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While growth in developing countries is expected to fall to 2.9% in 2001, or nearly half the 5.5% recorded in 2000, GDP growth in South Asia is likely to be 4.5% in 2001 and 5.3% in 2002, states a new report released by the World Bank Colombo Office.

The release further states: Removing barriers to trade, the topic of WTO meetings in Doha in early November, could significantly boost the long-term prospects of developing countries, many of which are suffering from the fall-out of the September 11 attacks and worldwide slowdown.

Following are excerpts from the release: "Reshaping the world's trade system and reducing barriers to trade could accelerate medium-term growth and reduce poverty around the world, concludes Global Economic Prospects and the Developing Countries 2002: Making Trade Work for the World's Poor, the Bank's yearly report on prospects for developing countries. Expanding trade could well increase annual GDP growth by an additional 0.5 per cent over the long run - and by 2015, lift 300 million people out of poverty in addition to the 600 million escaping desperate poverty with normal growth. Developing countries stand to gain an estimated $1.5 trillion of additional income in the 10 years after liberalisation policies are begun; developed countries would see their incomes rise by some $1.3 trillion.

"To make this happen, the developed countries have to be willing to put agriculture and textiles on the negotiating table because those are the products that the world's poor produce," says Uri Dadush, Director of the World Bank's Economic Policy and Prospects Group. "A round that brings down barriers in agriculture, advances the timetable on textiles, and agrees to curtail antidumping at the same time it takes up the concerns of the industrialised countries has the potential for being a true 'Development Round'."

"The report says that, despite the tough circumstances in 2001, the long-term prospects for developing countries are promising. This is to a large extent due to improved macro-economic management, rising savings, increased openness, and greater diversification. Average per capita growth of 3.6 per cent is forecast for 2005-2015 for developing countries and 2.5 per cent for high-income nations. Export markets are expected to recover robustly by 2003, but commodity prices may remain depressed for some time."

"The short-term problems are serious and call for an urgent response. However, the long-term prospects for developing countries are still bright," notes Nick Stern, the World Bank's Chief Economist and its Senior Vice President. "Since the crises of the mid 1990s, trade linkages have risen in importance and many developing countries have become less reliant on the more volatile forms of capital flow. In addition, many developing countries are better equipped to absorb negative external shocks, given their domestic reforms and their trade diversification. Most important, these policy improvements justify the expectation that they will return to relatively high growth rates, once the global economy recovers from the current slowdown. Other developing countries, with weaker policies, have done much less well in the 1990s - there is a challenge of inclusion."

However, even with these favourable growth prospects in most regions, some could be left behind, making it difficult to meet development goals of reducing child mortality, halving poverty and raising literacy rates. Non-oil commodity exporters, countries with high debt levels, and nations with poor credit histories will find themselves at a disadvantage in trade and financial markets. Sub-Saharan Africa in particular confronts enormous problems in all of these dimensions - as well as the public health epidemic of AIDS. For these reasons, invigorating the global trade agenda, granting preferential access to low income countries, and providing aid to expand trade is imperative, even in these times of uncertainty, the authors stress."

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