|
|
 |
 |
 |
 |
| Thursday, 18 November 2004 |
 |
|
 |
Business | |
| News Business Features Editorial Security Politics World Letters Sports Obituaries
|
Regional trade pacts must create trade to reduce poverty - World Bank report WASHINGTON, Economic growth in South Asia, while still strong, has declined to 6 percent in 2004, from 7.5 percent in 2003, according to the Global Economic Prospects 2005: Trade, Regionalism and Prosperity, a report launched by the World Bank. The slowdown in the region can be attributed to adverse weather conditions and a decline in agricultural output due to poor rainfall. For 2005, regional gross domestic product is expected to increase by 6.3 percent. With regional trade agreements (RTAs) having increased sixfold since the 1980s and now covering more than one-third of global trade, the World Bank's report advises countries concluding bilateral and regional trade pacts to keep them "open", so as not to divert trade or cause market distortions that penalise other developing countries. "Trade as a share of GDP remains smaller in South Asia than in any other developing region," said Shanta Devarajan, Chief Economist for the South Asia region in the Bank. "But things are changing, including prospects for greater intra-regional trade as indicated by the recent SAFTA agreement. The challenge is to ensure that regional integration does not occur behind a wall of protection." Multilateral market openings-which are being sought in the Doha Round of WTO negotiations-hold the promise of greater potential gains to all developing countries, the report said. "A multilateral agreement is the only way to open agricultural markets and reduce or end subsidies in rich countries," said FranØois Bourguignon, World Bank's Chief Economist. These reforms are of critical importance to the poor but they are not on the table in regional trade talks." In addition to its analysis of regional trade agreements, the report notes in its review of global prospects that 2004 is likely to be the best year for growth in developing countries since 1974. Growth is estimated to be 6.1 percent, due to a strong cyclical global rebound from the 2001-02 slowdown and a solid performance spanning all regions. Global growth in 2004 is also strong at 4.0 percent, and the report forecasts that it will decelerate to 3.2 percent in 2005, and 2006. Slower growth is expected in developing countries too, down from 6.1 percent in 2004 to a projected 5.4 percent in 2005 and 5.1 percent in 2006. East Asian growth will continue to outrun that of other regions, if at a somewhat slower pace, with 7.1 percent growth in 2005. South Asia is close behind with growth of 6.0 percent expected. China's growth is forecast to slow modestly, in response to the government's effort to prevent overheating; similarly, East Asian countries that had gained from a 30-percent increase in Chinese import demand this year, are also expected to experience moderating growth. Russia and oil-producing countries of the Middle East and North Africa, beneficiaries from high petroleum prices in 2004, are expected to grow at about the same pace in 2005 as oil prices move downwards. In the medium-long run, the report predicts that developing countries could nearly double their 1990s growth rate as their investments in structural reforms begin to pay dividends. A sustained improvement in their macroeconomic stability, greater flexibility in moving resources to competitive opportunities, a better investment climate, and further reductions in reducing trade barriers, together with continued progress in the transition countries, should help developing countries reach an average annual per capita growth rate of 3.4 percent between 2006 and 2015, up from less than two percent in the 1990s. The report warns that some countries, particularly in Africa, have not participated in this higher growth. This upbeat forecast is also vulnerable to risks, such as high and volatile oil prices, abrupt increases in interest rates associated with adjustments in the US current account and government deficits, and possible stumbles in the effort to cool China's rapidly growing economy. But the report sees these risks as manageable and concludes on a positive note. The rapid growth of developing economies, most concentrated in East and South Asia, has produced a spectacular drop in poverty, though some countries remain seriously off-target. |
|
News | Business | Features
| Editorial | Security
Produced by Lake House |
