Economic Survey 2003

World economic recovery in 2002 was slower than expected. This was due to weak consumer and business confidence as well as low performance of equity and financial markets. Economic activities across the Organization of European Cooporation and Development (OECD) region were relatively weak while recovery was erratic. Interest rates were low in all the OECD countries. Despite volatility in the oil market, inflation remained low with oil prices averaging US$24 per barrel. The world’s major currencies recorded mixed performance in 2002 with the dollar depreciating against the Euro by 14 cents and the yen against the Euro by 8 cents. Real GDP of USA grew by 2.3 per cent in 2002 against a background of strong household and government spending. In Japan, the economy performed well in the first half of 2002 due to sharp increase in exports and low level of inventories. The weakening of the Yen further augmented increase in exports. Real GDP growth in China improved further from 7.3 per cent in 2001 to 7.9 per cent in 2002. The robust growth was bolstered by China’s accession to the World Trade Organization (WTO), which improved its international competitiveness. Performance of most countries of Dynamic Asian Economies (DAEs) was rapid mainly due to improved export growth to USA and strong regional and domestic demand.