The world's economic outlook for 2005 is uncertain at best. Pessimists may worry about worst-case scenarios, but economic disasters, unlike natural disasters, can be prevented through better planning and management. Much depends on how major economic powers -- particularly the United States, Europe, Japan and China -- handle domestic and international problems in the year ahead.

One immediate concern is how the U.S. dollar will move in foreign-exchange markets. Lately the greenback has lost some of its exchange value, reflecting financial market worries about America's bloated twin deficits: in the budget as a result of massive tax cuts and the mounting military costs in Iraq, and in the current account involving trade. The question being asked is whether the second-term administration of President George W. Bush can stop the hemorrhaging.

The American currency has followed a zigzag course in recent weeks. Typically, it has declined as the trading week drew to a close but then rebound early the next week following a statement by a U.S. administration official that Washington supported a "strong dollar." Such flip-flop movements reflect a lack of market confidence in the dollar.