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The World Economy

Section I. Recent economic developments

Published online by Cambridge University Press:  26 March 2020

Extract

The five years up until the end of 2000 saw a period of rapid growth in the world economy, with OECD output increasing by 3¼ per cent a year, and overall world output rising by 3¾ per cent a year. Sustained strong growth of this nature is an unusual occurrence. Once capacity limits are reached, growth is bound to slow. This is particularly likely if full capacity output is attained simultaneously in a number of regions, much as we believe happened in North America and Europe in 2000, where growth was 5 per cent and 3¼ per cent respectively. We anticipate that growth will slow to 1.9 per cent in North America and to 2½ per cent in the European Union in 2001. World growth is expected to slow to under 3 per cent in 2001, with OECD growth declining to under 2¼ per cent, which would be the weakest seen since 1993. Although this cannot be regarded as a deeply worrying slowdown, there are significant risks associated with our projections.

Type
Research Article
Copyright
Copyright © 2001 National Institute of Economic and Social Research

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References

Notes

1 We have data on financial wealth in all major economies, and we find that wealth effects are present in all countries, but they differ in importance depending upon institutions.

2 Details of these simulations can be provided to interested readers on request.

3 The national accounts data used in the forecast are those produced by the Deutsche Bundesbank which have been adjusted for both seasonal and calendar effects using a CENSUS X-12- ARIMA method.