The world economy [February 2005]

As stated in the previous quarter we still believe growth in the world economy is relatively strong (despite the weak data in the summer and a slight slowing in China). There signs of strong growth in the US, China and Japan although the Euro Area remains relatively weak. The world economy is expected to grow at a considerable pace (close to 4 per cent) in 2004 but growth is forecast to be slightly less in 2005. The Euro Area is expected to grow more strongly in 2005 as it is currently lagging the other regions of the world. World trade is forecast to grow rapidly in both 2004 and 2005 (just below 10 per cent for both years). Chinese trade flows and the importance of trade in Asia are the most significant contributions to this growth. Emerging markets are also expected to have strong trade growth in 2005. Sadly, while the human costs of the Tsunami were both tragic and huge the economic impact on the world economy will be relatively minor