The economic background [September 1998]

The world economy has recently seen several shocks from the Asian financial crisis to the
devaluation of the rouble. Columbia has also devalued and commodity prices have fallen sharply particularly the price of oil which has fallen from $18 to about $13. The financial crises have sent stock markets into downwards spirals where the Dow Jones Industrial Average lost all of its gains this year and Wall Street had $4 trillion wiped off share prices (equivalent to the GDP of Japan). As fundamentals in the global economy are not out of line, and as predicted stock markets have regained much of the ground. There is now severe pressure on Latin American and African economies that are suffering from the loss of commodity revenues. Growth in the developed economies continues although slowing from 1997 in some regions. It is unlikely that there will be a global recession as some forecasters are predicting.