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Trade and Development Report 2007

Regional Cooperation for Development

image of Trade and Development Report 2007

The current edition of the Report anticipates a fifth consecutive year of overall output growth and continued strong demand for primary commodities contributing to an overall increase in per capita gross domestic product in developing countries. The main risk to this positive scenario, the Report warns, is that a major recession in the United States could sharply curtail exports from China and India, which are setting the pace for this growth. The report says regional cooperation can help reduce the vulnerability of developing nations to current account imbalances such as that of the US, and also reduce their vulnerability to major shifts in exchange rates caused by speculative capital flows.

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Overview

In 2007, for the fifth consecutive year, the expansion of the world economy is expected to maintain its momentum with an estimated overall output growth of 3.4 per cent. Thus developing countries, including many of the poorest, should continue to benefit from strong demand for primary commodities. In many developing countries, including in Africa, positive trends in the terms of trade since 2003 have contributed to improved external and fiscal balances. These have paved the way for more expansionary policies, and for a widespread recovery in investment rates. Africa is set to continue growing at around 6 per cent in 2007, while growth rates in Latin America and West Asia are expected to slow down slightly to close to 5 per cent. Indeed, over the past five years, per capita GDP in Africa, West Asia and Latin America has increased by more than 15 per cent, a rate not seen in these regions since the early 1980s. This certainly raises hopes for greater progress towards meeting the United Nations Millennium Development Goals. However, it has to be noted that not all developing countries have experienced improvements in their terms of trade, because they have to contend with higher oil import bills while the prices of the products they export have not increased at similar rates.

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