The world economy will see modest growth this year, Sir Eddie George, governor of the Bank of England and spokesman for the G10 central bankers, said today, adding that the financial markets were anticipating a short war in Iraq.
"We are seeing slow but relatively steady growth in the world economy in 2003," Sir Eddie said after a regular meeting of the central bankers taking place at the Swiss-based Bank for International Settlements (BIS).
Commenting on the economic impact of a possible war in Iraq, he said he did not want to speculate, adding that central banks can only react as events unfold. However, he said: "The markets have already anticipated that there will be a war and that it will be short." The trend in oil prices was an indication of this, he added.
The economic impact would depend on whether any conflict was lengthy or short-lived, he said.
"But there is not a great deal you can do to anticipate that kind of risk," he added, saying, however, that central banks would make sure monetary policy accomodated developments if growth turned out to be more sluggish than expected.
Sir Eddie predicted economic growth would pick up later in the year in the United States and Japan and then spread to the euro zone. Although figures for growth were not given during the meeting, Sir Eddie said that his estimates made in September 2002 remained valid.
At that time, he had said the euro zone was set for two-per cent growth in 2003 and the US should see growth of about three per cent.
AFP