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World Economy Highlights April 2005 World Bank and IMF spring meetings in April produced little in the way of help for developing countries. There was discussion of the usual suspects, I mean the usual subjects but no commitments for more help to needy states. Oil prices retreated to a bit below $50 per barrel but this might not last very far into the summer driving season in the United States . The U.S. Millennium Challenge Account made the first grant in its two year history. 1. The world Bank/IMF spring meetings on April 16-17 were notable for not being notable. The meetings usually produce some headlines but it was almost impossible even to find a news story about them this year. The attendees made a few statements about the need to address the debt problem of the poor nations but no new proposals for any help. They pronounced themselves as comfortable with the rate of inflation and the global economy in general. The latter was despite indications that the U.S. economy and almost all other regional economies are slowing down. This could cause even more problems for the developing nations. But the meetings were so quiet that even the regular demonstrations against the two institutions were muted and very limited in number; almost a non-happening. 2. At the end of April, oil prices retreated below $50 per barrel for the first time in more than two months. Gasoline prices in the U.S. also fell to an average of around $2.10 per gallon with less driving and a slowing economy. The U.S. stock markets responded positively after a month of significant losses. Most analysts expect the oil price to remain where it is until the summer driving season really kicks in June/July. Meanwhile, economic commentators are speculating that the price of other sources of energy will increase sharply; this could further slow the U.S. economy. This is important for the global situation because the U.S. consumer is a very important factor and without his/her continued buying, many economies will suffer. • The new U.S. approach to foreign aid the Millennium Challenge Account or MCA was touted as a way to make aid more effective when it first was announced in 2002. ( Carol Schwobel has kept the Commission members informed by e-mail with a very good series of articles on the concept.) The main idea is that aid will be given to the countries that can use it best, i.e., those which have relatively free economies, less corruption, more transparency, etc. There are some 16 categories which are assessed in making decisions. The account is managed by the Millennium Challenge Corp., not by AID and has received a total of $2.5 billion but granted only $110 million in April to Madagascar . Submitted by Ed Dillery , Member of the International Economics Committee of the Commission on Peace. Comments: C Edward Dillery cedillery@juno.com
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