The World Economy in 2004
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Case Code: ECOA121 Case Length: 20 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization : - Industry : - Countries : Global Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
USA
In late 2003, the recovery of the US economy was gaining momentum. The economy grew impressively in the third and fourth quarters of 2003. But America's national savings rate had reached an all-time low. The federal budget had shifted from a surplus of over 2% of GDP in 2000 to a deficit of over 4% of GDP in 2003. The country's current-account deficit had been rising fast, and was running at over 5% of GDP, a historic high. At the end of the 1970s, after decades of almost continuous current-account surpluses, the US was a creditor country, with a net stock of foreign assets worth about 10% of GDP...
Japan
Japan's economy had barely grown for a decade, the worst performance of any rich country since the Great Depression. Both unemployment and public debt levels had doubled over the past ten years. Between 1997 and 2002, Japan's economy had shrunk in nominal terms from Y523 trillion to Y500 trillion (Economist, September 27, 2003). The subsequent recovery had been tentative and economists doubted whether sustained growth was round the corner...
Germany
Germany had long been considered the economic engine of Europe. It was one of Europe's richest nations till the late 1980s. But in 2003, Germany's GDP per head fell 1% below the EU average, when measured at purchasing power parity. Only four of EU's 15 members had a lower per capita income. The German economy had been stagnant for three years. It was the weakest economy in a region with many weak economies. In 2003, unemployment was running at 10%...
France
Like Germany, France had also been one of the laggards in the European Union. France had struggled to introduce sweeping reforms though in recent times, the resolve of the government seemed to have increased. Reform of the health-insurance system had also become an urgent need, with health costs having gone through the roof...
Asia
Since the currency crisis of 1997-98, Asian countries had staged a smart recovery. In mid-2003, the central banks of Japan, China, Hong Kong, Taiwan and South Korea, seemed to be sitting pretty on a pile of foreign exchange reserves. Between them, these five Asian central banks held around $1.3 trillion in official reserves (or over half of the global total), most of them in dollar assets...
Global Trade
Global trade had grown over the years. During the 1990s, protests against globalization, though vocal, had been relatively ineffective. Political pressure for protectionism in rich countries was subdued as economies boomed...
Exhibits
Exhibit I: Output, Demand and Jobs
Exhibit II: Money and Interest rates
Exhibit III: Trade, Exchange Rates and Budgets
Exhibit IV: Stock Markets
Exhibit V: Economy
Exhibit VI: Financial Markets
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