Despite market inequalities and current-account deficits, the global economy did better than expected this year. World gross domestic product may come in at 5% for 2006. Not bad considering the 45-year average is 3.7%. Morgan Stanley Chief Global Economist Stephen Roach was on “Closing Bell,” and he says the same growth isn’t guaranteed next year.
Roach has a somewhat bleak outlook for '07. "The biggest risks for the global economy," Roach says, "are the U.S. housing market and slowing investments in China. A housing slowdown in the U.S. could cause collateral damage in the export businesses of many countries around the world – especially in Asia. Also, the success China has had in trying to cool its overheated investment sector could slow that economy enough to have a ripple effect globally."