USDA Sees Economic ‘Strong Growth' Worldwide

February 27, 2001

USDA's outlook for the world economy over the next 10 years calls for strong growth in almost all regions. The aftermath of the Asian financial crisis "is a world that is structurally more sound and poised for significant growth without major imbalances," says the report, presented as part of the USDA baseline projections at the Outlook Forum last week.

"Although we anticipate that long-run growth rates in the Asian crisis countries are lower than they were before the crisis, significantly high real GDP growth rates of about 5% per year are forecast for these countries," USDA said.

Significant sustained positive growth is expected in Africa for the first time since the 1950s and for Russia for the first time since the dissolution of the Soviet Union. In both cases, positive per capita income growth is expected after long periods of per capita income delcines.

"Although we anticipate positive GDP growth in Japan, the longer term outlook for sluggish growth there is an important negative feature of the longer term global outlook. Continued large trade deficits in the United States are another potential problem for the longer term outlook," the report added.

In the near to mid-term, "crisis recovery" dominates the outcome, while in the longer term structural reform leads to renewed sustained economic growth in the crisis countries but at a lower rate than previously recorded. Combined with this renewed growth in the crisis countries is higher growth in Africa and Latin America.

"Indeed it is hard to find a comparable historical period of consistent and sustained growh on such a broad country basis under conditions of macroeconomic stability. It also is hard ot find a comparable period of such high sustained growth throughout the world without significant inflationary pressures," USDA said.

Oil prices are expected to decline somewhat over the next several years from the high levels reached last year and then rise to slightly more than the general inflation rate for the remainder of the baseline.

"This near term decline in oil prices followed by moderate gains is predicated on the assumptions that new oil discoveries, such as those in Kazakhstan, along with new technologies for both finding and extracting oil will allow for substantial growth in demand without significant energy inflation."