Global economic activity is accelerating at record levels, but many of the world’s poorest countries are hurt by trade barriers the United States and other wealthy nations impose on their exports, the World Bank said yesterday.
While the outlook for continued economic growth is good, the report said, sharp changes in oil prices remain a major uncertainty, as does whether the U.S. economy will continue to expand or crash to a “hard landing.” Fragility of financial systems in East Asia also is a concern, the bank said.
Global Economic Prospects and the Developing Countries 2001, the bank’s annual update on these nations, said their economic growth is expected to register 5.3 percent in 2000, 5 percent in 2001 and 4.8 percent in 2002.
However, the report warns that many of the world’s poorest nations, especially those torn by conflict in Africa, are not keeping pace.
The bank said high trade barriers imposed by industrialized countries farm and food products, along with the agricultural subsidies, contribute to the poor performance of developing countries exports of these commodities.
“There is a certain hypocrisy about lectures from advanced countries to developing countries on the importance of [trade] liberalization and joining the global economy while at the same time they erect barriers against their goods,” said Nick Stern, the World Bank’s chief economist.
He said industrialized countries should make a major effort to reduce the protectionism they practice against developing countries.
Nevertheless, “What this report emphasizes convincingly is that prospects for growth are better than they have been in around 30 years,” Mr. Stern said.
He said many developing countries have improved their economic policies over the past 10 years, tamed inflation, opened up to trade, emphasized internal reforms and improved education of their workers.
“We all have to work to try to create the environment where poor people participate more fully in economic growth,” Mr. Stern said.
The 158-page report said that “world economic activity during 2000 is proceeding at the fastest pace in over a decade with developing country output expected to exceed 5 percent.
“World trade volumes are expected to rise by a record 12.5 percent this year,” the report said, the highest rate of growth since before the 1970s oil shocks.
“We think this is a cyclical high and expect a moderate slowdown over the next two years to single-digit levels,” said Hans Timer, one of the report’s authors.
He said some tensions are building up that pose a risk to the favorable economic outlook, among them whether the price of oil will go up or down, the potential for future volatility in financial markets and the huge U.S trade deficit.