Wednesday, April 11, 2007

Global Growth in 2007


The International Monetary Fund predicted that the world economy will grow by almost 5% this year! They also predict approximately the same amount of growth for the year of 2008 and if this occurs, it will make 6 straight years the economy has grown at over a rate of 4% and better. "By and large, things look very good," the IMF's new chief economist, Simon Johnson, announced happily at the release of the institution's semiannual World Economic Outlook report. Although this may seem exceptionally positive, there are those negative attributes that dim the lights.
A chance of oil price rise, sudden drops in the dollar, sell-offs in stock and bond markets, etc., are negative forecasts that may have a harsh effect on the global economy. Many people feel that the International Monetary Fund are just being too optimistic and the likely hood of this rash of econony growth is highly unlikely. "It's a no-brainer to say the risks are on the downside. As we move through 2007, I wouldn't be surprised to see the number slip below 4%." said Stephen Roach, chief economist at Morgan Stanley.
IMF states that the U.S. slowdown will quickly regain momentum, but the IMF reports it also depicts the plethora of factors can bring this to a quick halt. "A further cooling of the U.S. economy that increasingly spreads to weakness in consumption and business investment in 2007 would be challenging, particularly since the euro-area economy is likely to be slowing," IMF warned. So is Mr. Roach, an economist, says, "that the fast-growing economies of Asia might not be enough to compensate for a profound slowdown in the U.S. Slower U.S. growth means less appetite for imports, a sequence of events that could roll through China, Taiwan, Korea and even Japan."

1 comment:

brianhahn said...

I dont think it matters what happens. Its just like when the minnimum wage was increased so did everything else. if the price of the dollar decreases so will everything else. Businesses still need to sell to us and we still need to buy from them. Its a market that will work with each other.