Global Business Leaders Fret About Growth
Sat January 24, 2004 04:17 PM ET
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By Stella Dawson
DAVOS, Switzerland (Reuters) - Tepid optimism and gnawing concerns.
This is the state of mind of a number of global business leaders and policy-makers gathering at this ski resort for the annual World Economic Forum meeting of the rich and powerful.
While noting that a recovery is slowly underway, they remain concerned about Europe's struggling economy, a spendthrift United States and a burgeoning Chinese economy. But most of all, what concerns many of them is the possibility of the dollar crashing. All these factors, they say, darkens the global economic outlook and could upset recovery in 2004.
"I am optimistic but I am worried. I am concerned," said Stephan Newhouse, president of investment banking giant Morgan Stanley USA (MWD.N: Quote, Profile, Research) .
For several years, the United States has driven recovery worldwide. "That is not sustainable. That is a big question for me," he said.
If the United States stumbles, the global engine sputters.
LOPSIDED RECOVERY UNDERWAY
The global economy is expected to expand by 3.5 percent in 2004 -- its fastest pace in several years, according to United Nations' forecasts. But it is very lopsided.
The United States is sucking in imports from all over the world, driving up the U.S. current account deficit as Americans borrow heavily. This, combined with the huge U.S. budget deficit, is forcing down the value of the U.S. dollar in currency markets. The euro (EUR=: Quote, Profile, Research) is bearing the brunt of the dollar's fall, rising 20 percent last year.
Meanwhile, Asian countries, especially Japan and China, are keeping their currencies artificially weak to compete in global export markets, fueling concerns of a dollar crash. |
