The global economy is on shaky grounds, reports the World Trade Organization in its most recent assessment of the international outlook. Uncertainty created by geopolitics and the effects of severe acute respiratory syndrome, or SARS, has reinforced vulnerabilities that result from imbalances in the structure of the international economy. Each of those problems must be addressed individually, even though the combined effects are interrelated. Unfortunately, this cooperation is required at the very time that each country's ability to adjust is constrained by those same pressures. Governments walk a line that is growing progressively narrower.

According to the WTO, world merchandise trade grew 2.5 percent in 2002, a marked improvement from the 1 percent decline recorded in 2001, but still well below the 6.7 percent average rate of trade growth achieved in the 1990s. This year, the organization forecasts trade growth of between 2 and 3 percent, but those estimates are very rough, given the many uncertainties in the global economy. Questions include the length of the war in Iraq and its impact on petroleum prices, the spread of SARS and the outlook for the United States, which has served as an engine of growth for the entire world.

The war in Iraq may be officially over, but international oil markets are still in a state of confusion. Iraq has the world's second-largest oil reserves, and it can be presumed that when a government is installed in Baghdad, its oil policies will be sensitive to Western consumer concerns. No one knows when that will occur. Until then, volatility will continue. Oil prices shot up to almost $40 a barrel before war broke out, but producers opened the spigots and eased demand pressures. This week prices dropped from $30 to $26 a barrel, prompting the Organization of Petroleum Exporting Countries to call for production cutbacks to keep prices in their preferred range of $22-$28 a barrel.