I think that might be the light

May 15 2003 By Peter Jackson, The Journal

I'm tempted to really stick my neck out this week and predict that the global economy has turned a corner.

After all, like most pundits, if I prove to be right, I'll never let you forget it, and, if I prove to be wrong, I'm sure nobody will hold it against me.

But, as befits a former accountant, I'll play safe and only point out that there are some distinctly encouraging signs.

First, experts are beginning to predict a recovery in the US economy in the second half. Stocks there have rallied slightly and although we have seen plenty of false dawns in recent months, there is a growing feeling in markets that there has to be a bottom somewhere and surely we have seen it.

Second, central bankers meeting in Basel earlier this week said they could see some grounds for optimism.

They predicted that the US would see economic growth reaching at least 3pc this year and continuing that trend over the next couple of years.

For too long, the world has been dependent on the strength of performance on the other side of the Atlantic, but there are now prospects of help from other quarters. Even Japan, which a couple of years ago one Pacific observer described to me as "a basket case", is showing some signs of revival.

The bankers said there were prospects there for an export-driven expansion and Japan's equity market has recently seen a rally.

All this should be viewed in the context of events in the Gulf. The uncertain political and military situation there has had a debilitating effect on the world economy for many months.

Don't forget that, almost until Baghdad fell, there were dire predictions of the US and UK being bogged down in a Vietnam-style quagmire, of regime change much closer to home than anticipated and of oil at US $100 a barrel.

It now looks - touch wood - that none of this is going to happen and investors can emerge blinking into the sunlight to reassure themselves that the roof has not fallen in.

Of course, as some wit once pointed out, the trouble with light at the end of the tunnel is that it might just mean a train coming the other way and - to mix metaphors horribly - we're not out of the woods yet.

As I pointed out last week, the German economy gives cause for concern, particularly if the Americans turn vengeful post- Gulf.

Furthermore, there are those predicting that the Sars virus will be the new Iraq.

That, I suspect, is so much rubbish. The Gulf was a real international crisis, a war for goodness sake. Sars is merely the latest apocalyptical great fear fashion, replacing the next Ice Age, global warming, nuclear winter, the hole in the ozone layer, BSE and the Invasion of the Body Snatchers. It will do until the next doomsday scenario comes along.

So, I think we can permit ourselves a little cautious optimism and, if it turns out to be well- founded, remember - you read it here first.