A Look At The World's Economy
FILE- In this Sunday, Dec. 4, 2011, file photo, New England Patriots owner Robert Kraft, right, talks with casino mogul Steve Wynn at Gillette Stadium prior to the Patriots' NFL football game against the Indianapolis Colts in Foxborough, Mass., Sunday, Dec. 4, 2011. Efforts to bring a $1 billion resort-style casino proposed by Wynn to the New England Patriots' hometown have been suspended after an announcement Tuesday, May, 8, 2012 by The Kraft Group and Wynn Resorts, a day after voters elected two selectmen who opposed opening negotiations with Wynn. (AP Photo/Elise Amendola) / Elise Amendola
"The overall outlook remains relatively favorable: Inflation should remain subdued, and economic expansion should continue," the Organization for Economic Cooperation and Development said in a recent report.
The Paris-based OECD foresees a global economic growth rate of 3.2 percent next year, down from 4.2 percent this year. High oil prices, tighter monetary policies and plunging stock markets have prompted Deutsche Bank Research to scale back its growth forecasts for next year to 3.5 percent.
"All the same, out global outlook for 2001 remains relatively up," the DBR said in its Economic Financial Outlook. "As things stand today, it appears rather unlikely that the world will slide into recession."
And the International Monetary Fund sees a rosier picture for the world economy in 2001; it is predicting an expansion rate of 4.2 percent.
And while there is some concern about the slowing economy in the United States, the general feeling is that the upward trend will continue.
Demand for Asian goods, including electronics, is helping Asia rebound from its economic crisis. Hong Kong and Singapore are seen as the jewels in the crown with growth rates of 9.5 percent.
Japan is showing signs of recovery, but there are lingering fears about another downturn because of continued weak consumer spending and a surge in bankruptcies.
China is hoping to join the World Trade Organization early in 2001 as a way of securing export markets and foreign investment, which will help to ensure economic growth.
According to the 15-nation European Union, economic growth reached its highest level since 1989. The European Commission said growth should remain strong next year, although there are concerns higher oil prices could take a toll. But the fledling euro appears to be picking up steam.
Latin American economies may grow in 2001 with Brazil, Mexico and Chile leading the pack. But again, a slowdown in the United States could cause confusion, as it is the region's largest trading partner and investor.
Mexico, whose economic fortunes are tied to the United States through the North American Free Trade Agreement, is the most vulnerable Latin American nation. Brazil is more insulated from outside influences, with a larger and more inward-looking economy.
High oil prices have helped Russia continue to recover from the devastating economic crisis of two years ago. For the first time since the Soviet collapse, gross domestic production grew. But Russia owes $148 billion in foreign debt, with $3 billion due to creditors in 2001.
Economic development in the former communist countries of Eastern Europe will be higher than any time since the fall of the Berlin Wall in 1989.
In the Middle East it's oil, oil, oil.
In the last two months, Sadam Hussein has caused international turmoil by demanding payment for its oil in euros rather than dollars, the industry's accepted form of payment. Iraq then suspended its exports in a dispute with the United Nations over pricing, causing fears of a crude shortage.
Long seen as the most unpredictable member of OPEC, Iraq is trying to have the 10-year-old trade embargo against it lifted.
OPEC's fourth largest producer of oil exports 2.3 million barrels of crude a day - 3 percent of the world's supply. That's even with its oil industry hampered by a shortage of spare parts created by U.N. trade sanctions..
And if the United Nations should lift its embargo - as some countries are advocating - analysts say Iraq could double its daily output.
"It's got huge potential, but also huge potential for mischief," said Leo Drollas, chief economist at the Center for Global Energy Studies in London.
Iraq's position is all the stronger, in spite of the thredbare condition of its pumps and pipelines. It is back to producing nearly as much oil as it did before the war, a "stunning" achievement according to Peter Gignoux at Salomon Smith Barney in London.
Most of the OPEC partners are already producing as much crude oil as they can, and some can't even reach their latest output targets.
"Iraq recognizes it has the ability to influence the market one way or another," said Jareer Elass, head of the Washington-based consultancy Oil Navigator. "The Iraqi leadership is going to want to remind the West, as well as OPEC, that Baghdad can mess with the markets."
If sanctions are lifted, "Iraq will go hell for leather to increase output," said Drollas.
But a sanctions-free Iraq could have a major impact on the market. According to Elass, "I think you'd see a huge price collapse. Traders would think, 'Oh my god. Iraq's sitting on all this untapped potential.'"
As a result, Iran and Saudi Arabia might boost their own production capacity so as not to lose market share, which could drive down the price of crude.
© 2000 CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters Limited and contributed to this report
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