Covergence to Sluggish Growth in Industrial Countries

By Simos, Evangelos O.; Triantis, John E. | The Journal of Business Forecasting Methods & Systems, Summer 1994 | Go to article overview

Covergence to Sluggish Growth in Industrial Countries


Simos, Evangelos O., Triantis, John E., The Journal of Business Forecasting Methods & Systems


I. ECONOMIC OUTLOOK

The major industrial countries are experiencing uneven recoveries from the global recession that began in 1990. The economic growth disparities were highly pronounced last year. The English-speaking countries that first went into recession - the United States, Canada, the United Kingdom and Australia - expanded at growth rates between 2% and 3%. In continental Europe, the major economies - Germany, France, and Italy - experienced negative output growth rates, while Japan's economy stagnated with an almost flat growth rate in output.

According to our central forecast, the economic recovery in the United States will substantially slow down, while the recoveries in Europe and Japan will be moderate. Economic growth in the United States is forecast to slip to 2% in 1995 from 2.8% this year. Output in the European Union is expected to expand 1.4% this year and 2.2% in 1995. In Japan, the economic upturn is expected to be sluggish with output increasing by 0.2% this year and 1.8% in 1995. Therefore, the current dysyndronized economic rebound in the industrial countries will end in 1995 when the recent divergences in output growth rates are expected to diminish.

In contrast to the sluggish economic outlook for the major industrial countries, developing countries are expected to lead global economic growth. The newly industrializing countries in the Pacific Rim and several Latin America nations are expected to continue to advance at an average growth rate of 5.5% during 1994-95. Consequently, world economic output is projected to increase by 2.8% this year and 3.4% in 1995, following an estimated rate of growth of 2.2% in 1993.

The gradual strengthening of world economic activity is expected to be accompanied by a strong recovery in world trade. The volume of world trade is projected to expand by 5.1% in 1994 and by 6.2% in 1995 from a 2.4% growth rate in 1993. At the same time, worldwide inflation rates are projected to accelerate during 1994-95 for the following reasons:

* Output gaps in the industrial countries will be narrowed because of the gradual economic recoveries that are underway.

* Strong growth in developing countries and acceleration of world trade are expected to result in inflation in international non-oil commodity prices.

* Oil prices are projected to slowly accelerate, which will now bring consumer inflation rates up because of the current increases in fuel taxes. Fuel tax increases were introduced in 1993 in the United States, France, the United Kingdom, Austria, Spain, Sweden. Similar taxes are introduced this year in Germany and Italy.

* Structural inflation, which results from productivity differentials between manufacturing and services as they both are expected to receive the same wage and non-wage benefit raises, is forecast to be a common contributor to overall inflation in many industrial countries, especially in the United States, Canada, Germany and France.

* Rising structural unemployment rates in Europe and Japan will influence political leaders to promote expansionary fiscal policies despite the existence of large deficits.

The findings of the second quarter of 1994 International Economic Survey of nearly 500 economic experts of transnational corporations and organizations in 66 countries conducted by the German Ifo-Institute confirm our central scenario for the world economic situation and short-term outlook. The major findings of the survey are as follows:

* For the first time since 1990 the business climate in the world economy was judged as satisfactory.

* Expectations that the world economy will continue to recover within the next two quarters have been rising.

* World trade is expected to accelerate this year particularly in Western Europe, China, India, Korea, Taiwan, Argentina and Mexico.

* Inflation is not expected to accelerate on the average in all 66 countries during the next three months.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Covergence to Sluggish Growth in Industrial Countries
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.