On the other hand, world production of cotton is expected to come down in the next season to 18.94 million tonnes from an estimated level of 19.12 million tonnes in 1999-00, despite a likely increase of about half a million tonnes in the USA to 4.20 million tonnes from nearly 3.69 million tonnes.

In all other major cotton producing countries, however, cotton output in the coming season is expected by ICAC to be lower. In China it is expected to come down from 3.90 million tonnes to 3.70 million tonnes as that country is reducing its cotton acreage. Production is expected to fall in India to 2.70 million tonnes from 2.75 million tonnes; to 1.55 million tonnes from 1.80 million tonnes in Pakistan; to 1.10 million tonnes from 1.16 million tonnes in Uzbekistan and to 0.84 million tonnes from 0.85 million tonnes in Turkey.

Combined production of other countries is expected to be lower around 4.85 million tonnes compared with 4.97 million tonnes in the current season.It might be interesting to note that the world economy which was adversely affected in 1997-98, because of East Asian financial crisis is expected to do better. This year, as crisis-hit economies are on the path to recovery.

South Korea is stated to have come back out of crisis. Thailand, Indonesia, Malaysia and the Philippines are also doing much better than before, though the Japanese economy remains sluggish.

As a result, the world GDP which is estimated to have grown at the rate of 3 per cent in 1999-00 is likely to rise 3.5 per cent in 2000-01. This is the main reason for the expected increase 1.2 per cent in cotton consumption in the next season.

Similarly, consumption of end-use textile products is expected to increase both in industrial and developing countries. Increases are also likely in Eastern Europe and former USSR group countries. Financial crisis that hit East Asian countries earlier, not only affected economies of those countries, but those of some others as well. As a result, the world GDP growth decelerated from 4.2 per cent in 1997 to 2.5 per cent in 1998, the lowest level of growth in the last five years. Recession in Japan, the first in 24 years, further complicated the situation. All these factors had an adverse effect on the offtake of cotton and textiles.

The World GDP growth has now recovered to about 3 per cent and might rise further to 3.5 per cent. This explains why the world offtake of cotton is improving again. Decline in production under this situation would mean hardening prices. The end-season stocks at the close of 2000-01 season is expected to contract further to 7.93 million tonnes, compared with 9.00 million tonnes at the end of 1999-00 season and 9.66 million tonnes at the end of 1998-99.

Economic growth and competitive prices are stimulating growth in world cotton consumption. On the other hand tighter supply position because of decline in production is imparting firmness to cotton prices. The Cotlook `A' index, an indicator of international prices which had fallen as low as 44 cents per lb in December 1999 is expected to average a 14-year low of 53 cents per lb. in 1999-00. However it has already taken a turn in view of the tightening demand-supply position and is expected to average around 62 cents per lb in 2000-01.