Crisis in rich nations to take toll on LDCs
Mustafizur Rahman, left, executive director of Centre for Policy Dialogue (CPD), speaks at the launch of LDC Report 2011 of United Nations Conference on Trade and Development, at the think-tank's office in Dhaka yesterday. Fahmida Khatun, centre, head of research at CPD , was also present.Photo: STAR
Economic turmoil in advanced countries and a spike in food and oil prices are likely to slow down economic growth of the least developed countries (LDCs), warned a United Nations agency yesterday.
The LDCs may grow by 4.9 percent in 2011 from 5.7 percent the previous year due to a slowdown in exports, remittances and aid flows in the wake of economic crisis in the developed economies, said LDC Report 20l1 of the United Nations Conference on Trade and Development.
In the mid term, economic growth of all LDCs, now 48, may slow down to 5.8 percent from 7.2 percent a year during 2002-2008, the report said.
"The medium term prospects for the LDCs are likely to be less favourable than in the previous decade. This is due to the downside risks surrounding the outlook for developed economies and also the uncertain dynamics underlying the rebalancing of the world economy," said the UN in a press statement.
Centre for Policy Dialogue (CPD) released the report on behalf of the UN agency at a press conference at its office in Dhaka.
CPD Head of Research Fahmida Khatun presented the report, while Executive Director Mustafizur Rahman also spoke.
The report, noting the immediate past global economic crisis, said the balance of payments situation deteriorated for the LDCs, including Bangladesh, due to negative impacts on trade.
"There is also volatility, especially in commodity prices, and for many LDCs fuel and food prices are high. The trend also portended somewhat weaker private external capital inflows and possibly less aid."
The report came after the Fourth United Nations Conference on LDCs in May in Istanbul set targets like achieving the goal of sustained, equitable and inclusive economic growth of at least 7 percent a year, building human capacities and reducing vulnerability.
In the last four decades, the number of LDCs rose to 48 from 25 in 1971 and the share of total number of people living in extreme poverty increased from 18 percent in 1990 to 36 percent in 2007.
Mustafizur Rahman said the report will help the LDCs press for duty- and quota-free access to developed economies and aid for trade in the eighth World Trade Organisation Ministerial next month.
The LDCs cannot use their capacities and realise their economic potential in an absence of financial resources, technology and weak governance, the report said.
Deeper economic, trade and investment ties with southern economies (developing countries) could provide the LDCs a scope to offset part of the impact.
Noting rising economic ties between the LDCs and other developing countries, it said India and China have become major markets for the LDCs, the report said.
Noting a $3.5 trillion foreign exchange reserve held by the developing countries in their sovereign wealth fund, it calls for channelling 1 percent of the funds to the LDCs to help them invest and build capacities.
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