International Economic Outlook

INTERNATIONAL ECONOMIC OUTLOOK By Evangelos Otto Simos GROWTH REALIGNMENT MAINTAINS GLOBAL EXPANSION I. GLOBAL ASSESSMENT AND OUTLOOK The current worldwide economic expansion is forecast to be the best abovetrend period of the global business cycle. Robust growth in the last four years and a brisk outlook for 2007-08 will result in a worldwide expansion lasting from 2003 to 2008, which matches the duration of the 1984-89 global upswing when the world’s real output grew for six consecutive years above its long-term trend of 3.6 percent, averaging an annual rate of 4.3 percent. More important, the current expansion will exceed the 1984-89 benchmark as worldwide output during the recent expansion of 2003-08 is estimated not only to grow above trend but also to average 4.8 percent in the whole period. In particular, world output is estimated to have increased by 5.2 percent in 2006; the baseline forecast calls for growth to moderate to 4.7 percent in 2007 and slightly accelerate to 4.9 percent in 2008, thus finishing with the strongest global expansion on record. Despite inflationary concerns, tight monetary conditions, and high energy prices, the global economy strongly enters ...