Friday, September 27, 2002

A time for caution (Argentina comments) In a global context such apparently small-sounding reductions [1% in global GDP] are significant. They also serve to underline the extent of the collapse in Argentina, a country whose problems, while not likely to have much of an impact on the world economy as a whole, are greatly exercising the IMF. By the end of this year, the IMF estimates that Argentina’s economy will have contracted by a cumulative 20% in four years—that is twice the contraction experienced during the Great Depression of the 1930s, and unprecedented for any economy in modern times except for those involved in war or in transition from Communist rule. The size of Argentina’s problems (the remedies for which are the subject of an increasingly bitter dispute between Argentina and the IMF) and the financial pressures which neighbouring Brazil now faces in the run-up to its presidential election have prompted the IMF to question the reliance of many emerging-market economies on capital inflows which, if they suddenly become outflows, can wreak havoc with economic policy and performance. 12:31:55 PM  Google It!  comment  []

Sluggish U.S. Economy a Global Concern Despite nearly daily news of economic strife in Brazil and Argentina, a growing number of economists and governments around the world worry that the biggest risks to the global economy are emanating not from Latin America or Asia but from the United States and Europe. Bankers and finance ministers will descend on Washington this weekend for the annual meetings of the International Monetary Fund and the World Bank, anxious about economic imbalances in the United States, the possibility of war in Iraq and foot-dragging on free-trade by rich countries. 11:49:03 AM  Google It!  comment  []