u>s> economy to struggle for a while yet

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    SYDNEY, July 11 AAP - The US economy would struggle for some
    years yet because structural imbalances existed, a leading
    economist said today.
    And the US dollar would need to fall much further than it had to
    compensate, Morgan Stanley chief economist Stephen Roach said.
    He told a briefing in Sydney the world would have to do without
    its engine of growth for some time because the US economy would
    probably record growth rates of around 2.0 per cent.
    "Since the (equity market) bubble burst, the US economy has
    grown an anaemic 1.7 per cent average annual rate since 2000 and
    all you can say is: `Get used to it, that's America's new norm',"
    he said.
    "Don't count on America being the engine of the world."
    He said the massive US balance of payments deficit and lack of
    savings would hamper its economy for some time.
    "(With) the massive and ever widening balance of payments
    deficit and the record low in the national savings rate, with
    record levels of private sector indebtedness, it is very difficult
    for massive fiscal and monetary stimulus to get traction," he said.
    He said the US balance of payments deficit was 5.1 per cent of
    "In Australia that may not be such a big deal until you
    recognise that our balance of payments deficit is $US545 billion -
    the size of Australia's economy.
    "We have to import $US2 billion of capital inflow every business
    day to grow our economy."
    He said the only fix to the problem, other than politically
    unpalatable fiscal restraint, was for further depreciation of the
    US dollar.
    This was because the US Federal Reserve had run out of
    traditional ammunition and was not keen to take US interest rates,
    at 1.0 per cent, much lower.
    "The only fix as far as I know is the US dollar has to go down.
    "It has gone down by 10 per cent and it probably has to go down
    another 20 per cent and that will not be an easy fix but it is the
    only way I know."

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