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One Analyst's Optimistic View Toward Global Economy - 2003-02-07

As global markets remain jittery amid uncertainty over the possibility of armed conflict in Iraq, some economists are revising downward their growth forecasts for this year. But, one economist is relatively optimistic.

Money manager David Hale says uncertainty could persist for the next two months or so but after that there will be more clarity. Mr. Hale told a Washington gathering he believes there is an 80 percent chance that the United States will launch a military attack on Iraq. But he is doubtful that will cause oil prices to soar.

"So the fact is, until this thing is really over, six, eight, ten weeks from now, there will be risks and that could have an adverse effect on the market and the economy," he said. "But if in fact America does win a clear, decisive victory at a very low cost, if we can gain control of the oil fields very quickly and protect them, then the outcome on a three-month view could be very benign. The price of oil could fall back to $20 a barrel. We could have a major source of concern lifted. And this could set the stage for a much better economy this summer and autumn."

Mr. Hale, who is based in Chicago and whose investments span the globe, believes the United States was very lucky to achieve nearly three percent growth last year.

He applauds the central bank for pursuing a stimulative monetary policy and says the dramatic shift in government finance to an expansive fiscal policy is correct. Without a shift from surplus to deficit spending, he says, U.S. growth could have been zero or negative last year. Mr. Hale says there is little prospect for growth this year in Europe and Japan. Only China, he says, is growing rapidly.