The survey, released on Monday also said that the world economy would grow at 32 per cent in 2000, ending the dip in 1998 and 1999. Continued strength was expected in North America and improvement in most parts of the world, especially in South and East Asia, Latin America and Europe, it added.

In many ways, the international economy is resuming its pre-crisis mode. Private capital flows to emerging economies were on the upswing again, although not yet at pre-crisis rates. International prices of most commodities have bottomed out and fuel prices have risen appreciably. The volume of world trade was growing by about eight per cent, up from from less than five per cent in 1999 and about three per cent in 1998.

According to the UN survey, employment was improving globally, including in western Europe. The unemployment rate dropped below 10 per cent at the end of 1999 for the first time since 1992. Although the crisis induced rise in unemployment has peaked in developing and transition economies, unemployment rates remain above pre-crisis levels.

Inflation, it says, is under control globally. In the developed countries, inflation is largely an expectation, rather than something visible. Even more encouragingly, many emerging market economies succeeded in reducing inflation in 1999. It is expected to decline further in many developing countries and economies in transition this year, the survey said.

Notwithstanding the optimistic outlook for the medium-term, the survey warns that the world economy is vulnerable to a number of potential shocks that warrant the attention of policy-makers. A sharp swing in major exchange rates is possible, for example, if financial markets become concerned about the growing - and ultimately indisputable - trade imbalances of major countries.

For the first time in over a decade, almost all developed countries are simultaneously tightening monetary policy and there is a possibility that in aggregate the authorities may inadvertently adopt an excessive restrictive stance.

Although the rapid escalation of equity valuations in major economies appears to have ended, these prices remain unusually high by conventional measures. A large and sustained drop in asset prices, especially in the US, could reduce consumption and investment and send the global economy to a much lower rate of growth, the survey adds.