International Economic Outlook

INTERNATIONAL ECONOMIC OUTLOOK By Evangelos Otto Simos RESILIENCY IN GLOBAL GROWTH DESPITE FINANCIAL TURMOIL I. GLOBAL ASSESSMENT AND OUTLOOK Since 1970, world GDP averaged an annual growth rate of 3.7 percent. In each of the last four years, worldwide economic growth surpassed the 37-year long-term trend led by the emerging economies of China and India and the technology- induced growth in the United States. The latest evidence from quarterly national accounts and forward-looking economic data suggest that half way into 2007, global economic growth remains broad based, above trend, and sustainable. In the second quarter of 2007, the U.S. economy expanded at an annual rate of 4.0 percent, following an anemic growth rate of 0.6 percent in the first quarter. In China and India, real output soared by 11.5 percent and 9.5 percent, respectively, from last year. Leading indicators of the global business cycle compiled in 35 countries signal a continuation of growth in the second half of 2007 despite financial market turbulence amid corrections in housing markets. As was explained by the U.S. Federal Reserve, central banks moved swiftly “to mitigate the adverse effects on the economy ...