The International Monetary Fund has trimmed down its earlier forecast for global economic growth. The IMF foresees sluggish economic growth hampered by war and mysterious disease.
The IMF said this year the world economy has been unsettled by uncertainty surrounding the conflict with Iraq. IMF chief economist Kenneth Rogoff says the uncertainty affected oil prices, stock markets, and consumer and business confidence.
"As near-term uncertainties surrounding the war recede, the question of the hour is whether present sputtering global growth will suddenly lunge ahead into an immediate strong recovery. "Perhaps," he said. "But our base line here is for subnormal growth of 3.2 percent in 2003 rising to 4.1 percent in 2004."
Mr. Rogoff says the recovery is likely to be slow because of the lingering effects of the bursting of the stock market bubble in Europe and America, structural weakness in Europe and Japan, and security related concerns.
The IMF made the steepest downward revision for growth in Western Europe, especially Germany. Mr. Rogoff says the outlook in Asia is mixed.
"Japan remains mired in a slump with 0.8 percent growth in 2003 and one percent in 2004," said Mr. Rogoff. "Indeed, emerging Asia is, in fact, the strongest growing region of the world with six percent growth projected in 2003 and 6.3 percent in 2004."
Within emerging Asia, China is the best performing economy, with anticipated growth of 7.5 percent this year.
But the IMF says the Severe Acute Respiratory Syndrome epidemic has become a major uncertainty. The most optimistic assumption is that the epidemic will be controlled within two months and that growth will have been reduced by no more than 0.2 percent.
The United States economy, which accounts for one-fifth of global output of goods and services, is expected to grow a bit more than two percent this year.