What direction did the Global, National and Regional economies move during 2005 and 2006 and what were the important strengths and weaknesses in each of these segments?

Global and U .S . Economy

State of the Global Economy - and Prospects

A . The Direction of Economy in 2005-2006

After a low-key performance for about three consecutive years , prospects for growth of the world economy significantly improved in 2004 . This improvement in the economic outlook was widespread across the nations of the world . However , differences in economic robustness among regions and countries persisted . In the preceding two years , macroeconomic policies had been crucial for stimulating the global recovery , but the emerging challenge was for policies to simultaneously sustain robust growth

and maintain stable inflation (United Nations , Economic and Social Development Affairs , 2004 ' 3

Following a temporary slowdown in mid-2004 , global GDP growth picked up through the first quarter of 2005 , with robust services sector output more than offsetting

slowing global growth in manufacturing and trade . In the second quarter however , in part reflecting the impact of higher oil prices , signs of slowness emerged , with leading indicators turning downward and business confidence weakening in most major countries . Subsequently , while global manufacturing and trade were strengthened , and leading indicators picked up , the continuing rise in crude oil and refined product prices , which was exacerbated by the catastrophic effects of Hurricane Katrina , acted as a major downward force (World Economic Outlook , 2005 ' 1

theless , the resilience of the global economy in 2005 continued to exceed expectations . Despite higher oil prices and natural disasters activity in the third quarter of 2005 was in fact stronger than earlier projected , particularly among emerging market countries global GDP growth was estimated at 4 .8 percent , 0 .5 percentage point higher than projected previously (World Economic Outlook , 2006 '1

Global industrial production has gone up from mid-2005 the services sector today remains strong global trade growth is at a high level consumer confidence and labor market conditions are on an optimistic note and forward-looking indicators such as business confidence have risen

Asia is forging ahead , with China enjoying double-digit expansion and India growing very rapidly as well . Growth in most emerging and developing countries remains solid , with a marked buoyancy of activity in China , India , and Russia . After years of deflationary weakness , Japan has embarked on a new path , with personal consumption and labor income joining exports and business investment as the main drivers of growth Japanese expansion is well established

In continental Europe , activity weakened again late last year , partly reacting to rising oil prices , but accelerated in early 2006 (Organization for Economic Co-operation and Development . There are signs of a more sustained recovery in the Euro area , although domestic demand growth remains subdued in that region

The impressive performance of the global economy in recent years is truly , a cause for celebration . Accelerated growth is vital prerequisite for poverty reduction in developing countries . Without sustained and rapid growth , lasting poverty reduction will prove elusive (Krueger

Though hurricanes had a damaging impact in the United States , it was but a transient one , and the activity was already bouncing back early in 2006 . Among industrial countries , the United...