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Global Scale by Coletta KemperGlobal Warming

No, not that kind. We’re talking the international economy! Who’s hot, who’s not?

By Coletta Kemper

The good news came across my desk in the form of a recent joint report from the Ifo Institute for Economic Research and the International Chamber of Commerce, which receives financial support from the European Commission.

According to a survey of 1,030 economic experts in 90 countries around the globe, the outlook for the world economy in the first half of this year is quite sunny. In fact, the experts predict that 2007 will be “rosier” than 2006. The January economic climate index already registered a robust 106.5—a 1.8 point improvement over last quarter. 

The survey assesses a nation’s general economic situation and expectations by looking at key economic indicators. The authors say it is a useful tool since it reveals economic trends earlier than conventional business statistics.  

The current economic mood points to further economic stabilization, the report says.  Improvements were made in all three major economic regions—Western Europe, Asia and the U.S. Key factors contributing to this cheery picture include recent declines in energy prices along with increasing corporate profits and modest interest and inflation rates. Of course, all that can change. But overall stabilization in the world economy is percolating along at a favorable level.

The economic rebound in Western Europe continued in almost all the euro countries, except in France, Italy, the Netherlands and Ireland. Economic conditions in France and Italy fell below the “satisfactory” level. The Netherlands and Ireland declined marginally but still remain at a highly satisfactory level. Most of the experts viewed the present economic situation in Portugal to be “bad.” Still, the expectations for the euro area point to economic stabilization in the first half of 2007. The climate remains highly favorable for Nordic countries Sweden, Denmark and Norway.

The economic climate in Eastern Europe remains satisfactory and more or less unchanged. The regions’ economy is expected to stabilize. The economic climate for Russia, Kazakhstan and the Ukraine cooled somewhat. While the outlook remains positive for the first two, the Ukraine’s state has deteriorated and expectations remain cautious.

North America is staging a comeback after the economic slowdown last year. The economists slightly upgraded the current U.S. economic situation. The positive assessment of Canada generally reflects optimistic expectations for the first half of the year. Both countries are viewed as having a highly favorable present economic climate.

Asia continues to boom; however, the improved view is based entirely on positive expectations for the first six months of the year. The current economic performance for the region remains favorable for different reasons across countries. 

India’s star continues to rise. Its rapid growth, averaging about 7% annually over the last four years, is expected to continue. The climate index was upgraded and reached the highest level in January. Capital expenditures and private consumption are also expected to grow along with growth in imports and exports.

While China’s economic situation remains good, the experts expect exports to decline somewhat. Meanwhile Japan’s economy has cooled resulting in a downgrade in the current economic situation, but the outlook is still positive. The current economic view for Hong Kong and Vietnam are very positive with strong predictions for growth in exports and imports for the Vietnamese market.

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