While one can be fairly confident about the world economy’s prospects for 2004, I have already hinted that challenges may emerge in 2005 and beyond. Real GDP growth is not expected to accelerate in 2005, while the downside risks loom larger.
These challenges are a bit further down the road, but in a fast-moving world prevarication is not a good strategy and I shall mention the most important: Certainly, the largest threat looming over the world economy in the medium-to-longer term is the “twin deficits” in the US.