1997 Global Economic & Business Outlook: Most Countries To See Moderate Growth With Falling Inflation.SAN FRANCISCO--(BUSINESS WIRE)--Jan. 23, 1997--With more governments pursuing free domestic markets and stimulating private initiatives, the global business environment will continue to grow while global inflation declines, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. an economic report issued by Emanuel Frenkel, senior vice president and director of international economics at Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. . In BofA's Economic & Business Outlook, Frenkel is predicting that most countries will see moderate growth with falling inflation. On average, per capita incomes are rising and middle classes are expanding. Overall, global economic expansion will be 3 percent and inflation will fall to 5 percent from its 5.5 percent rate in 1996. Impact of Low Inflation and Increased Capital Flows Since 1993, global inflation has been falling year-on-year, and 1997 will be no exception, according to the report. Prudent monetary policies and more disciplined fiscal programs have bolstered confidence of money markets in the ability of central banks This is a list of central banks. Contents A B C D E F G H I J K L M N O P Q R S T U V W Y Z to staunch inflation expectations as soon as they appear. "This dynamic between inflation fears and the money markets also will ensure that global growth will be moderate," says Frenkel. Frenkel also predicts that flows of international investment will rise again this year. It is estimated that $340 billion will be made in foreign direct investment (FDI FDI See: Foreign direct investment ) worldwide, compared to just $75 billion in 1986. Total financial flows of all types, including stock market transactions, loans and grants, and bond purchases, but excluding foreign exchange transactions, will reach $15 trillion this year, or 55 percent of the value of all global sales of products and services. In 1997, U.S. firms will be the foreign investment leaders, placing some $75 billion abroad. This number is higher than the combined $50 billion in direct investment flows from Japan and Germany. Of total FDI, developing nations will receive some 35 percent or $120 billion this year compared to 10 percent a decade ago. "The flows of global direct foreign investment represent the ongoing confidence that companies and entrepreneurs have in the global economy," says Frenkel. "The flows are reflective of a worldwide search for better production cost opportunities and consumer markets that are opening up in more and more countries." The Liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . of Domestic Economies Making markets freer and more efficient will continue as a major force this year, and virtually all nations will strive to embrace some part of the liberalization agenda. Countries that desire to be globally competitive must also show progress in their reforms in order to benefit from foreign confidence and investment. Frenkel cautions that fear remains for some reformers who see the benefits of liberalization in the form of higher incomes, secure and productive jobs, and more efficient pension schemes will not be felt quickly enough by the population, thus resulting in a backlash against the reforms. "That is why educating the masses, simply and clearly, about the benefits of such actions is imperative." Following are some observations made by Frenkel on major regions in 1997: Asia Asian growth will pace the economy in 1997. The region as a whole will post 1997 growth of 4.5 percent with inflation of 3.9 percent. However, prospects will reflect business conditions in Japan, which is estimated to have a growth rate of 2.4 percent this year, and whose economy accounts for 70 percent of the region's total GDP GDP (guanosine diphosphate): see guanine. . Nonetheless, Asian growth in 1997, excluding Japan, will hit 6.9 percent. Continuing large infrastructure investments and the development of new industrial capacity will be the mainstay of activity in Asia's emerging markets. Southeast Asian economies will expand by 7.1 percent due to a trend toward private sector infrastructure development. The East Asian nations of China, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , Taiwan and South Korea, will post combined growth of 6.5 percent in 1997. Inflation is only an issue for China in this sub-region reaching 9 percent. Although this is a significant drop from the 15 percent in 1995, little progress is being made to change the underlying Chinese economic structure necessary for permanent price stability. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. Faster growth will make the region's expansion the third fastest after Southeast Asia's emerging economies and those of industrializing East Asia East Asia A region of Asia coextensive with the Far East. East Asian adj. & n. . In 1997 Latin America will see overall business expansion of 4.1 percent and annual regional inflation at 12.8 percent will show its fourth consecutive year of decline. Mexico's economic fundamentals also will improve in 1997. Growth will rise to 4.5 percent in a further reversal of the post-devaluation depression in 1995 and inflation will fall again, to 18 percent. Europe The developed economies will endeavor to move further toward economic and monetary convergence. Most important will be the additional steps that European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community member-states take in an effort to converge in accordance with Maastricht Treaty Maastricht Treaty officially Treaty on European Union Agreement that established the European Union (EU) as successor to the European Community. It bestowed EU citizenship on every national of its member states, provided for the introduction of a central criteria. Meeting these criteria by the end of this year is a prerequisite to being in the 1999 first round of Economic and Monetary Union (EMU) participants. In Europe's transition economies, including Russia, Poland, Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. and Hungary, support is growing for acceptance of free market principles and private enterprise. Eastern and Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. will enjoy steady expansion in foreign and domestic private investment and increased consumer purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. . New job opportunities will keep growth at or above 3 percent in virtually all economies, including Russia. Inflation and unemployment will fall slowly, and trade ties with Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). will expand. U.S. and Canada The United States remains the world's largest trader as it exports some $682 billion in 1997, well ahead of Germany ($564 billion) and Japan ($496 billion), and will comprise 12 percent of the U.S. GDP this year. Domestic activity will expand by 2.6 percent against a backdrop of 3 percent inflation and 5.2 percent unemployment. Canadian growth will not exceed 2.7 percent and unemployment will remain near 9 percent as fiscal tightening proceeds at provincial and federal levels. CONTACT: Bank of America, San Francisco Susan Stanley, 415/622-2449 Linda Smith, 415/953-0112 |
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