ERMUSR MISC. ISSUES 01-13-2004 - Laserfiche WebLink

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i 2 Global Economic Outlook Exports improve as the world economy expands 1 he global economy is going to move into high- bottlenecks were resolved,but a fix to that problem is er gear in 2004, improving the fortunes of nowhere in sight. U.S. exporters after three lean years. Gains in world gross domestic product(GDP) are likely to CHINA continues to set the pace for rapid growth in reach 4%, the fastest pace since 2000 and a welcome Asia. Its GDP gain in 2004 is likely to reach 8%,about increase from about 3% in 2003. the same as in 2003. China will help lift economies The outlook for U.S. exports is even brighter: a throughout the region by buying more imports and surge of 6% after a 3% gain in providing a low-cost manufactur- 2003. But imports will also grow, -44-itiyoamorsi, ing base for South Korea and rising about 7% in 2004, about x Japan as well as the U.S. the same percentage gain as this China is going to be a subject r g g I year That means the U.S. trade v f' of economic controversy in 2004 deficit is bound to rise in 2004 to 41 . °` as the U.S. presidential race heats about$600 billion,up from the t '" 1 �' up. The loss of U.S. manufactur- record $550 billion or so this year '4.4Z.1 •rt,r° ing jobs to China, inevitable snags ., ''....71 `x-.�t_ in implementing pledges to open Markets Gaining ., \ its markets when China joined the " World Trade Organization(WTO) major U.S. trading partners `' y�J g ( ) expect to see higher growth in '� ♦ in 2001 and China's refusal to let :Zi tom*P. its currency float freely in the 2004 as the rising economic tide ; lifts all boats. , „.-,- world market are sure to be topics k ,pt ' • k ,• of hot debate. �N . CANADA AND MEXICO, by far our tx' t., d' President Bush will try to loo., \ 41 top trade partners, will see their ,, tough on these issues,but Democ economies expand in tandem ,-. rats will charge him with not with U.S. growth. The cost of ex f , t doing enough. " ports from Canada has risen with t" the strengthening of Canada's '1 :`.. _- JAPAN, which is nip and tuck with i currency against the U.S. dollar. China for third ranking in overall But greater demand for Canadian goods in the U.S. trade with the U.S.,is likely to grow 1.5% in 2004, will more than offset that. Canada's economy is set to down from 2% in 2003. U.S. exports of information grow by 3.3% in 2004, up from about 2% growth pro- technology to Japan are going to increase,and U.S. jected for 2003. U.S. exporters will find Canadian travel destinations popular with Japanese tourists, businesses more eager to invest in information tech- such as Hawaii and California,will see some improve nology,telecommunications gear, machine tools and ment in business. farm equipment. After years in the economic doldrums,Japan has Look for Mexico's economy to expand about 3% shed much of its excess industrial capacity and is be- in 2004. Mexico will open its power generation and ginning to increase capital spending. But its banking natural gas sectors to foreign investment,which is system, which is weighed down by loans to insolvent sure to draw substantial U.S. capital. Its oil industry, companies, is sure to hinder the expansion. however, will remain nationalized. Sweeping economic and tax reforms sought by SOUTH KOREA AND TAIWAN are each heading for a gait President Vicente Fox will remain stymied in a hos- of about 4% in 2004. Growth is somewhat depender tile legislature.Mexico's economy contracted slightly on continued political stability in the region. South in 2001 but eked out economic growth in 2002 and Korea is bound to suffer if North Korea's unpre- will expand by about 13% this year. Its trade with dictable regime decides to escalate tensions on the the U.S. would grow more rapidly if border-crossing peninsula. Elections in Taiwan may prompt renewe2 4 1 The Kiplinger Letter • KiplingerForecasts.com