Europe heading for bad year says economist

Europe and Japan will be the worst economic performers of the industrialised world in 2002, according to a World Economic Forum (WEF) official.

The official also predicts the USA will see a gradual recovery.

Economist and senior advisor to the Geneva-based WEF, Claude Smadja said that Europe is likely to pay a heavy price for underestimating the impact of the US slowdown on its own economy.

Speaking at an economic summit in the southern city of Bangalore, Mr Smadja added that a weakening euro could also complicate matters for European nations which may be forced to bolster the common currency against the dollar by raising rates, possibly hurting lending and spending.

He also predicted that Japan’s recession may last through the year and has not yet run its course, but United States’ gross domestic product is likely to be around 2% thanks to the repeated interest rate cuts last year.

The World Economic Forum is a global forum formed in 1971 and funded by 1,000 international companies.