Alberta Economic Development

Global Economic Outlook

2003 - 2004

June 2003
Policy and Economic Analysis
 Digitized by the Internet Archive
in 2017 with funding from
University of Alberta Libraries

[Link]
 Global Economic Outlook, 2003 - 2004

Table of Contents

Highlights 1

Introduction 2

World Economic Growth 2

World Trade 4

North America 5

United States 5

Canada 6

Latin America 7

Mexico 7

Brazil 8

Argentina 8

European Union 9

United Kingdom 10
France 11

Eastern Europe 12

Russia 13

Asia Pacific 13

ASEAN-4 (Thailand, Indonesia, Philipines, Malaysia) 14

Newly Industrialized Countries (S. Korea, Singapore, Hong Kong,Taiwan) 15

Japan 16
China 17

Australia 18

Middle East 18

Africa 19

21
Appendix
 Global Economic Outlook, 2003 - 2004

Highlights

• According to international forecasting agencies, the world economy grew by

between 2.8 and 3 percent in 2002, an improvement over 2001, but lower
than the long run average of 3.4 percent. This was largely the result of a
recession in South America and very low growth in the euro region and in
Japan. World trade volumes started to recover in 2002, led by strong export
growth in Asia and Eastern Europe.

• Economic growth in 2003 is expected to be only marginally higher than in

2002, as a result of very weak economic conditions in the first half, caused by
the slumping stock market, the Iraq war and more recently SARS. In 2004
the world economy should expand by at least 3.7 percent. World trade
growth will continue to strengthen in 2003 in 2004.

• In 2002, Canada had the highest economic growth of the G7. GDP increased
by 3.4 percent, fueled by strong domestic demand and inventory rebuilding.
Lower growth of 2.7 to 3.2 percent is forecast for 2003, because of declining
net exports (exports minus imports), and of 3 to 3.4 percent for 2004.

• Strong consumer and military spending boosted the US economy in 2002.

However, by the end of the year growth had weakened again and remained
weak in the first quarter of this year. As a result, economic growth in 2003
may be slightly below the 2.4 percent registered in 2002. The US economy is
anticipated to grow by 3.1 to 4 percent in 2004.

• Japan’s economy remained weak in 2002, with 0.3 percent growth. Exports
were strong, but consumer demand was sluggish and capital investment
declined. Recent economic data suggest that growth will remain weak at best
in 2003, because of very weak domestic demand.

• Most other Asia Pacific economies expanded strongly in 2002, because of

strong consumer spending and intra-regional trade. The current bullish
forecasts for China, Hong Kong, Taiwan and Singapore will likely be too high
because of the effects of SARS on these economies in the second quarter.

• The European Union’s economy grew by only 1 percent in 2002, due to low
confidence levels and geo-political uncertainty. Similar growth is forecast for
2003. Economic output likely declined in the first quarter and will likely be flat
in the second quarter. Germany may already be in another recession, and is
expected to see minimal growth over the next 1 2 months.

■ With Argentina and Venezuela in a recession, Latin America’s economic

output declined in 2002. Weak consumer spending and Venezuela’s crisis
will result in another sub-par year for the region in 2003.
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Introduction In 2002, the world economy is estimated

to have grown by between 2.8 and 3
The outlook presented in this report is percent, higher than the 2.2 percent
based on the latest forecasts from the registered in 2001 , but low by historical
International Monetary Fund (IMF), standards. World growth was low
OECD, Export Development Corporation primarily because of continued weakness
(EDC), Economist Intelligence Unit (EIU), in the euro region, Japan, and especially
Kiel Institute of World Economics (Kiel), Latin America (steep recessions in
Conference Board of Canada (CBoC), Argentina and Venezuela). The rest of
World Bank (WB), and [Link]. Asia and Eastern Europe registered
strong growth. The North American
The report has a particular emphasis on region performed relatively well, with US
regions that are of interest to Alberta growth rising to 2.4 percent, up from 0.3
exporters, and those that are facing percent in 2001 , and Canada leading all
special economic circumstances, such as G7 countries with growth of 3.4 percent.
recessions or structural reforms.
The world economy bounced back more
World Economic Growth strongly than expected in the first nine
months of 2002 because of strong
consumer demand, especially in the US
Because of the global economic
slowdown that started in the fourth and Asia, and a modest improvement in
world trade. However, consumer and
quarter of 2002 and its effects on many business sentiments soured in the fourth
large economies, most forecasters have
become more bearish about the outlook quarter and remained weak in the first
quarter of 2003, partly because of
for world growth. Since the middle of
2002, global growth forecasts for 2003 uncertainties related to the then up-
have been lowered by about one coming war in Iraq and the continued
stock market slump. At the same time,
percent. Growth forecasts for the US,
industrial production stagnated and
the euro region and Latin America in labour markets weakened.
particular have seen significant
downward revisions.
World GDP Growth, 2001 - 2004
Estimates and Forecasts
Tracking the EiU’s Forecasts for
World GDP growth in 2002 and 2003
percent

Note: World GDP growth rates are based on

exchange rates at Purchasing Fbwer Parity.

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Recent indicators suggest that the euro is forecast at 3.7 to 4.1 percent. Higher
region’s economy likely shrunk in the first growth is forecast for all regions,
quarter and may, at best, remain flat in especially for Latin and North America
the second quarter. Economic growth in and for the European Union (EU).
the US economy has also weakened in
recent months and the risk of a double None of the forecasts examined include
dip recession has increased. The the negative effects of the SARS
OECD’s Composite Leading Index for its outbreak on world economic growth. It is
member states, all major developed apparent that SARS is having an impact
countries, has been weak since mid 2002 on economic growth in a number of
and falling in the first months of 2003. Asian economies, most notably in Hong
Kong, Taiwan and China. As a result, the
World economic growth in 2003 is outlook presented here for a number of
expected to be only marginally higher Asian countries and for the region as a
than in 2002, at 2.9 to 3.2 percent. whole probably have some upward bias.
Growth will be low in the first half of this The overall impact on world growth,
year, but should improve in the second however, will likely be small, as
half. Although growth in household containment measures continue to
spending is expected to be less in 2003 strengthen.
than in 2002, inventory re-building and a
small turn-around for investment Most of the forecasts were also made
spending should boost overall world GDP when a quick resolution of the war in Iraq
growth. was not yet in sight. As long as there is
no further escalation of hostilities in the
Growth in the NAFTA region is expected Middle East, the recent drop in crude oil
to be similar as in 2002, weakening prices and recovery in the stock market
slightly in the US and Canada, but should hold up, which could have a small
strengthening in Mexico. The recovery in positive impact on economic growth in
the euro region was short lived and a the remainder of 2003 and possibly also
recession in the first half of 2003 cannot in 2004. Reconstruction spending could
be ruled out - Germany’s outlook is also provide a small boost to world
particularly poor. Japan is also on the
brink of recession, but most other Asian growth.
economies will expand strongly. Latin The outlook for the global travel and
American growth will remain low as a tourism industry remains clouded. The
result of a deepening of the recession in war in Iraq, the risk of further terrorist
Venezuela and low growth in Brazil. attacks and more recently SARS (Severe
Fairly strong growth is forecast for the Acute Respiratory Syndrome) have all
Middle East, Africa and Eastern Europe. taken their toll on this industry. The US
and the Middle East (terrorism) and Asia
The fundamentals are in place for (terrorism and SARS) continue to be the
stronger growth after 2003, mainly most at risk, although the winding up of
because of monetary and fiscal stimulus, the war bodes well.
on-going structural reforms and robust
improvements in productivity. Moreover, Significant downside risks to these
the capital overhang, which resulted in forecasts remain. These concerns
declining investment spending during the include:
past two years, appears to have largely • Imbalances in the US, including the
been worked off, thereby setting the huge trade deficit and private sector
stage for stronger investment growth in debt, as well as the more recent
the years ahead. For 2004, world growth large federal deficits.
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• The recent run-up in the euro, which

World trade is forecast to increase by
could hamper the euro region’s between 4.3 and 6.2 percent in 2003,
economic recovery.
• Additional terrorist attacks on the US with most of the growth coming in the
or other western or Asian second half of this year. Import growth
economies, or an escalation of will remain strong in a number of Asian
hostilities in the Middle East or on tigers, such as China, South Korea and
the Korean peninsula. India. Developed markets, such as
• Financial sector problems, a huge Japan and the EU, will start to
public debt and persistent deflation experience a recovery in imports flows.
A recovery is also expected for US
are hampering Japan’s economic imports, although the recent decline in
recovery.
• The recent slowing in the demand the US dollar could have some negative
for IT equipment could cause effects on these imports. After declining
economic growth to fall in major IT sharply in 2002, South American imports
producers, many of which are could see marginal growth in 2003.
located in Asia.
• Further economic crises in emerging Higher growth of around 6 to 8 percent is
countries, especially in Latin forecast for 2004. Asian import growth
America. will remain robust, while improving
domestic demand in Western Europe
• Additional fall-out effects from the
and North and South America will
sharp stock market declines,
translate into higher import growth for
especially on Germany and Japan’s these regions.
banking and insurance industries.
• The possibility that Asia’s SARS The outlook for short and medium term
outbreak cannot be contained in a
timely fashion: most at risk are World Trade Growth, 2001 - 2004
China and Taiwan. Estimates and Forecasts
• Labour market rigidities, costly social
programs and a weak banking
industry will hamper Germany’s
economic recovery.

World Trade
World trade volumes grew by between
2.9 and 3.6 percent in 2002. Asian
exports expanded strongly, especially
from Japan, South Korea, Hong Kong,
China and India, as did exports from
Eastern Europe. Exports declined in
many developed economies, such as the 2001 2002 2003 2004
US, Australia, the UK and Italy. Imports
were up strongly in most Asia Pacific trade growth has deteriorated since 9/1 1 ,
countries, including Australia and China, and it is unlikely that the strong growth
and in Eastern Europe, but fell in South numbers of the nineties will be replicated
America (especially in Brazil and over the next decade. The risk of doing
Argentina), and in many Western business globally has increased, as has
European countries (especially in its cost, because of higher insurance and
Germany and Sweden). security costs and border delays.
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North America After expanding by 2.4 percent in 2002,

because of relatively strong consumer
The economies of North America were spending and surging military spending,
gaining strength in the first half of 2002. the US economy could expand by about
But, in recent months, the economic 2.3 percent in 2003. Most of the growth
prospects for both Canada and the US in 2003 will come from military spending
have deteriorated somewhat, and there and inventory rebuilding. Net exports are
is growing evidence that growth slowed expected to continue to fall, as import
markedly at the end of 2002 and in early growth is forecast to exceed export
2003. By the end of this year both growth, even with the lower US dollar.
countries should be back in full recovery Growth in consumer spending will be
mode, followed by strong growth in 2004. much lower than in 2002, because of
weaker spending on durables.
United States
U.S. GDP Growth, 2001 - 2004
Estimates and Forecasts
The United States’ economy expanded
strongly during the first three quarters of
percent
2002, fueled by strong consumer and
military spending. However, growth
weakened in the fourth quarter of 2002
and the first quarter of 2003, as exports
declined and growth in consumer
spending moderated, partly because of
continued weakness in labour markets.

Lackluster growth is also forecast for the

second quarter of 2003, because of weak
(although improving) consumer and
business confidence, which could lead to
low growth in consumer and investment
spending. The US economy is expected
to see much stronger growth towards the
end of 2003 and in 2004, as consumer The US economy will pick up steam in
2004, reaching between 3.1 and 4
and investment spending improve.
percent growth as investment spending
The US economy will derive significant and exports recover, inventories are re-
benefits from the effects of the lower oil built and consumer spending
strengthens.
prices, which resulted from the quick
resolution of the war in Iraq, as well as
from the reconstruction spending. Alberta US Portland Office:
However, the costs of occupation and ‘The Pacific Northwest continues to suffer
from weakness in the transportation, high
peacekeeping and of reconstruction will
tech, and natural resource sectors. Large
put significant strains on the US budget.
state budget deficits and subsequent
A detailed analysis by William Nordhaus cutbacks are providing a drag on already
put the costs of occupation and weak economies. The poor global
peacekeeping at between $75 and $500 economy has also caused difficulties for
billion over a ten-year period, while
reconstruction could cost a further $25 to these export dependent states.”
$100 billion. The bulk of these costs will
likely be borne by the US government.
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There are some risks to this forecast. have a positive impact on consumer
The employment situation remains spending.
precarious: in mid April initial claims for
unemployment insurance exceeded After declining in 2002, business
400,000 for a ninth consecutive week. investment has started to improve in
Further unemployment increases could 2003. Although 2002’s stellar growth in
pose a serious threat to consumer residential construction will not be
confidence and further weaken private replicated in 2003, this sector will
spending. The possibility of another continue to make a positive contribution
terrorist attack and imbalances in the to overall GDP growth.
economy, specifically the high current
account deficit, growing levels of GDP is expected to grow by 3 to 3.4
household and corporate debt and the percent in 2004, as exports increase
return of federal deficits, are other sharply and domestic demand
causes for concern. Further corporate strengthens, as a result of stronger
scandals could undermine already low growth in business investment and
levels of confidence in the US. consumer spending. Residential
construction is forecast to decline, as
Canada recent activity levels will prove to be
unsustainable.

Canada’s economy outperformed all of Canada’s GDP Growth, 2001 - 2004

its G7 partners in 2002, with GDP rising Estimates and Forecasts
by 3.3 percent. Surprisingly, it was little
affected by the US slowdown, partly
percent
because of inventory re-building and
strong consumer spending - a result of
higher wages and employment levels.
However, the US slowdown started to
impact economic growth, as export
volumes dropped in the fourth quarter of
2002 and in the first quarter of this year.
Consumer spending remained strong in
the first quarter of 2003, as retail sales
and housing starts rose sharply.

For the year 2003, slightly lower growth

of 2.7 to 3.2 percent is forecast, as a
result of a steep drop in net exports. The
recent strength of the Canadian dollar
combined with the weak US dollar will A recent study by CBoC estimated the
effects of SARS on the Toronto and
negatively impact Canadian exports,
especially to the US, and boost import Canadian economies. The major
growth. Mad cow disease will seriously impacts are on Canada’s tourism and
affect exports of agricultural products. travel industry and on Toronto’s retail
sector. Overall, Canadian GDP could be
The recent federal budget will contribute lowered by as much as $1 .5 billion,
an estimated y2 percent to GDP growth, which equates to be about 0.15 percent
and will lead to strong advances in of GDP. Two-third of the economic
government spending, especially public impacts will be concentrated in the city of
investment spending. Recent Toronto, and its GDP growth could fall by
employment gains and the budget should y2 percent as a result of SARS. Nation-
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wide the travel and tourism industry US demand. In Brazil, economic growth
could lose just over $1 billion in strengthened gradually throughout the
revenues. year because of a recovery in industrial
output.

Latin America Latin America’s economic growth will

remain low in 2003, mainly because of
In 2002, the Latin American region was the crisis in Venezuela and weak
consumer demand, with growth rates
in the second year of the region’s worst
recession in twenty years. Last year, forecast at 1 .5 to 1 .8 percent. Higher
economic output fell mainly because of growth of between 3 and 4 percent is
the crises in Argentina and Venezuela, forecast for 2004 as capital investment
but also because of the US slowdown, and consumer spending recover.
and lower consumer and business
confidence. Many of the region’s Mexico
currencies declined in 2002, resulting in
high inflation rates and rising interest
Mexico’s economy expanded by a mere
rates. By the end of the year, GDP 0.9 percent in 2002, because of weak
growth turned positive, driven by strong export growth and a decline in
exports. investment. In addition, growth in
consumer demand was lower than in the
Latin America’s GDP Growth previous year.
2001 - 2004
Estimates and Forecasts
Mexico’s manufacturing output in the
maquiladora region plunged in 2001 and
2002, because of the downturn in the US
manufacturing industry combined with
higher wages and NAFTA regulatory
changes. In late 2001 , NAFTA cancelled
duty-free status for maquiladora inputs
originating outside of North America.
Alberta Mexico Office:
“Mexico has strong fundamentals -
decreasing inflation, low country risk
spreads, sustainable external deficit, low
fiscal deficit, and almost US$ 50 billion in
2001 2002 2003 2004 international reserves. As well, the
government will keep spending under
control, even if budget cuts are needed.”
Argentina’s output declined by more than
ten percent in 2002. Venezuela entered
For 2003, stronger export led growth of
a deep recession because of political 2.3 to 3.2 percent is forecast. Net
unrest and a large reduction in oil output,
exports grew for an eighth consecutive
that could reduce its economic output by
month in March (on a year-over-year
one quarter by the time it’s expected to basis) as exports recover because of
be over. Argentina’s crisis also had spill- higher US imports. Investment is
over effects on Uruguay and Paraguay, expected to rebound because of
and to a lesser degree also Brazil. increased foreign investor confidence
Strong underlying fundamentals caused
Mexico to emerge from its 2001 due to Mexico’s sound government
policy. Recent interest rate hikes,
recession, which was caused by weak
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caused by an acceleration in inflation, weak growth in consumer demand and

and tight fiscal policies, could lead to a industrial production caused by high
weakening of consumer demand. interest. Net exports will continue to
jump, and investment levels should re-
In 2004, the economy should achieve a bound.
higher growth rate of between 3.1 and
4.5 percent growth, led by stronger Growth should accelerate to between 2.7
growth in consumer spending and and 3.5 percent in 2004 as the world
business investment, and renewed economy continues to improve, interest
strength in exports. rates fall and investment spending
strengthens further.
Brazil
Brazil’s GDP Growth, 2001 - 2004
The Brazilian economy advanced by only Estimates and Forecasts
1 .5 percent in 2002, because of a sharp
decline in domestic demand. Consumer
spending and capital investment fell,
while inventory draw-downs also made a
negative contribution to GDP. However,
lower domestic demand was more than
offset by a strong rise in net exports -
exports grew strongly and imports fell
sharply.

Brazil still faces some risks. First and

foremost is the large current account
deficit, which makes the country highly
dependent on foreign capital flows, and
therefore sensitive to speculation among
foreign investors. Although financial
contagion has largely been contained,
there is the looming risk of additional Argentina
spillover effects from Argentina, Brazil’s
second largest export market. Argentina has been in a recession since
1 999. Real output dropped by about 1 1
Investor reaction to the recent election of percent in 2002, because of very steep
President da Silva has so far been declines in consumer and business
generally positive, with a steady drop in spending. However, Argentina may have
the country risk premium. The new emerged from its recession in the second
government is committed to reducing the half of 2002, because of strong export
public debt: it is targeting a substantial led growth in industrial output. By the
fiscal surplus this year, and is planning end of the year, domestic demand also
for a budget surplus of 414 percent for started to improve.
2004 to 2006. Recent inflationary
pressures have been answered with The floating of the peso in early 2002 led
significant interest rate hikes. to a sharp depreciation in the Argentina
currency, which caused a tripling in the
Only a slight improvement in economic trade balance. It, however, also caused
growth is forecast for 2003, ranging from real wages and government spending to
1 .8 percent to 3 percent, as a result of decline.

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The outlook for the Argentine economy is the US (export market), explain the
probably the most clouded of the recent deterioration.
outlooks examined in this report.
Considerable uncertainty remains about For 2003, most forecasters surveyed are
the government’s willingness to expecting lackluster growth of about 1 to
undertake the necessary structural 1 Vz percent for the EU economy.
reforms, especially in light of public Domestic demand growth could be
unrest. A long term IMF program to higher than in 2002, partly because of
improve the country’s credit worthiness recent interest rate drops, but net exports
and fiscal performance will be a tough are likely to fall, partly because of the
sell to a government under pressure to strong euro. A return to normal growth
relieve its people’s economic hardships. rates is not expected until the third or
fourth quarter, when global economic
As a result, economic growth will likely growth is expected to strengthen.
remain lackluster over the short term and
inflation is expected to persist. For 2003, Economic growth in 2004 is forecast to
forecasts range from a further contraction be nearly double that of 2003, at
up to growth of 4.4 percent, depending between 2 and 2.7 percent, close to its
on whether domestic demand recovers. long term potential. Consumer spending,
For 2004, 4 to 5 percent growth is and especially investment and exports
expected, on the back of strong growth in should strengthen.
domestic demand.
Euro Zone’s GDP Growth
2001 - 2004
European Union Estimates and Forecasts

Economic growth in the European Union

slowed to about one percent in 2002, and
may have actually declined in the first
quarter of 2003. Geo-political uncertainty
and high oil prices resulted in low
consumer and business confidence that
translated into very weak domestic
demand. Unemployment has been on
the rise in most countries and capital
investment is declining.

Germany, France and Italy narrowly

avoided another recession, but a number
of the region’s smaller economies, such
as Portugal and the Netherlands, may
Risks to the outlook for the EU include:
have slipped into recession by year-end.
Most Ell countries had lower growth than • Further appreciation of the euro could
in 2001 , an already dismal year. hamper the EU’s recovery, as it
would likely result in lower exports.
Euroframe’s leading growth indicator for • Lack of progress towards structural
the euro region suggests that GDP likely labour reforms, especially in
fell in the first quarter of 2003 and will
remain flat in the second. Weaker Germany, to improve the region’s
competitiveness.
business and consumer confidence in
the euro region (domestic market) and in
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United Kingdom negative in the first quarter of 2003 as a

result of a decline in net exports.
Domestic demand declined for a second
The UK’s economy was again better
insulated against the global slowdown consecutive year in 2002, as capital
than its EU partners. The economy investment continued to fall and
expanded by 1 .8 percent in 2002, as a consumer spending followed suit.
result of strong domestic demand. Overall, the German economy expanded
Consumer and defense spending in by 0.2 percent in 2002.
particular remained strong. However,
exports and capital investment declined, The German employment situation
remains dismal, with the unemployment
and the manufacturing sector’s recession rate already exceeding 1 1 percent, up
deepened.
from less than ten percent at the start of
As net exports declined, GDP growth 2002.
weakened slightly in the fourth quarter of
2002, and slowed sharply in the first Falling domestic demand has also led to
quarter of 2003. The manufacturing lower inflation rates, and Germany may
industry expanded in the first quarter, be poised to enter a deflationary period.
and has recently improved its productivity Consumer demand could be stimulated if
performance. However, business and interest rates were low enough.
consumer confidence fell sharply in the However, these rates are not set in
first months of 2003. With the tensions Germany but rather by the European
easing in Iraq economic prospects will Central Bank, and are too high for
improve in the second half of 2003. Germany’s consumers and corporate
sector. Moreover, fiscal policy has
Growth in 2003 will likely come in closer
become restrictive, as Germany’s
to the lower end of the range of forecasts government deficit has exceeded the EU
examined in this report (1 .7 to 2.3 prescribed limits. As a result, business
percent). The April consensus forecast and consumer confidence have fallen
for 2003, as reported by the UK Treasury sharply in recent months. The war in
department, came in at 1 .9 percent, Iraq and high oil prices have also taken
almost one percent lower than the their toll on confidence levels.
consensus forecast of 2.8 percent back
in June 2002. Growth again will be The outlook for Germany remains bleak:
centered around the consumer and the in 2003, GDP is forecast to increase by
public sector (strong growth in health and 0.3 to 0.7 percent. Growth will be partly
military spending). export led, as consumer spending and
investment is forecast to decline again.
A turn-around for exports and However, the recent appreciation of the
investment, combined with inventory re- euro could cause export growth to be
building, could result in higher growth of lower than in 2002.
2 to 2.6 percent in 2004.
The turnaround factor for 2003 could be
Germany inventory levels, which, after their sharp
decline in 2001 and the first part of 2002,
Germany emerged from its 2001 are expected to be built back up, thereby
recession in the first part of 2002 with providing a boost to economic growth.
fairly strong export led growth. However,
growth weakened as the year Once the world economy recovers, so
will German business and consumer
progressed, and turned negative in the
last quarter of 2002. It remained confidence. Higher growth of 1 .5 to 1 .9
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percent is therefore forecast for 2004, as • Reducing the high costs of public
domestic demand, especially investment healthcare by increasing the role of
and private consumption, recovers. The private healthcare.
foreign sector is not expected to make a
strong positive contribution to the Although these changes, once
German economy in 2004, as import implemented, will have a positive impact
growth could exceed export growth. on employment and economic growth,
further structural reforms will still be
necessary.
Germany’s GDP Growth
2001 - 2004
Estimates and Forecasts France

In 2002, France’s economy expanded by

1 .2 percent, as a result of solid growth in
consumer and government spending and
exports. Although the rate of GDP
growth declined steadily throughout the
year, France’s performance by year-end
was much better than Germany’s and
was largely driven by consumer
spending. As in many other economies,
inventory draw-downs again lowered
overall GDP growth.

For 2003, similar growth of between 1

and 1 .7 percent is forecast. First quarter
GDP results will probably show modest
Alberta Germany Office: growth. Investment could decline again
“In stark contrast to Canadian banks, in 2003, consumer and government
German banking reports this year have been spending growth will be lower than in
compared to those of Japanese banks. Last 2002, but inventories should make a
year two major banks declared bankruptcy,
and another three are on the brink. positive contribution to GDP. Growth in
consumer spending will be low, because
Germany’s banks cut 35,000 jobs in 2002. of low consumer confidence and rising
The banking industry started too late with
restructuring and has been severely unemployment. Business confidence
challenged by the global downturn and the has also been falling again in recent
months. However, the federal
pressure to cut costs.”
government has little room to stimulate
Chancellor Schroeder recently the economy, as its budget deficit has
also exceeded the EU limits.
introduced “Agenda 2010”, a package of
reforms designed to reduce rigidities in
Higher growth of 2.2 to 2.6 percent is
Germany’s labour market and in its social expected in 2004. A stronger global
welfare system. Proposed changes
economy will lead to much higher export
include:
growth, while investment is also
• Reducing unemployment support expected to make a positive contribution
levels,
to GDP growth, as will inventory
• Making it easier for firms to hire rebuilding. Growth in private and
additional temporary staff, government consumption is expected to
• Loosening of firing-protection rules, remain weak.

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Eastern Europe gains and falling interest rates. All

countries are forecast to see their
Economic growth remained high in the economies expand in both 2003 and
Eastern European region at about 4 2004. Growth in the two sub-regions is
percent because of strong domestic expected to converge, as the recovery in
demand arising from income gains and Western Europe will boost exports from
falling interest rates. The slowdown in east-central Europe, while growth in the
Western European markets impacted the CIS region could be marginally lower
than in 2002 because of lower (but still
region’s exports much less than strong) growth in consumer spending in
expected.
Russia. Forecasts for the region as a
whole are for growth of about 4 percent
The two sub-regions, the Commonwealth in both 2003 and 2004.
of Independent States (CIS) and east-
central Europe, registered positive
growth in 2002. Growth was particularly The CIS region could see growth of just
strong in the CIS (former Soviet Union), over 4 percent in both 2003 and 2004.
especially in Azerbaijan, Kazakhstan, The region’s economic prospects depend
Turkmenistan and the Baltic states on the outlook for Russia, which
(Estonia, Lithuania and Latvia). The accounts for two-thirds of the CIS
strength of the Russian economy economy and is a major export market
continued to drive growth in a number of for the other states. Trade within the
CIS members. The CIS economy grew region will continue to rise, especially in
by about 4V2 percent in 2002, and Russia 2003, as Russia’s crude oil export
by 4.3 percent, because of very strong revenues and domestic spending remain
consumer spending. High prices and strong. Other oil-exporting countries,
increased volumes caused energy such as Kazakhstan and Azerbaijan will
exports to jump. stay on a rapid growth path.

An investment led recovery in Poland

East-central Europe’s economy
expanded by just over 2V2 percent, and higher growth in the Czech Republic
mainly because of lack-luster growth of (resulting from robust exports) will
1 .3 percent in Poland caused by a sharp contribute to the improved outlook for
decline in capital investment. Growth in east-central Europe; GDP could expand
the Czech Republic decelerated to two by nearly 4 percent in 2003 and slightly
percent, also because of weak more in 2004. Growth in Hungary and
investment. The Balkans, and especially the Balkans should remain vibrant and
Albania, Bulgaria and Romania, will largely be investment led.
expanded strongly in 2002 as a result of
strong exports and investment. Turkey is expected to see lower
(investment led) growth in 2003, mainly
as a result of the war in Iraq and ensuing
Turkey’s economy pulled out of its steep
2001 recession, registering strong growth regional instability. Higher growth of
of more than 7 percent. However, almost about 4 percent can be expected for
all of this growth was the result of 2004 driven by export and investment
inventory building; investment and net
exports declined and consumer spending growth.
remained weak. Long-term growth prospects are good for
east-central Europe, because of recent
The outlook for Eastern Europe remains structural reform, large inflows of foreign
positive and will again be fueled by direct investment (FDI) and productivity
domestic demand resulting from income gains. Accession to the EU will likely
12
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

occur on May 1 , 2004 for eight middle For 2004, most forecasters call for
European and Baltic states, which should growth of 3.5 to 4 percent. Consumer
demand will remain strong although
also boost these countries’ prospects.
probably weaker than in 2003, capital
For the CIS, the long-term economic investment could improve, but oil prices
outlook is somewhat less clear: structural will likely decline.
reforms are progressing at a slower pace
and more diversification away from With most new investment going into the
energy is needed. In Russia, the low energy sector Russia has a growing
investment rate, lack of FDI and rather dependency on oil and gas that could
modest productivity growth are hamper its long-term economic
particularly worrisome. prospects. The manufacturing sector is
in decline as a result of disinvestments
Russia and aging of the capital stock, and
foreign investors are put off by the many
structural flaws in the Russian economy.
Russia’s GDP increased by 4.3 percent The Deutsche Bank in a recent analysis
in 2002, as a result of very strong growth
in private consumption and high oil of the long-term growth potential of the
prices. Robust domestic demand also Russian economy came up with a long
caused a surge in imports, which led to term GDP growth rate of between two
another large decline in net exports. The and three percent, partly because of its
trade balance, however, remains in a low investment to GDP ratio and the poor
large surplus position because of strong quality of its economic institutions.
oil prices.

The 2003 outlook is for economic growth

Asia Pacific
to moderate to 3.8 to 4 percent, as
consumer spending growth moderates to In 2002, the Asia Pacific region, which
includes such diverse economies as
just over 5 percent, oil prices remain high
and net exports continue to drop. The Japan, China, India, the ASEAN
recent appreciation of the ruble is a (Association of South-East Asian
concern for exporters. Nations) and Australia, saw higher
growth than in the previous year. The
entire region expanded by at least 2.5
Russia’s GDP Growth, 2001 - 2004 percent (estimates vary depending on
Estimates and Forecasts what economies and how the economies
were combined). Growth was again held
back by Japan’s weak economy - Asia
Pacific excluding Japan grew by more
than 5 percent.

The region’s improved performance was

the result of a strong turnaround for
exports and higher growth in domestic
demand. The region’s increasing
dependence on intra-regional trade,
especially to and from China, has
insulated it somewhat from the global
slowdown. Intra-regional trade in IT
equipment was very strong in 2002.
Moreover, exports to the US and other
13
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

developed nations strengthened. The second quarter will be very weak for
Personal consumption was booming Asia because of SARS, which is affecting
(except in Japan), because of rising business and consumer confidence in
incomes and the increased use of credit. the entire region. It is not only impacting
By the end of 2002, however, consumer economic growth in Hong Kong, China,
confidence slipped, as a result of global Taiwan and Singapore, but also on other
and local uncertainties, and remained countries, such as Japan, that have
weak in the first quarter of 2003. strong trade links with the SARS
countries. GDP could decline in Hong
Growth by major country/trading bloc in Kong, Taiwan and China in the second
2002 was as follows: quarter. As long as disease is brought
■ The ASEAN-4 (Indonesia, Malaysia, under control, the Asian economy should
Philippines and Thailand) grew by just be back on track in the second half of
over 4 percent. GDP growth ranged 2003.
from about 3Vz percent in Indonesia to
5 percent in Thailand. Consumer The current forecasts of just over 2Vz
spending was strong in all four percent GDP growth for the Asia Pacific
countries, while exports recovered in region (5 to 6 percent without Japan) in
all countries except Indonesia. 2003, is probably optimistic, as they were
■ The NIC (newly industrialized prepared without the economic costs of
countries) region of Hong Kong, South SARS. Estimates of the SARS impacts
Korea, Taiwan and Singapore,
on Asian GDP range from the ElU’s 0.1
expanded by 41/2 percent. The to 0.2 percent decline for emerging Asia
economies of Hong Kong and
to [Link]'s 0.6 percent downward
Singapore expanded by about 2 revision for all of Asia.
percent, Taiwan by 3Vz percent, and
South Korea by 6.3 percent. Exports In 2003, economic output for the region
rose strongly in all four countries, but will be constrained by lower growth in
domestic demand was very weak exports and consumer spending. Higher
except in South Korea. growth of more than 3 percent is forecast
■ China’s economy continues to fire on for 2004, as a result of much stronger
all cylinders, expanding by 8 percent. domestic demand, with improvements in.
■ Japan emerged from its recession, consumer spending and investment.
with an export led 0.6 percent GDP
increase.
■ India grew strongly by between 41/2 ASEAN-4
and 5 percent, as weak growth in The ASEAN-4 will see slightly lower
consumer spending was more than growth of just under 4 percent in 2003,
offset by a greater than 10 percent returning to near normal levels of 4.3 to
jump in exports.
4.4 percent
tourism in 2004.
industry will beTheunder
region’s
pressure
■ Australia’s economy was fueled by
very strong domestic demand, with again, this time from the recent terrorist
GDP increasing by 3.8 percent. attack in Bali and bomb attacks in
Mindanao. SARS will have an impact on
The outlook for the Asia Pacific region is tourism from China and other Asian
largely positive, but fraught with countries.
uncertainty. First quarter results were
strong for China and Thailand, but point For 2003, Indonesia will be the worst
to weaker growth in South Korea and
performer with less than 3.5 percent
Singapore and possibly negative growth
growth, followed by the Philippines at 4
in Japan.
percent and Malaysia and Thailand at 4.5
Alberta Economic Development
14
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

to 5 percent. Consumer spending growth forecast to rebound. This should cause

will moderate, especially in Indonesia, GDP growth to rise to at least 5 percent
while investment strengthens and in 2004. Recent economic restructuring
exports continue to expand. will continue to pay dividends for the
Korean economy over the long run.
In 2004, all countries, with the exception Alberta Korea Office:
of Malaysia, are forecast to expand by 4
to 4V2 percent. Higher growth of 5.1 to “President Elect Roh is a conservative, and
wants to see a vibrant South Korean
5.8 percent is expected in Malaysia. The economy. He may place emphasis on
improved global situation will benefit the restructuring the Chaebols, which will allow
region’s export performance. the small and medium enterprises to
flourish. This should have a positive
Newly Industrialized Countries impact on the economy.”

The NIC region is forecast to expand by Hong Kong

approximately 4 to 4Vz percent in 2003,
and by 4V2 to 5 percent in 2004. This
recovery will be mostly export driven. Hong Kong’s economy grew by 2.3
percent in 2002, as a result of slumping
domestic demand (both consumer
South Korea spending and investment declined)
caused by deflation (falling property
South Korea was one of Asia’s stellar prices) and high unemployment. Exports
performers in 2002. GDP grew by 6.3 increased strongly, especially to China
percent, because of very strong domestic and the rest of Asia. Most of Hong
demand, especially consumer demand, Kong’s economic expansion took place in
and a 15 percent increase in export the second half of 2002.
volumes (exports of information
technology rose 20 percent). Although a number of forecasters, such
Productivity in the manufacturing sector as the IMF, are still forecasting growth of
improved by more than 10 percent. 2 to 3 percent for this year, this will likely
prove to be too optimistic a forecast
Consumer and business demand are because of the impact of SARS. In a
weakening sharply as a result of the recent revision, the EIU lowered 2003
North Korean crisis, rising consumer growth from 2.5 to 0.3 percent, solely as
debt, SARS and low confidence levels. a result of the effects the disease is
Investment, especially by foreign having on Hong Kong’s economy. Even
sources, will likely decline. Growth in so, this forecast is based on a quick
consumer spending (and also in imports) containment of the disease. In particular,
will be much lower in 2003. Exports SARS is affecting tourism, retail and
however, which account for more than 50 restaurants.
percent of the economy, remain very
strong, partly because of a rebound for Higher growth of close to 4 percent is
semi-conductors. As a result, total GDP forecast for 2004. Exports, especially to
is forecast to expand by 4 to 5 percent in China, are expected to strengthen and a
2003. turn-around is forecast for domestic
demand, for capital spending in
Export growth will remain robust in 2004, particular.
although lower than in 2003, because of
the appreciation of the won. Domestic The gradual integration of Hong Kong
demand, especially capital spending, is into China, however, is also having
15
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

negative implications for Hong Kong on expansion of 3.7 to 5 percent in 2004.

property values, employment and wage Consumer spending and investment
levels. Prices and wages in Hong Kong should also be robust in 2004.
and the province of Guangdong are
slowly converging. Alberta Taiwan Office:
‘Taiwan’s IT companies have a more
Another concern for Hong Kong is optimistic outlook than last year. Output of
declining government revenues caused the IT industry is expected to grow to $54
by the bursting of the property bubble billion in 2003, an increase of 8.8 percent
and the relocation of businesses to over the previous year.”
mainland China. If fiscal deficits
continue, this could eventually introduce
macroeconomic instability. Fighting the Japan
budget deficits has become the
Japan’s economy started 2002 on a
government’s top priority. strong footing with an export led
expansion through the first three
Alberta Hong Kong Office: quarters. However, fourth quarter results
“New opportunities arise from a more pointed to another slowdown, causing
transparent and predictable China,
GDP to advance by a mere 0.3 percent
especially after its accession into the World
for all of 2002. Private consumption
Trade Organization. Hong Kong’s grew more slowly than in the previous
integration with the Pearl River Delta
economies will provide a new avenue for year and investment declined again.
Deflation and a weak banking sector
growth.”
remain the nation’s major problems.
Taiwan Japan is also very concerned about the
geopolitical developments on the Korean

In 2002, Taiwan’s GDP increased by 3.5 peninsula.

percent, because of strong exports and
production of electronics and information First quarter production estimates
suggest that Japan may be falling back
technology equipment. Hong Kong,
into a manufacturing recession, as a
transit point for trade with China,
result of an export slowdown. This
replaced the US to become Taiwan’s top weakness will likely continue in the
export market. Domestic demand
remained weak, which was also reflected second quarter because of anemic
growth in the US and the euro zone, and
in mild downward pressures on
the undermining effects of SARS on
consumer prices.
intra-regional trade.

The impacts of SARS on Taiwan’s Forecasts for 2003 range from 0 to 1 .2

economy have become significant, and
percent growth. Although exports will
the World Health Organization recently
issued a travel advisory for Taiwan. likely make a positive contribution to
Therefore, current forecasts of GDP GDP, consumer spending will see little or
no growth and investment is expected to
growth of 3 to 3.7 percent for 2003 are decline. Consumer demand is held back
probably too high. Consumer demand
by low confidence levels, increasing
and tourism in particular will be weaker
unemployment, persistent deflationary
than anticipated, although exports should
remain strong. pressures and declining real disposable
incomes. Social security reforms will
further reduce disposable income.
Even higher growth in exports, especially
to China, should contribute to a GDP
16
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

of unprofitable companies to remain in

Japan’s GDP Growth, 2001 - 2004 business needs to be dealt with. This
Estimates and Forecasts

percent would however add to the country’s

3 deflationary and unemployment woes.

China

China’s economy was little affected by

the global slowdown. The Chinese
economy expanded by 8 percent in 2002,
again led by robust growth in investment
and exports, while growth in private and
public consumption also strengthened.
Industrial output increased sharply, as
did FDI, partly as a result of China’s entry
into the World Trade Organization
2001 2002 2003 2004
(WTO).
The recovery will be in full swing in 2004, Similar GDP growth of 6.8 to 8 percent is
and will be based on higher exports and forecast for 2002. The economy surged
inventory restocking. GDP growth of 0.6 by nearly 1 0 percent in the first quarter,
to 1 .6 percent is forecast on the basis of but the effects of SARS on the economy
a stronger world economy, which would are being felt in the second quarter
translate into rising exports. Growth in through lower tourism revenues and low
domestic demand is expected to again growth in consumer spending and
be sub-par, and investment levels could domestic trade.
continue to fall.

Japan’s economy will remain sluggish in China’s GDP Growth, 2001 - 2004
the medium term, as domestic demand Estimates and Forecasts
remains weak. Deflation will likely persist
for at least a number of years - a burden
for a country with non-performing loan
problems and a huge government debt.

Alberta Japan Office:

‘The impact of Japanese companies shifting
their production bases overseas to places
such as China has been large. According to
a Ministry of Economy, Trade and Industry
study, the share of overseas production by
Japanese manufacturers out of their total
production has more than doubled to 14.3
percent over the last ten years."

Although the government has made

progress towards restructuring the
banking sector, the structural problems in As long as the disease can be contained
the non-financial sectors, such as retail quickly overall growth will not suffer too
trade, construction and distribution much and likely come in at close to 7
remain. To increase efficiency, the ability percent. The impacts of SARS on the
Chinese economy will not be as severe
17
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

as in Hong Kong or Taiwan, because declined marginally while strong

China’s two main economic drivers, domestic demand pushed import
investment and exports, are largely volumes up sharply.
unaffected. Although growth in
consumer spending will be lower than in The economy may have slowed in recent
recent years, this will be offset by strong months, as April was the third
growth in exports and investment. consecutive month of employment
losses. Moreover, SARS could affect
The economy will expand at a slightly trade and tourism with Asia in the months
higher rate of between 7.5 and 8 percent ahead. In 2003, GDP growth is expected
in 2004. Growth in consumer demand to drop to 3 to 3.2 percent, because of
will be much stronger than in2002, while lower growth in domestic demand,
investment and exports will continue to especially in consumer spending and
expand at a robust pace. investment, and lower agricultural
production because of the recent
Consumer spending will play an ever drought. Net exports could decline
increasing role in China as it continues again, although exports should rebound.
on its path to becoming a market based
economy. Consumer credit has been For 2004, slightly higher growth of 3.4 to
rising sharply and accounted for 8 3.8 percent is forecast. Domestic
percent of GDP in 2002. 2003 will likely demand is expected to remain strong
be the sixth consecutive year in which and the global recovery should provide a
real wage gains have been in excess of major boost to exports.
10 percent. Chinese consumers are
spending more than ever on tourism and
consumer durables such as housing and Middle East
cars (China is Volkswagen’s number two
market after Germany). Economic growth in 2002 in the Middle
East, including North Africa, slowed to
Two major concerns for the Chinese less than 3 percent. Causes include
economy include the ever widening declines in crude oil production, regional
income gap between urban and rural instability, continued weakness in EU
export markets and in tourism revenues
workers, and the country’s increasing
public debt to GDP ratio. and recessions in Kuwait, Iraq and Israel.
Strong crude oil prices provided the
Alberta China Office:
major boost to the region's economy, but
volumes were down because of OPEC
“China is placing great importance on its
entry into the WTO, as well as its hosting of Iraq. cutbacks and declining output in
quota
the Olympics in 2008 and Expo in 2010.”

Australia The top performers in this region in 2002

were Turkey (rebound after previous
Australia’s economy performed better year’s steep recession), Iran (higher oil
than that of other large developed production) and Qatar (liquefied natural
economies, growing by 3.8 percent in gas exports). Besides recessions in
2002, solely as a result of very strong Kuwait and Iraq (lower oil production),
domestic demand. Private and and in Israel (bursting of IT bubble and
government consumption increased by regional security concerns), economic
just over 4 percent, while capital growth was very low in Saudi Arabia
investment jumped 14 percent. Net (lower oil production) and Lebanon (weak
exports tumbled, as export volumes domestic demand). 18

Alberta Economic Development

Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

In 2003, higher oil production and strong about 1 percent. Poor weather
oil prices may more than offset weakness conditions in eastern and southern
in global export and tourism markets, and Africa, political problems in Nigeria and
economic woes caused by regional Zimbabwe, weak global demand and the
instability. Most forecasters expect HIV/AIDS pandemic contributed to the
economic growth to be at least one low growth. Tourism revenues were also
percent higher than in 2002, with the lower than expected.
largest improvement forecast for the oil
exporters. Major downside risks: if the The strongest growth was recorded by
US and UK are incapable of stabilizing Angola, Uganda, Tanzania and Ghana.
Iraq or if Israeli - Palestinian violence Civil unrest and political instability
and unrest increase.
caused Zimbabwe’s GDP to decline
sharply again. GDP of the region’s two
The top performers in 2003 are expected economic powerhouses, Nigeria and
to be Qatar (liquefied natural gas and oil South Africa, grew by less than 1 percent
exports), Algeria (higher oil production), and by 3 percent, respectively. Domestic
and Iran (higher oil production and strong demand was strong in Nigeria, but
domestic demand) and Sudan (oil political unrest and OPEC production
cuts caused a decline in exports. South
exports). Iraq’s output will likely continue
to shrink, and Israel will register minimal Africa’s domestic demand, especially
growth because of weak US growth and investment, was also strong, but exports
the impact of increased violence on declined because of the global
tourism. Countries with strong economic manufacturing slump.
ties with Iraq (Syria, Lebanon and
Jordan), oil importers (Israel), and Slightly higher growth of 3 to 4 percent is.
countries dependent on tourism (Egypt forecast for 2003, as commodity prices
and Jordan) are not expected to perform remain strong and as long as weather
well in 2003. Overall, North African conditions improve to boost agricultural
countries are expected to outperform output. Most agencies expect an
Middle Eastern ones. expansion of at least 4 percent in 2004,
as domestic demand and export volumes
Still higher growth of 4 to 5 percent is (especially to Europe) strengthen.
forecast for the region for 2004, mostly Recent advances in structural reforms
and market liberalization should improve
because of strong rebound in Iraq’s
economic activity. The resurgence will the region’s export competitiveness.
be broad-based, and will be strongest for
African countries that are forecast to do
non-oil producing countries.
well in the short term include Chad,
in 2004, the top performers are expected Madagascar, Congo, Tanzania, Uganda,
to be Iraq (oil production and Kenya and Cameroon. Most of the
reconstruction), Iran (strong domestic region's oil producers, such as Angola
demand), Sudan (oil investment), Tunisia and Equatorial Guinea, are also
(tourism and agriculture) and Qatar (oil expected to see strong growth, as oil
and gas output). production and investment continues to
increase.

Africa For Nigeria, higher growth of at least 3

percent is forecast for this year, mostly
In Sub-Saharan Africa, 2002 GDP growth as a result of strong domestic demand.
was about 2Vz to 3V2 percent, but per Although political unrest was affecting oil
capita GDP growth remained anemic at production in the first part of 2003, output
19
Alberta Economic Development
Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

is expected to rebound strongly during years, while exports will improve

the remainder of the year, partly because gradually.
of higher OPEC quotas. Growth is
expected to accelerate further in 2004, A long-term concern for the region is the
as offshore oil production continues to HIV/AIDS epidemic. The World Bank
expand and investment in the natural gas estimates that one out of every three
sector rises. adults in Botswana is infected, and at
least one out of every four in Swaziland,
Zimbabwe and Lesotho. Other regional
South Africa’s economy is forecast to
expand by about 3 percent this year and concerns identified by the World Bank
by 3 to 3.5 percent in 2004. Investment include low levels of foreign aid and
is expected to grow strongly in both investment, civil wars and low commodity

prices.

20

Alberta Economic Development

Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

Appendix
Economic Growth Forecasts by Agency, Region and Country
(Gross Domestic Product Growth Rates in Percent)
2001 2002 2003 2004
Actual Actual Range Median Range Median

World (at Purchasing Power Parity) 2.1 -2.3 2.8 -3.0 2.9 - 3.2 3.7 -4.1
1.9 -2.3 3.1 2.8 - 3.2 3.9
World (at Market Exchange Rates) 1.1 -1.3 1 .5-1.9 3.0
2.1
World Trade Volumes i0 1 o 2.9 -3.6 4.3 - 6.2 6.1 -8.8 7.4
5.2

<j>
North America (US, Canada & Mexico) 0.3 2.3 - 2.7 2.4 3.4 - 3.6 3.6
2.4
2.3 3.5
United States 0.3 2.2 - 2.5 3.1 -4.0
2.4
2.8
Canada 1.9 3.3 2.7 -3.2 3.0 -3.4
3.2

1.6
Latin America (incl. Mexico) -0.3
0.3 -0.6 3.6
-0.1 --1 1.5 -1.8 3.0 -4.2
* Growth rates depend on whether countries were combined at PPP or at market exchange
2.5 rates
Mexico 0.9 2.3 - 3.2 3.1 -4.5 3.9
-4.4 1.5
Brazil 1.4 -10.9 1.8 -3.0 2.4 2.7 - 3.5
3.2
-2.5 - 4.4 2.6
Argentina 4.0 -5.0 4.1

0.8 1.1
Euro Region 1.4 0.9 -1.7 2.0 -2.7 2.4
1.8
0.5
Germany 0.6 0.3 -0.7 1.5 - 1.9
0.2 1.3
1.8
France 1.2 1 .0-1.7 2.2 -2.6
2.4
1.8 1.0
Italy 0.8- 1.1 2.0 -2.4 2.2
0.4
1.8 2.0 2.5
2.0
United Kingdom 1 .7 - 2.3 2.0 -2.6

0.0 -5.1 3.4 -4.3 3.1 -4.1 3.8 3.4 - 4.3

Eastern Europe (incl. CIS)* 3.7
4.1
Eastern Europe (excl. CIS) 2.7 -3.0 2.4 -2.9 3.0 - 3.8 3.5 - 4.3
3.2
* Growth rates vary as some forecasters include Turkey (recession in 2001) in the region

CIS 5.8 -6.3 4.4 -4.8 4.1 -4.4 4.1 4.0 -4.3
4.3 4.0
Russia 5.0 3.4 -5.0 3.5 -4.0 3.5

2.6
Asia Pacific 2.1
2.8
3.2
5.7 -6.5
3.7 -5.7 5.3 -6.5 5.1 -6.3
Asia Pacific (excl. Japan)* 6.1
5.7 21
* Growth rates depend on whether countries were combined at PPP or at market exchange rates

Alberta Economic Development

Policy and Economic Analysis
June 2003
 Global Economic Outlook, 2003 - 2004

2001 2002 2003 2004

Actual Actual Ranae Median Ranae Median

2.4 -2.6 4.1 -4.3 3.9 4.3 -4.4

ASEAN-4*
* Indonesia, Malaysia, Philippines, Thailand
-1.4 -0.9
NICs 2.8 -4.6 3.3 - 4.5
4.1 4.5 -4.9

* Hong Kong, Singapore, S. Korea, Taiwan

Japan 0.3 0.6 0.6 -1.6

0.4 0.0 -1.2
1.1
7.3 7.5 7.6
China 8.0 6.8 -8.0 7.1 -8.0
4.5
6.3
South Korea 3.1 4.0 -5.2 5.0 -6.0 5.3
-2.2 4.0
2.3
Hong Kong 0.6 0.3 -3.0 2.2 3.3 -4.0
4.5
Taiwan 3.5
3.0 - 3.7
3.5 3.7 -5.0

Australia 2.7 3.8 3.0 - 3.2 3.4 - 3.8

3.0
3.7
-1.1 4.0
-0.
Middle East (incl. North Africa) 2.0 -4.1 9 1.7 -4.5 2.9 - 5.0 3.9 -4.8
3.8
* Growth rates vary as some forecasters include Turkey r (recession ini 2001) in the region

Israel 0.3 -0.5 2.2 -3.1

3.5 3.5
Egypt 3.0 1.6 -3.8 3.0 - 4.5
3.0

Africa (Sub-Saharan) 2.3 - 3.5 2.6 - 3.4 3.0 - 3.8 2.8 - 5.4
3.8
2.2
South Africa 2.8 - 3.0 3.4 3.2 - 3.5
3.0

Release dates of forecasts:

Economist Intelligence Unit: February - April 2003
Export Development Corporation: February - March 2003
International Monetary Fund: April 2003
World Bank: April 2003
Kiel Institute of World Economics: March - April 2003
Conference Board of Canada: April 2003
[Link]: April 2003
OECD: April 2003

Note: Wherever available, official historical growth rates were used

Alberta Economic Development

Policy and Economic Analysis
22
June 2003
 National Library of Canada
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