Prospects for the World Economy: From Global Recession to Global Recovery

The world economy will see a significant recovery of growth in 2002 and 2003, reversing the global slowdown of last year. The global economic recovery will be led by the United States where a vigorous cyclical rebound is already under way. Economic growth will also strengthen in western Europe during 2002; however, recovery will slightly lag that of the United States and will likely proceed at a more subdued pace. For Japan, the risks remain substantial, but a modest-paced cyclical upturn beginning by mid-2002 and extending through 2003 appears to be the most likely outcome. Among the other industrial countries, Australia should sustain its relatively strong growth performance at least through 2002, while economic growth in Canada should pick up roughly in line with that in the United States. Most developing countries, too, can expect significant strengthening of economic growth as the global economy recovers--Mexico and the emerging-market economies of Asia are likely to benefit particularly from US economic recovery and central and eastern European countries are likely to get a boost from stronger growth in western Europe.