World growth seen at over 3%

UNITED NATIONS – The United Nations forecast world economic growth of just over three per cent in 2006 and called on global policy makers to jointly tame imbalances like the US trade deficit.

The growth forecast issued on Tuesday was more conservative than those of some banks, and its plea for a coordinated macroeconomic policy, perhaps led by the International Monetary Fund, was likely to go ignored, economists said. The UN report saw a potential “disorderly adjustment” to global finance imbalances as a “clear and present danger” and listed other risks as higher oil prices, a sharp drop in housing prices, or a potential avian flu pandemic.The report differed with the theory of a global savings glut as advocated by incoming US Federal Reserve Chairman Ben Bernanke, saying rather that there was a lack of capital investment.The report, which is compiled annually by a host of UN agencies, saw growth in 2006 as similar to that of 2005, which has yet to be firmly established with US fourth-quarter data due on Friday.It said growth would continue to cool from the historically high pace of four per cent in 2004 using the market exchange rate method.Some banks see world economic growth in the range of 3,5 to four per cent in 2006.The UN report saw US growth at 3,1 per cent in 2006 in market exchange rate terms, with European expansion at 2,1 per cent and Japan’s at two per cent.On average, developing countries including China and India were seen growing 5,6 per cent and economies in transition, those of former Soviet Republics and Eastern European nations, should grow 5,9 per cent, said the report, called the World Economic Situation and Prospects 2006.The report showed differences between the United Nations and Wall Street over the seriousness of the US$800 billion US current account deficit, which largely reflects the growing gap between US imports and exports.UN Undersecretary-General Jose Antonio Ocampo said neither policy changes by single nations nor foreign-exchange adjustments were enough to solve the problem, and that the IMF was best-placed to coordinate international macroeconomic policy.”This should be the central role for the IMF under the current conditions,” Ocampo told a news conference, noting that the IMF was not currently distracted by the need to bail out a developing economy in crisis.Christian Stracke, a senior analyst at research firm CreditSights, said that argument was “very much in vogue” but added: “By no means is there a consensus.”-Nampa-ReutersThe UN report saw a potential “disorderly adjustment” to global finance imbalances as a “clear and present danger” and listed other risks as higher oil prices, a sharp drop in housing prices, or a potential avian flu pandemic.The report differed with the theory of a global savings glut as advocated by incoming US Federal Reserve Chairman Ben Bernanke, saying rather that there was a lack of capital investment.The report, which is compiled annually by a host of UN agencies, saw growth in 2006 as similar to that of 2005, which has yet to be firmly established with US fourth-quarter data due on Friday.It said growth would continue to cool from the historically high pace of four per cent in 2004 using the market exchange rate method.Some banks see world economic growth in the range of 3,5 to four per cent in 2006.The UN report saw US growth at 3,1 per cent in 2006 in market exchange rate terms, with European expansion at 2,1 per cent and Japan’s at two per cent.On average, developing countries including China and India were seen growing 5,6 per cent and economies in transition, those of former Soviet Republics and Eastern European nations, should grow 5,9 per cent, said the report, called the World Economic Situation and Prospects 2006.The report showed differences between the United Nations and Wall Street over the seriousness of the US$800 billion US current account deficit, which largely reflects the growing gap between US imports and exports.UN Undersecretary-General Jose Antonio Ocampo said neither policy changes by single nations nor foreign-exchange adjustments were enough to solve the problem, and that the IMF was best-placed to coordinate international macroeconomic policy.”This should be the central role for the IMF under the current conditions,” Ocampo told a news conference, noting that the IMF was not currently distracted by the need to bail out a developing economy in crisis.Christian Stracke, a senior analyst at research firm CreditSights, said that argument was “very much in vogue” but added: “By no means is there a consensus.”-Nampa-Reuters