'India, developing nations to benefit from upturn in the U.S, Japan'

Wednesday, 03 September 2003, 19:30 IST
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NEW DELHI: India and other exporting countries are expected to benefit from a rise in investment, consumer spending and stronger recovery across rich nations leading to a growth in global trade, the World Bank said in its annual report released Wednesday. "Global recovery, though still fragile, is now underway. This recovery is expected to improve growth in developing countries in 2004," said Michael Carter, World Bank country director for India. He was presenting the annual forecast, 'Global Economic Prospects 2004: Realising the Development Promise of the Doha Agenda', ahead of WTO Ministerial Meet being held in Cancun from September 10. "Barring additional (geopolitical) shocks, the global growth should pick up to three percent in 2004," the report said. "Following an advance of four percent in 2003, developing countries are likely to grow at 4.9 percent in 2004, grounded in a revival of world trade, the fading of global tensions and the rekindling of domestic demand," the report said. For the current year, as against the earlier expectations of 6.2 percent anticipated in the first quarter, the World Bank now expects the world trade to record 4.6 percent growth. "World trade is growing more slowly than expected in 2003, but fundamentals suggest a build-up of momentum into 2004," the report said. If the global environment continued its growth momentum, the global trade was expected to record 8.0 percent growth in 2004, which is a considerable improvement considering that in 2001, world trade had registered a dip of two percent and recorded just a 2.5 percent upturn in 2002. The recent pick up in growth in the developing economies to four percent in the face of subdued conditions in the rich countries and amid geopolitical uncertainties has raised hopes of a further surge. "Developing countries appear poised for growth to pick-up further towards five percent on aggregate by 2004-05. On the external front, improved trade performance, greater access to international financial markets with continuing flows of foreign direct investment should provide a fillip to growth," said Dominique van der Mensbrugghe, senior economist of the World Bank development prospects group. The early signs of recovery in the U.S. including upturn in orders, production, investment and exports as well as firming equity markets are expected to improve confidence of investors and push growth. The World Bank experts were quick to point out that with the pace of stabilisation in the Middle East still uncertain, the challenges persisted. For developing countries to benefit from the economic revival, which is still lagging across European Union, the World Bank has urged the developing nations including India to improve the fiscal position, focus more on infrastructure spending and speeding up economic reforms to support demand. "A return to stronger growth in India (in part weather related) should power the South Asia region," said Aditya Mattoo, lead economist of the World Bank. Mattoo stressed that for the developing nations to fully benefit from the upturn there was need for fuller participation in the multilateral WTO negotiations. "One short term event that will influence the long-term outlook is the discussions in the WTO called the Doha Development Agenda," he said. An important component of this growth would be reduction in agriculture and export subsidies by the rich nations and providing better market access to goods and services of developing countries. Just the improvement in market access could result in stimulating income growth and lifting 144 million people in developing nations out of poverty. "To realise development promise, an agreement has to reduce trade barriers to goods and services produced in poor countries," he said.
Source: IANS
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