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In 2003, the global economy developed very moderately. The first six months were characterized by geopolitical uncertainty as a result of the war in Iraq, by the outbreak of SARS (Severe Acute Respiratory Syndrome) in Southeast
Asia, and a lack of major economic impulses. As a result, economic development in the USA was very subdued in the first Half of 2003, all major economic indices having shown continued weakness. On account of this very moderate economic development,
the Federal Reserve Board (the Fed) cut the US prime rate to 1%, the lowest in 45 years. Not until the second Half of 2003 were there some signs of recovery in the USA. Improving economic indicators and a strong development of the Gross Domestic
Product (GDP) in the third Quarter signaled growing economic revival. The economy in Europe developed likewise, although much more subdued. The rise of the Euro against
the US dollar placed an additional burden on economic activities. Not until the fourth Quarter was there a slight uptick in economic activities. The economic upturn in the USA is seen as the driving force for this growth. China’s
economy recovered very quickly from the effects of the SARS epidemic. According to researchers the country’s GDP in 2003 was reduced by only 0.5-1% due to SARS. Sources:
OECD, WIFO
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