IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

World-wide Slow-down of Economic Growth in 2001

Listed author(s):
  • Markus Marterbauer

    (WIFO)

The world economy has been experiencing a boom in 2000. Demand and production have increased in real terms by about 5¼ percent in the USA, 3½ percent in the European Union, and 2 percent even in Japan, where the economy had been stagnating for almost a decade. A relatively favourable monetary framework and a vigorous expansion of domestic demand have contributed to this development. Currently, however, a growing number of indicators are pointing to a slow-down of economic activity, the major contributing factor being the increase of crude oil prices with the related redistribution of purchasing power at the expense of the industrialised countries. The more restrictive orientation of monetary policy also has a dampening effect on economic growth. As for the USA, the majority of international observers are expecting a "soft landing" with growth rates of over 3 percent, although the risk of a downturn has clearly increased. In Europe, the cyclical upswing set in with a certain time lag in 1999-2000 after the slump in the wake of the Asian and Russian crises had been overcome. The high rate of economic growth had a very positive effect on public households and the labour market – with employment growing strongly in 2000 (+1.6 percent) and the rate of unemployment dropping to 8.5 percent. The beginning slow-down of economic growth at such an early point in time is considered to be a cause for concern. The most recent EU and OECD forecasts – with estimates of real economic growth in 2001 of around 3.1 percent and 3.0 percent, respectively – tend to be rather optimistic for the EU countries. Nevertheless, rising oil prices, which will lead to higher inflation – presumably over 2 percent in the EU in 2000 and 2001 – and a loss of purchasing power for private households, may result in a stronger dampening of demand. Moreover, monetary policy has reacted more quickly than in the past by increasing interest rates. However, given the fact that the phase of fiscal consolidation has been completed, a certain amount of economic stimulation is to be expected from European fiscal policy in 2001, above all through major tax cuts in Germany and France. Assuming that the upward movement of crude oil prices in the world markets is going to level off in the coming quarters, and provided that interest- and exchange-rate developments do not result in a significant deterioration of the monetary framework, the slow-down of growth in Europe in 2001 may turn out to be of a temporary nature.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.wifo.ac.at/wwa/pubid/19562
File Function: Abstract
Download Restriction: Payment required

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by WIFO in its journal WIFO-Monatsberichte.

Volume (Year): 73 (2000)
Issue (Month): 12 (December)
Pages: 719-726

as
in new window

Handle: RePEc:wfo:monber:y:2000:i:12:p:719-726
Contact details of provider: Postal:
Arsenal Object 20, A-1030 Wien

Phone: (+43 1) 798 26 01-0
Fax: (+43 1) 798 93 86
Web page: http://www.wifo.ac.at/

More information through EDIRC

Order Information: Postal: Austrian Institute of Economic Research Publikationsverkauf und Abonnentenbetreuung Arsenal, Objekt 20 A-1030 Vienna/Austria
Email:


No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wfo:monber:y:2000:i:12:p:719-726. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.