Headline: Downright worry versus cautious optimism Source: Euromoney Date: January 2001 Author: Jonathan Brown Following the turbulence of 2000 in financial markets – with the euro in free fall, volatility in tech stocks, a climbing oil price and continuing problems in Japan – economists are divided into two camps over the outlook for 2001: the cautious and the downright worried. Merrill Lynch’s army of analysts take the cautious – even a cautiously optimistic – line, arguing that though global growth will continue to slow, conditions are in place that will result in positive returns in equity markets and a soft landing in the global economy. Michael Hartnett, senior international economist at Merrill Lynch, says that there are three questions facing the global economy in the coming year: will there be a soft landing, will the US Federal Reserve and the European Central Bank (ECB) ease monetary conditions, and will the euro bottom out and find itself a range? “The answers to these questions are yes, yes and yes,” he says. Merrill Lynch expects global growth to slow from 4.2% in 2000 to 3.2% in 2001, with US growth falling to 3.3% from the 5.1% |