EIU Reduces 2003 Global Economic Forecast

ByJohn S. McClenahen The global economy will remain sluggish during the first half of 2003 as excess capacity, high personal debt levels, weak confidence and high oil prices dampen private-sector demand, says the Economist Intelligence Unit (EIU), a business unit of the London-based Economist group. A result will be average GDP growth of 3.1% for 2003, down a tenth of a percentage point from EIU's mid-January forecast of 3.2%. Unlike many other forecasts, EIU figures GDP on a so-called purchasing-power-parity basis, which takes into account differences in currency exchange rates. "But a return to a more normal rate of growth in most major markets by late 2003 or early 2004 suggests that world GDP will average a far healthier 3.8% in 2004," EIU relates.