1.7 At present, the major uncertainty hanging over the world economy is the prospect of war in Iraq. Consumers are holding back their spending, and companies are delaying investment plans. Within a few weeks we will know whether war is going to break out. Within a few months we will know how things have turned out.

1.8 One significant worry is oil prices. After a war, they could fall back to normal and give a boost to growth, or they may stay high and slow down the recovery process. The crisis in Venezuela, which has significantly reduced world supplies of oil, makes it more likely that oil prices will stay high.

1.9 Growth in Europe and Japan this year is expected to remain sluggish. In the US, the consumer confidence index in January reached its lowest level since 1993. The present projection remains for a pickup in the second half of the year, bringing growth close to 3%, slightly better than 2002.