The world economy is currently faced with considerable elements of uncertainty. Since a cyclical downturn appears to exist in job opportunities in industry while the service sector is seeking more labour, the importance of smoothly operating labour markets becomes more pronounced. The uncertainty caused by the international financial crisis affects the state of the global economy. World trade growth slowed down to about 3 per cent last year from the previous year's 10 per cent rate, and growth in world total output fell by one half to 2 per cent. There has been a general fall in world market prices, and prospects in exports and industrial production in the industrialised countries have deteriorated.
Significant uncertainty prevails particularly in the economic outlook in Japan.
The Japanese economy has continued to contract and public sector debt has increased, plus short-term interest rates are close to zero. Total output is not expected to grow either in 1999 or in 2000. Problems in the financial sector are serious and the sector is undergoing restructuring. The fall in asset values has only made the situation worse. Economic growth in the United States is based to an increasingly greater extent on private consumption financed by borrowing.