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Philippe d’Arvisenet Global Chief Economist ECONOMIC RESEARCH DEPARTMENT

Philippe d’Arvisenet Global Chief Economist ECONOMIC RESEARCH DEPARTMENT. THE WORLD ECONOMIC OUTLOOK Conferences BNP PARIBAS, Thursday 6th October, 2005. Chart 1. Chart 2. Chart 3. Chart 4. I - UNITED STATES. STRONG ACTIVITY … GDP growth reached 4.2 % in 2004

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Philippe d’Arvisenet Global Chief Economist ECONOMIC RESEARCH DEPARTMENT

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  1. Philippe d’ArvisenetGlobal Chief Economist ECONOMIC RESEARCH DEPARTMENT THE WORLD ECONOMIC OUTLOOK Conferences BNP PARIBAS, Thursday 6th October, 2005

  2. Chart 1

  3. Chart 2

  4. Chart 3

  5. Chart 4

  6. I - UNITED STATES

  7. STRONG ACTIVITY … • GDP growth reached 4.2 % in 2004 • We expect about 3.5 % in 2005 and 2006 • Katrina : lower activity end 2005, acceleration at the beginning of 2006 • Growth components : • consumption moderating somewhat as a result of high oil prices (not much risk related to the level in indebtedness, job creations and compensations favourably oriented, long rates remain at a record low) • investment to remain strong (sound financial situation of the corporate sector, higher rates of capacity utilisation, favourable financing conditions, manufacturing mini cycle bottomed out) • exports supported by the lower dollar but impacted by weakness in European investment.

  8. … INFLATION PRESSURES SHOULD REMAIN CONTAINED • wages: towards an impact of the unemployment getting closer to NAIRU • productivity gains: in line with their long term trend … NORMALISATION IN MONETARY POLICY WILL BE ACHIEVED SOON.

  9. … IMBALANCES • fiscal policy, the cycle delivers: fiscal deficit will be significantly below expectation • long term problems persist ... • current account widening • the dollar is likely to remain under pressure

  10. Chart 5

  11. Chart 5bis

  12. Chart 6

  13. Chart 7

  14. Chart 8

  15. Chart 9

  16. Chart 9bis

  17. Chart 10

  18. Chart 11

  19. Chart 12

  20. Chart 12bis

  21. Chart 12ter

  22. Chart 13

  23. Chart 13bis

  24. Chart 14

  25. Chart 14bis

  26. Chart 15

  27. Chart 16

  28. Chart 17

  29. Chart 18

  30. Chart 19

  31. Chart 20

  32. Chart 21

  33. Chart 22

  34. Chart 22bis

  35. Chart 23

  36. Chart 24

  37. Chart 25

  38. II - EUROLAND

  39. what leading indicators tell us : • growth below potential once again in 2005 and 2006 • domestic demand is lagging; high unemployment, low increase in real wages impact households confidence and consumption • the financial situation of the corporate sector has strongly improved, and external demand is likely to be sustained, but the weak domestic demand will prevent a strong recovery in investment • the renewed strength of the euro will dampen the contribution of external demand to GDP growth • significant and structural national differences across member countries

  40. fiscal policies under stress; the stability pact has been watered down, several countries (Italy, Portugal, Greece …) have entered the EDP (Excessive Deficit Procedure), France and Germany likely to overshoot the ceiling of 3% of GDP in 2005 • monetary policy to remain accommodative • core inflation outlook is still favorable and growth disappointing • no price-wage spiral despite oil shock • liquidity is abundant with consequences on asset prices, but with no general push to domestic demand and consumption prices as yet • the appetite to implement structural reforms remains mixed • towards a lasting wait & see stance

  41. Chart 26

  42. Chart 27

  43. Chart 28

  44. Chart 29

  45. Chart 30

  46. Chart 31

  47. Chart 32

  48. Chart 33

  49. Chart 34

  50. Chart 35

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