Passage 1

The World Economy

  Canada's new Liberal government “ has to start rebuilding the economy,” Dornbusch writes.“ Public finance is rotten; industry is dull.But...there is an understanding of what has to happen.”

  Inflation is lower in Canada than in the US, allowing the Bank of Canada to lower interest rates over the next year without much risk of a rout for the Canadian dollar on foreign exchange markets.

  The Japanese economy remains in trouble, with output falling two quarters in a row for the first time in decades.An appreciation of more than 15 per cent in real terms in the yen over the past two years has hurt Japanese competitiveness, Dornbusch notes.The fiscal package to stimulate the econ- omy, to be implemented next April, “will help some but not much”.

  At best, Dornbusch predicts, the Japanese economy will grow a real 1 per cent next year.Ja- pan is in a situation which business is singularly ill-equipped to handle.The entire belief system of decades—superiority of the Japanese culture and business system, sustained growth, social cohe- sion, lifetime employment, accommodating finance, the US can be managed—are all up for grabs.Bad news!

  Outside Japan, Asia booms.China tried to slow down its economy, but apparently abandoned that effort at a Communist Party meeting last month.Growth in national output is expected to run at an astonishing 13 per cent this year.

  South Korea has its woes, and so do a few other economies, Dornbusch notes.But “there are no major obstacles to continued growth in Asia: savings rates are high, access to external capital is plentiful, and the world trading system is staying open.Asia cannot fail to do well.” 

The present economic situation in Canada presents nothing to be optimistic about.()

The next challenge will be to assist trade in services, which is growing more quickly than trade in goods.A fresh round of services talks is due to start in 2000.The aim will be to strengthen last year's agreements on telecoms, financial services and IT, as well as completing an accord on accountancy services which is currently being negotiated.Rich countries want firm rules on government procurement, to replace the vague existing code.Some countries, but not America, are also keen to tackle other subjects that eluded agreement in earlier talks, such as shipping.These will prove thorny, too, as any global talks will have to cope with bilateral agree-ments dating back decades.

What does “stay” mean and imply in “… 85 per cent of it is supposed to stay in the country…”?

What is meant by “The re-export figures are indicative of markets rather than volumes”?

Passage 2

What the statistics do not reveal is how much is unofficially re-exported from the country.Thisis acknowledged by Dubai's customs department.“ The re-export figures are indicative of markets rather than volumes,” a spokesman says.“If you add up the import figures and work out that 85 percent of it is supposed tostayin the country, then the UAE would be the best stocked warehouse in the world.”

Do the UAE's statistics on trade show the volume of all its re-exports?()

How could “weak growth of credit and a fall in some asset prices” slow down consumption?

What does “consumption” refer to here? Is it consumption of the consumer goods or that of thecapital goods?

primary commodity

Passage 1

The slowdown of the industrial countries in 1991 partly originated in structural problems inheri-ted from the 1980s.Slower growth in Europe in 1991 revealed that unemployment, for instance, was still a structurally problematic area.The unemployment rate in the four largest European economies was 7.8 per cent in 1990, near the peak of the business cycle, and rose to 8.3 per cent in 1991. Financial stress brought on by excessive debt in the household and corporate sectors was an example of another kind of structural problem, in particular for the economies of Japan and the United States. Financial institutions in these two countries adopted more conservative lending policies, curtailing fi-nancing of higher - risk projects such as commercial construction and highly leveraged corporate transactions.A number of weaker institutions were also consolidated through bankruptcy, merger and reorganization.These developments played some part in the general tightening of credit during 1991, which may have helped to slow the pace of investment in the United States and Japan.Weakgrowth of credit and a fall in some asset pricesprobably slowedconsumption, as well.

Did “a fall in some asset prices” have anything to do with “weak growth of credit”?()

dollar-denominated

intellectual property right