This Meeting is an opportunity for a stocktaking on the economy of Asia, after the return to brisk growth. Global economic and financial conditions have improved significantly during the past year and the recovery continues to gain momentum. World growth is projected to reach 4.2 percent in 2000. The contributions to the improved outlook come from the strong growth performances of both industrial countries and emerging economies. A significant recovery is taking place in the euro area, where growth should reach 3.2 percent this year.
Several uncertainties remain.
External imbalances among the major currency areas are becoming more pronounced and are not sustainable. Moreover, recent increased volatility in major equity markets has highlighted, once more, concerns about too high valuations and the risks of a significant downward correction. Achieving a smooth transition to a more sustainable pattern of growth is, therefore, the difficult challenge that policy makers are now facing. The turnaround of Southeast Asian countries has been spectacular. Growth has been mainly driven by a strong demand for exports, boosted by the depreciation of nearly all currencies in the region, though domestic demand has also played an important role in the recovery.