Global Economic Prospects projects soft landing

The World Bank's just-released Global Ecotax cuts revived confidence in several counnomic Prospects and the Developing Countries tries.Japan's growth rose to about 2 percent, 2001 reports that developing country growth supported by public investment and rising surged to 5.3 percent in 2000, up from 3.2 business profits and investment. But the The potential for percent in 1999 and 1.0 percent in 1998 Japanese recovery remains fragile because of (table 1). All developing regions experienced high corporate debt, insufficient corporate tong-term growth faster growth, though to varying degrees. and financial restructuring, low consumer World growth is expected to slow to a soft confidence, and growing government debt. may have improved landing in 2001, reflecting monetary tightGrowth among OECD countries is ening in industrial countries, stock market expected to slip below 3 percent in 2001 globally, improving declines, and high energy prices. Looking as the U.S. economy slows. Consensus foreahead, the potential for long-term growth casts envisage a U.S. soft landing rather than prospects for may have improved globally, improving outright recession. Over the longer term prospects for reducing poverty. (2003-10) OECD growth is expected to averreducing poverty But there are notable risks to the outlook, age 2.8 percent. Global Economic Prospects including higher oil prices, further slides in argues that industrial countries, led by the stock markets, and a U.S. recession. These U.S., are starting to see productivity payoffs developments would seriously reduce develfrom large investments in information and oping countries' trade, growth, and access communications technology. European inteto capital. They could also worsen longergration has induced greater competition term global performance if they lead counand efficiency, along with more flexibility tries to retreat from reform and openness. in labor markets. InJapan continued efforts at deregulation and financial and corporate Modest prospects for restructuring could yield long-term effihigh-income countries ciency gains. Growth in high-income countries was estimated at 3.8 percent in 2000, the highest in World trade: capping a decade 10 years. U.S. growth exceeded 5 percent, of massive expansion supported by strong productivity growth, World trade volume rose an estimated 12.5 buoyant business and consumer confidence, percent in 2000. This remarkable expanand years of booming stock markets. Growth sion caps a decade of trade growth averin the euro area (consisting of the 11 counaging 10 percent for developing countriestries using the euro) also accelerated in 2000, three times the rate of the 1980s. Rapid to more than 3 percent, and was accompatrade growth reflects major multilateral and nied by higher employment. European regional trade liberalization agreements exports benefited from a weak euro, while (Uruguay Round, North American Free