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Developing nations shine in UN
report
By Haider Rizvi
UNITED NATIONS - Despite an overall slump
in the global economy, growth in poor countries
continues to expand, a trend that many economists
believe could prove helpful in implementing the
international agenda on development.
"One
unusual aspect of the present pattern of global
economic growth is that it is widespread among
developed countries," says a new United Nations
report on the world's economic situation and
prospects released here this week. The sustained
economic growth in developing regions - if it
continues uninterrupted in the years to come -
would be "a window of opportunity" for meeting
development goals adopted at various international
conferences in the 1990s, including the Millennium
Summit in 2000, according to UN economists who
prepared the mid-year review.
Those goals include
cutting world poverty and hunger in half; providing
universal primary education; reducing child
mortality by two-thirds; cutting maternal mortality
by three-quarters; promoting gender equality;
and reversing the spread of HIV/AIDS, malaria
and other diseases, all by 2015. "The anticipated
growth of the world economy for 2004-05
is not only the strongest for the past few
years, but is unusually widespread among developing
countries and countries in transition," said
Jose Antonio Ocampo, undersecretary general
for Economic and Social Affairs. "Even with a
deceleration, developing countries are expected to
grow at 6% in 2005-06. All developing regions
are performing well by their respective standards
of the past few decades."
Last
year, economies in developing countries grew by
more than 6%, a trend that appears to be set
for "still-strong growth" of more than 5% in the next six
months and beyond, according to UN analysts. They
projected that South Asia, which joined East Asia
by achieving a 7% growth rate, was likely to
maintain the same rate this year. As for
Sub-Saharan Africa, the region's economy was
expected to grow by more than 5%. Similarly, the
economies in the former Soviet republics are
estimated to expand by 6% this year and more than
7% next year. "It is very, very promising," Ocampo
told reporters. "This higher economic growth in
many developing countries is partially
attributable to the improvements in economic
policies within these countries themselves."
For now, according to economists, the
climate remains generally favorable for developing
countries as international trade continues to
grow. Rising prices for energy and raw materials
in the past two years has improved the terms of
trade, and the costs of external financing are at
a historical low. They said some factors
responsible for higher growth in developing
countries were internal, as opposed to increased
demand from the developed countries. For example,
in China and India, income growth and poverty
reduction are buttressing internal markets, which
provide a source of demand other than exports.
"This is one factor giving rise to new patterns
that include growing trade among developing
countries, especially the purchase of raw
materials by China," said the UN report.
Noting that the developed world is still
considered the "main determinant" of global
growth, UN economists said the dichotomy between
reduced growth in the developed economies -
particularly in Europe and Japan - and continued
growth in the developing countries suggest "some
degree of de-linking".
UN
Secretary
General Kofi Annan praised the economic
performance of the developing world, but at the
same time cautioned that growth trends were not
free from risks, such as higher oil prices and
current imbalances in global trade, which could
stall momentum. "Widening external imbalances
across countries continue to pose a threat, with
the current account deficit of the United States
expected to reach US$700 billion," according to
the mid-year report. It warned policymakers
against relying on exchange rate adjustments to
redress imbalances, saying that without
adjustments in real economic activity, including
deficits and surplus, confidence in the US dollar
as the international reserve currency may wane.
Some experts suggested that the
International Monetary Fund (IMF) should take a
lead role in addressing the issue of fiscal
imbalances. "The IMF should design ways of
shifting risk from the developing countries to the
developed, and certainly the loans made by the
multinational institutions should be designed so
that the developing countries would not bear the
risks of exchange rates and interest rate
fluctuations," said Professor Joseph Stiglitz, a Noble
laureate in economics.
Addressing a
high-level meeting of the UN Economic and Social
Council the same day that the UN economic report
was released, Stiglitz said: "But that leaves the
underlying problem: why is there so much
instability in the global economy and what can be
done about it? If there is a single answer," he
said, "it is the US's macroeconomic policy. Without
correcting that, the problem cannot be corrected."
On higher oil prices, UN experts said that
the trend might choke global growth, in turn
leading to another precipitous fall in oil prices.
"If prices remain very high, the world economic
growth could suffer," Ocampo told reporters. The
UN forecasts a fall in oil prices in the second
half of this year, as global demand is expected to
lose some of its dynamism.
Though happy
with the news about increased economic growth in
the developing world, Annan told the Economic and
Social Council: "Growth is vital, but not
sufficient by itself. If economic growth is to
make greater inroads against poverty, there is a
need for smarter policies, more resources, and
closer partnerships. Only then will the benefits
of globalization reach all people, including those
who need it most."
(Inter Press
Service) | |
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