I AM certainly not alone in being spellbound by the haste at which economists have had to change their forecasts of growth for the world.
There we all were plodding along expecting that growth in the world would continue at about 3.5 to 4 per cent.
Now with the US potentially going into a recession, forecasters have had to redo their forecasted numbers for the calendar year.
The latest forecasts come to us from Dennis Mahoney, chief economist for BNP Paribas.
The forecast for growth in the US and Japan have been cut sharply for the 2001 year. Additionally, the forecast for Europe has also been cut.
For 2002, the US is expected to rebound while Europe will follow a flat profile with growth closer to trend levels.
Within Europe, the UK stands out as being the area that will provide stronger growth in 2002.
The main theme that we can take away from these forecasts is that the slowdown in growth is going to be across the whole world.
Every region is expected to be affected. The change in the US expectations is one of the largest, being exceeded only by the turnaround in the Japanese economy.
That economy being one of our major trading partners will impact on us, here in Australia, substantially.
Of course, lower growth also tends to see substantial cuts in interest rates.
Already we have seen the Fed cut rates there aggressively.
A 75 basis point cut there is certainly not expected to be the last in this cycle.
Most commentators are expecting that there will be at least another cut of about 75 basis points soon.
So where are the interest rates forecast to head to?
The one thing that has surprised most commentators is the speed at which the slowdown has occurred and also the unanimity of the slowdown across the world.
There doesn’t appear to be a region of the world that is escaping the current downturn.
The upside of the slowdown is the fact that we can look forward to a long period of low interest rates.
This may have an upside for the housing market, a fact that will be cheered by the despairing real estate industry.
