International Economic Outlook

INTERNATIONAL ECONOMIC OUTLOOK By Evangelos Otto Simos GLOBAL SOFT PATCH NOT A RECESSION AT YEAR ENDI. GLOBAL ASSESSMENT AND OUTLOOK A slowing in global economic activity is underway, driven by a high degree of uncertainty in the global political environment and a worldwide tightening of monetary policies. There are several areas where geopolitical concerns remain unusually high and cloud the global business outlook. The conflict in Iraq has not produced calm in the country, which was expected to bring substantial additions to oil supplies and intensify trade from reconstruction activities. Terrorism has expanded to several areas in a synchronized pattern, even reaching India’s fast growing economy. The latest turmoil in the Middle East has substantially increased political instability, which adds to global uncertainty in the energy and financial markets and, consequently, contributes to a higher risk premium on prices. Increased geopolitical uncertainties result in higher oil prices and falling worldwide stock prices, which are expected to lead to a softening in business investment and moderation in consumer spending. For any $10 per barrel increase in the price of oil, ...