Group Revises Global Economic Forecast Upward

Jan. 13, 2005
By John S. McClenahen Factoring in stronger than anticipated economic growth in the U.S., the Economist Intelligence Unit (EIU) has revised upward its global growth projections for 2004. The EIU, the business information unit of Britain's Economist ...
ByJohn S. McClenahen Factoring in stronger than anticipated economic growth in the U.S., the Economist Intelligence Unit (EIU) has revised upward its global growth projections for 2004. The EIU, the business information unit of Britain's Economist Group, the publisher of "The Economist" magazine, now forecasts a 3.2% global GDP growth rate for next year on a so-called market basis, which reflects the currency exchange rates at which manufacturers and other businesses trade and repatriate profits. For 2003, EIU anticipates 2.4% growth. On a purchasing power parity basis, which assumes that internationally traded goods carry the same price tag in every country whether rich or poor, EIU figures global growth at 4.1% in 2004, compared with a 3.4% average for this year and the 3.9% it previously estimated for 2004. Nevertheless, the revised forecast carries some notable risks of being wrong. For example, "policy stimulus, particularly in the U.S., has much to do with the recent upturn in growth, and there are still concerns about how the economy will perform when [federal] tax cuts come to an end and interest rates rise," says EIU.

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