Hamish McRae: Winter is coming but growth is set fine: why the world won't go into hibernation

A few things have happened in the past few days that suggest the world economy will come through the winter in decent enough shape. The most important of these are the falling oil price and the evidence that declining US house prices will simply slow the economy rather than tip it into recession, as some had feared.

There are other promising signs: Italy, long the dog of the eurozone, has started to do rather better; here in Britain, growth has picked up; and the strong growth from China and India that we have now become used to seems to be continuing. Autumn may have officially begun, but as yet, the winds seem far from chill.

That the oil price has fallen to its lowest level for six months matters only if that price stays below $60 a barrel or comes down further. Taking a less optimistic view, what can sensibly be said about the possibility of it bouncing back to $80 a barrel or more? It was, after all, only a few weeks ago when people were warning of $100.

Full Article on Independent.co.uk     Published: 24 September 2006