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Money matters

Hard Times

Large industrialised counties are now in a recession. What are the prospects for economic recovery?

The three most important industrial economies in the world are, at the moment, facing enormous problems. Germany is struggling with the cost of reunification and is in recession. Japan is also experiencing recession and the United States has a large budget deficit.

Forecasters and analysts face questions about the prospects of an economic recovery. Here are some of their findings:

The election of a new president of the United States gave hope to the rest of the world. If the US recovered, the rest of the world would face a more promising future. However, analysts now accept that the US will only recover very slowly.

Consumer and investor confidence is still lacking. Large deficits and declining short-term interest rates mean that there is little scope for economic stimulus.

The Japanese economy, after years of trade and budget surpluses, is in deep recession and the growth rate has slowed down considerably. German economists have lowered their forecasts for economic growth this year. The lowering of German interest rates may bring some relief to other members of the European Exchange Rate Mechanism (ERM). However, Germany's importance as Europe's largest export market may decline.

Most forecasters are predicting world growth of only one percent in 1993. Others predict that it will only be after the completion of the GATT (General Agreement on Tariffs and Trade) negotiations that the world economy will improve.

In some parts of the world, there are more positive signs, particularly in some Latin American countries and in South-East Asia. Another encouraging point is that analysts do not expect an upsurge in inflation in 1993.

Analysts says that, as long as the rate of interest stays above the rate of growth in national income, then the ratio of debt to income will get worse. Falling interest rates help towards overcoming this problem. They believe it may take several years before there is real recovery. However, advances in technology and the collapse of communism offer hope for the world economy.

Reading for meaning

When you read an article, you can often guess the words you do not know from the context.

Find words or expressions in the above article which have the following meanings:

a. fighting

b. The amount by which something is less than what is needed

c. a return to a strong condition

d. something that provokes activity

e. predictions of what may be expected to happen in the future

f. sudden rise


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