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World Economy Expected to Grow Strongly, predicts UN Symposium - 2004-04-15

The world's economy will grow strongly this year and next, building on the recovery that started in the second half of 2003. That's the prediction of a group of 100 economists from 60 countries meeting at the United Nations. Asian giants, such as China, India and Japan, are helping to brighten the global economic picture.

The world economy is likely to grow more than 3.5 percent this year, and at nearly the same rate next year. The United States, traditionally the engine of the global economy, could grow more than 4.5 percent this year, but slightly less in 2005.

Those figures are in a report issued Thursday by Project LINK, a non-governmental research activity representing the work of more than 100 economists worldwide. Its founder, Nobel-prize winning U.S. economist Lawrence Klein, says the pace of growth seems unaffected by the current world turbulence.

"In spite of very turbulent world situation, meaning political, military diplomatic and economic situation, things are from an economic point of view looking a little bit better for the near term prospect," he said. "We fully expect 2004 will be better than 2003, and 2005 in the neighborhood of 2004."

Mr. Klein said he was especially encouraged by developments in the emerging economic giants of Asia, what he called "new centers of economic activity.".

"Countries aren't new, but the fact that they are leaders is new," he said. "Those countries are China...and we're watching China as a giant in Asia, but joined by another, the second biggest country in the world, India, is growing strongly in what we think is a sustained path at present."

Mr. Klein said China's economy is likely to grow at a better than eight percent clip over the next two years. He also pointed to Russia as an emerging powerhouse, but noted that Russia's economy is largely dependent on oil and gas prices, which are in some cases at historic highs.

Another LINK economist, Canadian Peter Pauly, said the group is also encouraged by Japan's economic turnaround.

"Japan, after many years of virtual stagnation has been gaining strength over past year, and seems on track to a sustainable growth path of three percent or so, which is a remarkable turnaround for Japan, and Japan is again contributor to world growth," he said.

The group pointed to a few weak spots, including Europe's disappointing performance. Mr. Pauly said European economies were growing at only half the rate of those in North America.

In the long term, however, the LINK report questions whether the United States can continue to be the world's economic engine, given its large deficits. The report notes that the U.S. economic boom has been fueled by resources borrowed from the rest of the world, and concludes that this "cycle of interdependency between the United States and the rest of the world is unlikely to prove sustainable."