Economic Survey 2000

World trade is expected to pick up as the health of the global economy improves. In particular, the strong recovery under way in most of the Dynamic Asian Economies, recoveries in Russia, Latin America and Europe. The volume of world trade is thus expected to steadily rise to 7 per cent in 2000 before dropping to about 6 per cent in 2001. The pace of trade liberization will continue to be hampered by protectionist policies. 1.23. The strong expansion of the US economy in 1999 is expected to slow down in the years 2000 and 2001 to stand at 3.1 per cent and 2.3 per cent, respectively. The projected slowdown is on account of higher short term interest rates, slack in real income growth and rising asset prices. Inflationary pressures are expected to increase on account of rising oil prices, increasing health care costs and increases in the prices of imported nonoil industrial supplies. The current account deficit is expected to widen further due to the prevalence of strong aggregate domestic demand, which will lead to an acceleration of import purchases and poorer terms of trade.