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Jonathan Bradley THE GLOBAL ECONOMY IN 2004 HOW ROBUST IS THE GROWTH?

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Presentation on theme: "Jonathan Bradley THE GLOBAL ECONOMY IN 2004 HOW ROBUST IS THE GROWTH?"— Presentation transcript:

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2 Jonathan Bradley THE GLOBAL ECONOMY IN 2004 HOW ROBUST IS THE GROWTH?

3 Jonathan Bradley

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5 u INFLATION OR DEFLATION? u A SUSTAINED RISE OR FALL IN THE OVERALL PRICE LEVEL

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7 THE WORLD ECONOMY IS INFLATION RECOVERING, AND THE TALK AMONG ECONOMISTS IS NOW MUCH MORE ABOUT INFLATION

8 Jonathan Bradley THE ECONOMIC AIM: A SAFE MIDDLE COURSE

9 Jonathan Bradley WORLD GDP GROWTH 2003 AND 2004 STRONGER!

10 Jonathan Bradley JAPAN PUTS OUT THE FLAG u After more than a decade of stagnation, Japan looks as though it has turned the corner. u At last Japan has become more normal!

11 Jonathan Bradley What is now driving the recovery? u Very low interest rates u Continued expansionary fiscal policy u Recovery in company finances u Buoyant consumer demand u Some stock market recovery

12 Jonathan Bradley GLOBAL SHORT TERM INTEREST RATES Source: IMF

13 Jonathan Bradley BUDGET DEFICITS COMPARED 2004 (est)

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16 OIL PRICE

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21 Jonathan Bradley PRODUCER PRICES 2003/4 Source: Economist No.2

22 Jonathan Bradley THE MAIN ECONOMIES RIGHT NOW u STRONG GROWTH EVERYWHERE EXCEPT EURO AREA u ENERGY PRICES u BEGINNINGS OF INFLATION??? u MAJOR IMBALANCES WITH USA

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25 DESPITE:

26 Jonathan Bradley NOW ON THE WAY UP….

27 Jonathan Bradley ALTHOUGH, INFLATION STILL OK

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29 1: HOUSE PRICES IN BRITAIN u Are they too high? u Is there a bubble? u Will they fall? u What will happen if they do?

30 Jonathan Bradley u STOCK MARKETS AND LAND PRICES GO UP FAR TOO MUCH u BUBBLES!! u WHEN THEY BURST ECONOMIES SUFFER

31 Jonathan Bradley Impact of 10% house price fall Q4 2005Q4 2006Q4 Interest rates Q4 2005Q4 2006Q4 CPIX inflation GDP growth Wealth & confidence Wealth effects Wealth & confidence effects with monetary response No monetary response OEF central forecast Source: Oxford Economic Forecasting LOOK AT THE RED NUMBERS

32 Jonathan Bradley 2: HUGE CONSUMER DEBTS! Total UK, May 2004: £993 BILLION

33 Jonathan Bradley SO, WHAT NOW? In the world: u Little danger of deflation u Growth generally healthy u Main threats from energy prices and politics In Britain: u Still strongest growth in Europe, BUT u Highest interest rates in Western Europe u Main threats political and from a housing asset price bubble

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