Emerging market economies like India, China, Brazil and South Africa are now leading the recovery, while the upturn in developed countries is weaker and resembles the pre-crisis build-up of global trade and current account imbalances. With fiscal stimulus measures petering out and systemic shortcomings such as insufficiently regulated financial markets and global current account inbalances still in place, growth rates in most countries will probably decline again in 2011, the study says.
The global real GDP is expected to grow by 3.5% in 2010
By contrast recovery has been weak in the transition economies of Central and Eastern Europe. African countries are less directly affected by the financial turmoil, since they are much less integrated into international financial markets than other developing countries.
As an alternative suggestion, the UNCTAD report calls upon the developing countries to rethink their policies in support of sustained economic progress if their current strategies for chieving growth and creating employment count heavily on expanding exports. Developing countries are building on strategies for for pushing export volumes by reducing prices. Such a situation will not result in increasing domestic demand or increase in wage employment.
The US economy, with debt-financed household consumption, can no longer serve as an engine of growth for the global economy and neither China nor Euro area nor Japan is likely to assume this role in the foreseeable future. In China, there is a deliberate reorientation of public policies towards supporting faster growth of domestic consumption, a trend that is confirmed and strengthened by accelerated wage increases. Since consumption in China is only one-eighth of that of the uS the aggregate effects of adjustments in these two large economies is likely to be contradtionary for the world economy.
The UNCTAD reports suggests the developing world for a reorientation of maroeconomic policies for strengthening domestic demand, greater investments in small sectors, effecting increase in wages and employment opportunities
UNCTAD calls for reorientation of policies to create jobs and reduce poverty
ASHOK B SHARMA - 2010-09-14 11:01
The winter of the global financial crisis is far from over. Whatever recovery is being noticed is fragile in nature. The proposed withdrawal of fiscal stimulus package in Western Europe may lead to double-dip recession and would not solve the intended fiscal problem since tax receipts will further fall, cautions UNCTAD in its trade and development report for the year 2010.