War ends but economic battle continues

NOW that the war is over, many US analysts, not to mention the White House, are forecasting that the US economy will rebound in the year ahead. It is widely expected

Mon, 21 Apr, 2003 - 01:00

these forecasters that investment spending corporates, the key to sustainable economic recovery, will pick-up once geopolitical uncertainties fade.

But how realistic is this assumption? In a survey published last week by the US "Business Roundtable" group (roughly equivalent to our own IBEC), the chief executive officers of 250 of America's top companies warned that an end to the war in Iraq won't necessarily mean a quick rebound for the economy.

Stating that inventories are still too high, capacity too great and orders too slow for them to be optimistic, they said "nobody is basing any of their investment decisions on growth at this point. These kind of business conditions are going to continue on, war or no war". When asked to place a number on their analysis, the Business Roundtable forecast Gross Domestic Product (GDP) economic growth of 2.2% in the US this year down from 2.4% in 2002.