World Economic Situation and Prospects for 1999

The world economy is now growing at its slowest rate since early in the decade. The recession in Japan, the East Asian crisis and the Russian crisis ??along with contagion throughout the financial markets ??combined in 1998 to halve the growth rate of the world economy and to raise concerns about a global recession. At some points during the year there was fear of serious damage to major financial markets. Compared with the previous year, 23 fewer countries saw an increase in output per capita in 1998 and no significant improvement is expected in 1999. Moreover, world trade in 1998 grew at less than half the pace of 1997, and about the same growth rate is foreseen for 1999. International prices (in US dollars) of crude petroleum fell by about one third and non-fuel commodity prices by about one eighth in 1998. With no acceleration expected in the growth of world output, and thus of demand, commodity prices are forecast to remain depressed in 1999.

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