some countries are finding increasingly less room for making macroeconomic policy adjustments. since 2000, many developed countries have successively lowered their interest rates and increased their fiscal deficits in response to the worsening domestic and foreign economic situation. since interest rates in some countries have now fallen to the lowest level in decades, there is limited room for further lowering interest rates and increasing deficits. therefore, while the risk of global economic volatility is rising, the use of policy means to achieve an economic upturn is severely restricted. 4. the volatility of exchange rates among the major currencies will have a differing impact on the economic adjustment of some countries. at present, the depreciation of the dollar has put pressure on the economic recovery of the euro area. if exchange rate volatility and international capital flows were to affect each other, there will be an even greater impact on the emerging market economies whose financial sectors are still not robust. in consideration of these vulnerabilities, i believe that staff ’ s overall forecast for the world economy and the u. s. economy is too optimistic and that they have underestimated the negative impact of geopolitical instability. in light of the existing vulnerabilities in the world economy, i believe that all countries should adopt appropriate policy measures to manage and resolve them. in particular, the major developed countries need to assume even more responsibility and pursue supportive macroeconomic policies. the united states should pay more attention to its existing macroeconomic weaknesses and enhance policy coordination with other countries to prevent the negative impact of sharp exchange rate volatility on the vulnerable world economy. the euro area should accelerate structural reform in the labor market area and pursue a looser monetary policy, when necessary. japan should focus on solving the problem of nonperforming loans and endeavor to carry out financial sector reform to create conditions conducive to economic recovery. to promote economic growth, the developing countries need to further expand domestic demand, improve financing conditions, pursue a robust macroeconomic policy, and speed up structural reform. ii. crisis prevention : surveillance, standards and codes in recent years, the imf has conducted extensive research and made considerable efforts in the area of crisis prevention and resolution. in my opinion, the imf should now set priorities and focus on those areas that can really enhance the crisis prevention capabilities of member countries. enhanced surveillance will be achieved by adjusting its focus. in light of the current situation in which the world economy is more dependent on the economies

. 8 percent, both showing the fastest growth since the same period in 1996. meanwhile, business efficiency improved sharply, and industrial profits grew 120 percent. imports and exports maintained their fast growth, being up 44 percent from the same period in 2002. this included export and import growth of 32. 8 percent and 57. 1 percent, respectively, for a trade deficit of nearly us $ 600 million and marked the first time that imports have exceeded exports since the asian financial crisis. the total volume of retail sales grew 9. 2 percent, 0. 7 percentage points more than in the same period in 2002. use of foreign capital saw sustained and rapid growth, with the contracted amount being up 59. 1 percent ( us $ 14. 2 billion ) and real use of foreign capital being up 53. 6 percent ( us $ 7. 54 billion ). the consumer price index increased by 0. 3 percent. money supply also increased correspondingly, including broad money, which was up 18 percent from the same period in 2002. we are now paying close attention to the development of the macroeconomic situation. while preventing deflation, we also need to avoid economic overheating. for 2003, we project that annual economic growth will remain at around 7 percent ; the cpi will rise 1 percent ; foreign trade will grow 7 percent ; and the registered urban unemployment rate will be 4. 5 percent. due to strong export growth, the economy of the hong kong special administrative region ( sar ) started to improve in the second half of 2002. while it still faces various, we firmly believe that the hong kong sar economy will definitely weather its difficulties and resume quite strong growth under the leadership of the hong kong sar government. the central government will firmly support all measures taken by the sar government to restore economic growth. since china ’ s resumption of its exercise of sovereignty over macao, we are pleased to see that its economy has been more prosperous and its society more stable under the leadership of the macao sar government. it is expected that macao sar will maintain a quite high economic growth rate in 2003.