WASHINGTON, APRIL 26. Although some slowdown in
the global growth rates was desirable and expected,
the slide is more than earlier expected though it
may be shortlived. The International Monetary
Fund in its World Economic Outlook timed for the
Spring Meetings has made it clear that the
outlook remained subject to considerable uncertainty
and that a deeper and a more prolonged downturn
was is clearly possible.

. . .

The IMF notes that by the end of 2000, economic
activity, especially in the United States clearly
weakened and a series of shocks - including
higher energy prices, reassessment of corporate
earnings and prospects, fall in equity markets
and technology stocks - had generated a marked
slowdown in domestic demand growth and a sharp
weakening in consumer and business confidence.
The IMF said the further setback to the ``already
fragile'' recovery in Japan ``is an additional
source of concern''

. . .

What if the slowdown in the U.S. is deeper and
more prolonged? The IMF points out three things:
first, there will be the greater risk of a spillover
not just through the financial markets but on
confidence as well. ``The global economy would
also become more vulnerable to adverse shocks,
such as a sharper-than- expected weakening of
activity in Japan''.

Secondly, the WEO says that there will be a greater
risk that the current account imbalances in the
major currency areas and the apparent misalignments
among the major currencies could unwind in a
disorderly fashion. And thirdly, lower growth
could expose fragility in the financial markets.

The Hindu

-- spider (spider0@usa.net), April 28, 2001