WORLD ECONOMIC GROWTH EXPECTED TO ACCELERATE FROM 3 PER CENT IN 1996-1997 TO 3.5 PER CENT IN 1998-2000, SAYS PROJECT LINK FORECAST

21 March 1997

Press Release
DEV/2139

WORLD ECONOMIC GROWTH EXPECTED TO ACCELERATE FROM 3 PER CENT IN 1996-1997 TO 3.5 PER CENT IN 1998-2000, SAYS PROJECT LINK FORECAST

19970321 Global Economic Outlook To Be Reviewed by Expert Meeting at Headquarters, 24-27 March

NEW YORK, 20 March (DESIPA) -- Growth in the world economy is expected to increase slightly to 3.1 per cent in 1997 -- up from 2.9 per cent in 1996 - - and then accelerate to 3.5 per cent in 1998, 1999 and 2000, according to a forecast prepared by Global Model LINK that will be reviewed next week by the Ad Hoc Expert Group on the Short- and Medium-term Prospects of the World Economy (Project LINK) as they meet at Headquarters, from 24 to 27 March.

Project LINK is an international economic research network of more than 70 economists from all over the world led by Nobel Laureate Lawrence R. Klein of the University of Pennsylvania.

According to the forecast to be reviewed, the widespread economic growth expected in the next few years will be matched by increased trade among countries, with world trade expected to rise by 7 per cent in 1997. Inflation in the industrialized world is expected to remain subdued in most countries, but real interest rates are likely to remain high in relation to their long- term trend. Within the group of developed market economies, slower growth in Japan in 1997 is likely to offset an expected acceleration in the European Union from 1.7 per cent in 1996 to 2.4 per cent in 1997. Pockets of negative or sluggish growth will persist among the transition economies.

The forecast also indicates that economic activity in the developing world will accelerate from 5.8 per cent in 1996 to 6.1 in 1997 and continue to grow about twice as fast as the industrialized countries in 1997. The acceleration in growth in the developing world is due mainly to faster expected growth in Latin America and the Caribbean and Western Asia. Average per capita gross domestic product (GDP) in developing countries is forecast to increase by 4.2 per cent in 1997, compared to 3.9 per cent in 1996; in Sub- Saharan Africa, however, output per person will increase by only 0.8 per cent in 1997, which is, however, an improvement over the 0.5 per cent of 1996.

In addition to reviewing global, regional and country outlooks and policies, the experts will hold special sessions on world commodity markets, economic integration in Europe and the role of the developing countries in the world trading system.

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