
World Bank 3.8
* Excludes CIS

Commonwealth of Independent States 4.3

8.8 4.5 4.6
Economist Intelligence Unit 5.8 3.7
8.3
International Monetary Fund 7.9 6.2
World Bank 5.5 3.8 3.9

Russia 4.0
4.0
Economist Intelligence Unit 9.0 5.0
Export ^Development Council 9.0 5.0 3.0 3.8
4.9
9.0 5.0 4.4 4.0
International Monetary Fund
Kiel Institute of World Economics 9.0 3.3 4.0
5.0
OECD 9.0 5.0 3.5

Asia Pacific
4.2 1.3
Economist Intelligence Unit 1.4
3.4
Asia Pacific, excl. Japan 4.8
Economist Intelligence Unit 6.6 3.6
4.8 5.6
7.2
Export Development Council* 5.4
4.8 6.1
6.9 5.0
International Monetary Fund* 7.0 5.6 6.2
5.8
Asian Development Bank* 3.7 23
* Also excluding Australia
Alberta Economic Development
Policy and Economic Analysis
June 2002
 Global Economic Outlook, 2002 - 2003

2000 2001 2003

2002

ASEAN-10 1.9 4.9

3.6 4.3
Economist Intelligence Unit 6.2 1.9
Asian Development Bank 5.9
3.4
ASEAN-4 (Indonesia, Malaysia, Philippines, Thailand) 2.6
International Monetary Fund 5.1 3.3 4.1
Export Development Council 2.4 4.2
-1.3 3.2
NICs (Hong Kong, Singapore, S. Korea, Taiwan) 8.5
International Monetary Fund 0.8 3.6
-0.7
-0.4 2.8
Export Development Council 0.9 -1.2
8.0 -0.4 3.2
World Bank -1.0 4.2
5.1
-0.4 2.4
-1.5
-0.4
Japan -1.5 1.5
Economist Intelligence Unit 2.2 -0.4 -0.7
2.2 -0.4
Export Development Council 0.6
International Monetary Fund 2.2 -0.4 0.8
2.2 1.0
1.7
World Bank
Kiel Institute of World Economics 2.2
2.2
OECD 1.0
2.2 0.0 0.3
Asian Development Bank

China 7.3
Economist Intelligence Unit 8.0 7.4 7.7
7.3 7.0
Export Development Council 8.0 8.0
7.3 7.0
International Monetary Fund 8.0 7.0
World Bank 8.0 7.4
7.0
7.3 7.0 7.5
8.0
Kiel Institute of World Economics 7.3 7.6
8.0
OECD 7.3 7.0
7.1
Asian Development Bank 8.0 7.4

South Korea
Economist Intelligence Unit 3.3 4.4 4.4
9.2
Export Development Council 3.3
9.2 5.2 6.0
International Monetary Fund 3.3 5.0
9.2 5.5
World Bank 9.2 3.3 4.2
Kiel Institute of World Economics 5.0 5.6
5.0
3.3
9.2
OECD 3.3 6.5
9.2 4.8
6.0
Asian Development Bank 6.0
9.2 3.3
Australia 4.3
4.0
Economist Intelligence Unit 3.2 2.4
Export Development Council 3.2 2.4 4.0
International Monetary Fund 3.9
3.4 3.7
4.0
3.2 2.4
OECD
3.2 2.4
3.7

Alberta Economic Development

24
Policy and Economic Analysis
June 2002
 Global Economic Outlook, 2002 - 2003

2000 2002 2003

2001

Middle East (incl. North Africa) 2.3 1.6 4.4

4.5
Economist Intelligence Unit 2.8
Export Development Council 3.9 3.5 4.2
4.2 -0.5
World Bank 2.7 3.3
3.1
Saudi Arabia 4.5 1.8 0.6
Economist Intelligence Unit 1.5 3.8
4.5 3.8
Export Development Council 4.5 2.7
International Monetary Fund 2.2
3.2
Iran 4.7
4.5 4.3
Economist Intelligence Unit 4.1
6.1 4.5
Export Development Council 4.9 3.9
International Monetary Fund 5.3
5.1 5.1

4.3
Africa (Sub-Saharan) 2.8
Economist Intelligence Unit 2.3
Export Development Council 3.0
3.4 3.9
International Monetary Fund 3.5 4.2
2.6
World Bank 3.1 3.4
2.6 3.6
3.1
South Africa
Economist Intelligence Unit 2.2
3.4 2.3
2.4 3.4
Export Development Council 2.2 3.3
2.3 4.0
International Monetary Fund 3.4 2.2 3.0
3.4 2.9
World Bank 2.2
3.4

Release dates of forecasts:

Economist Intelligence Unit: April - May 2002
Export Development Corporation: February - April 2002
International Monetary Fund: April 2002
World Bank: March - April 2002
Kiel Institute of World Economics: March - April 2002
OECD: April 2002
Asian Development Bank: April 2002

Note: Wherever available, official historical growth rates were used

25

Alberta Economic Development

Policy and Economic Analysis
June 2002
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