BASEL (AFX) - The speed, extent and impact of the ongoing US economic slowdown in other countries clouds the short-term global economic outlook, the Bank for International Settlements (BIS) said in its annual report.
"Future prospects depend to a significant extent on the resilience of productivity growth and on a recovery in profits and capital spendings," it said.
Japanese growth slowed as lower export demand exacerbated domestic weakness, whilst euro area growth withstood better on its robust domestic demand, less indebted corporate sector and sounder banking system, it said.
The US slowdown which emerged in the second half of the 2000 was notably triggered off by a threefold rise in oil prices since 1998. Another factor was the progressive tightening of US monetary policy since mid-1999 together with the perception the US economy had reached a cyclical peak.
Once the US economy had reached this turning point, various accelerator effects reinforced the slowdown.
Demands for automobiles dropped sharply and orders had to be cut back by businesses as stocks accumulated, it said.
As future earnings growth prospects deteriorated and signs of excess capacity emerged, businesses began to cut IT investment plans, triggering the first fall in high-tech equipment investment seen in nine-years, it said.
Furthermore, the "significant" job cut announcements resulted in plunging US consumer confidence and lower households spending, it said.