Thread
Interesting article from Chicago
Economist Nervous About Recession
By PETER ALAN HARPER
.c The Associated Press
NEW YORK (AP) -- Marvin Zonis, a professor of business administration at the Graduate Business School at the University of Chicago, titled his global economic forecast last year ''Nervous in '98.''
He's ''Nervous Again in '99.''
Zonis, a leading economist, said in his forecast for the upcoming year that he believes the global economic crisis has reached its peak, though more than half the world's economies will be in recession next year.
''With a few notable exceptions, the global economy has hit bottom,'' Zonis said of the financial crisis that began in July 1997. He spoke Thursday at a business school luncheon in New York.
An estimated 40 percent of the world currently is in recession, with some places in depression, and economists have lowered growth expectations for next year.
Japan, Brazil and China are not likely to suffer further decline or political instability, Zonis said, but Japan's problems will lead to political instability in the region and less chance for its neighbors' economic recovery.
World leaders and economists had hoped that Japan, the world's second-biggest economy, could pull Asia out of its crisis. ''Instead, Japan is exacerbating the problems of the region,'' Zonis said.
The Japanese government is making matters worse by allowing Japanese banks to repatriate capital from the region to restore their own balance sheets and by increasing exports and decreasing imports.
''All the while the Japanese economy remains in the tank, despite ever-larger fiscal stimulus packages and bank restructuring plans,'' Zonis said. ''Most of these plans are smoke and mirrors.''
Zonis praised China's prime minister, Zhu Rongji, for steering that country through the intricacies of a market economy. But China has too many state-run enterprises doing the same work that need to be shut down, and it has a system of state subsidies that create a false economy, he said. But shutting all that down would lead to ''politically-threatening unemployment.''
''China is a mess'' whose policies are staving off inevitable problems, he said.
On other topics:
Zonis called the Russian state, ''effectively, dead.'' Russia defaulted on its debt, devalued its currency and will see further deterioration, Zonis said, adding, ''political disorder will spread in 1999.''
Africa is threatened by its first continent-wide war, stemming from the conflict in Congo joined by at least five neighboring countries. This could overshadow economic and democratic progress in other states, he said.
Preparing for Europe's monetary union is giving the 11 countries that begin using the euro on Jan. 1 unexpected benefits: lower interest rates and inflation and higher economic growth rates.
Overall in 1999, the global economy still will be under stress, Zonis said.
However, except for Russia, Indonesia and Venezuela, ''the bottom seems to have been reached. ... For the rest, consolidation and the long, slow painful path back to significant economic growth is under way.''
AP-NY-12-04-98 0112EST
|
