Global Economy Skips into New Millennium ; Growth and Rebounding Stock Markets Replace Malaise of Two Years Ago in Russia, Asia, and Parts of Europe

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The world is experiencing some of the best economic conditions in more than a decade.

In fact, elements of the "miracle" economy in the United States are now starting to show up in many industrialized nations - rapid growth and relatively low inflation.

Even stock markets, just two years ago a source of concern from New York to Hong Kong, are now starting to make money for everyone from fry cooks to fund managers again.

It's a "blowout," says Stephen Roach, chief economist of Morgan Stanley, a New York investment banking firm, of growth rates globally.

One reason for the turnaround in the $32 trillion world economy is lessons learned from the East Asian financial crisis of 1997, the Russian devaluation of 1998, and the subsequent failure of a huge American hedge fund. International bodies and nations are implementing reforms aimed at making the world's financial systems more stable, less subject to crisis.

"There is some progress," says Morris Goldstein, an economist with the Institute for International Economics in Washington.

The Group of Eight leaders of the world's major industrial countries, attending a summit last weekend in Okinawa, looked outward to a much cheerier global scene than in their previous three sessions.

Wall Street is back

Consider just the financial markets. The value of all US stock July 17 was $17.33 trillion, just above the previous peak in March of $17.29 trillion, says J. Paul Horne, London-based economist for Salomon Smith Barney. "The United States equity market has never been so buoyant," he says.

Some fluff blew off the market this spring. Internet and some price-rich technology stocks were hit hard. The Dow Jones Industrial Average of 30 Blue Chip stocks remains well below its January top.

But the broader Standard & Poor's 500 index stands close to its peak. Prices on the technology-laden Nasdaq market have leaped some 20 percent since late May.

Reflecting a more vigorous economic picture, Mexico stock prices are up nearly 25 percent since May, Canada 16 percent, Brazil 13 percent, and South Korea 15.6 percent.

Not all is rosy on the world economic scene, though. One concern is that Saudi Arabia will not pump enough crude oil to depress energy prices.

Mr. Horne sees signs that the high cost of energy is starting to have an impact on other goods, raising the prospects of inflation.

Another recurring danger is the high US stock prices. Despite the recent downturn, the value of all American stocks amounts to almost 1.8 times current US gross domestic product - a record. This makes the goal of the Federal Reserve to slow the US economy more tricky. …