Money

Issue No. 6 - July/September 2002

World Markets - Where to from here??

by Tony Catt

Further evidence of the global economic recovery continued in the March quarter with the recovery led by the US and non-Japan Asia. Europe and Japan will follow, though Japan is struggling under the weight of its structural problems. However, there remains a strong relationship between Japanese exports and the global industrial production cycle, with Japan likely to benefit from the emerging upswing in global production.

We would therefore expect to see a cyclical upswing in the world markets in the second half of this year. The Australian economy is likely to continue to do well, but unlike 2001, 2002 will stand out less in global comparisons.

Significant stimulus is now in place to continue driving a recovery in the global economy. Some major influences include:

• Very low interest rates
• Reduced oil prices (although tensions in the Middle East may drive prices higher)
• An excessive run down in inventory levels
• Fiscal stimulus
• Imbalances ( ie ove...

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