With the US economy struggling through a stop-and-go recovery and other major world economies equally unlucky, what effect would a possible war have? Let's take a look at the issue.
The US economy continues sluggish despite a series of government efforts.
The recession that ended at the end of 2001 didn't bring an economic recovery, so the Bush administration has been promoting a huge tax cut -- 1.35 trillion dollars in 10 years. Yet that brings down government revenues and worsens the deficit problem.
Consumer confidence is still weak. Corporate scandals and sharp falls in the market have undoubtedly caused a drop in US consumer confidence and a shortage of private investment.
The Dow and Nasdaq have both witnessed lows not seen in years. The loss of many family fortunes has shattered people's buying confidence. As the driving force of the US economy, consumer spending is rather weak.
As the world's leading economic power, the ailing US economy holds back the world's economic recovery. People are anxiously expecting a rebound from America, while that rebound seems to depend on whether the US dollar can maintain its status as a world currency and whether the new round of economic restructuring in the US will find some new economic growth points.
Some scholars have said that the US is planning to launch a war against Iraq to stimulate its depressed economy, as the increased defense spending will bring a large number of business and employment opportunities, especially to weapons-related sectors.
However the upcoming war could put more pressure on America's financial burden, since the fiscal deficits could reach 304 billion US dollars. Unlike the 1991 Gulf War, the US would have to spend both money and people on the war in Iraq. If the US has to finance most of the restructuring for Iraq after the war, this would worsen the US economy.
Will the possible war be a healing factor for the economy? Many analysts say it depends on how long the war lasts. A quick war may not greatly stimulate the economy, but will dispel uncertainties and worries in the financial sector. However, a prolonged war will make things complicated.
|
