UNCTAD warns against hasty stimulus exit
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The United Nations Conference on Trade and Development Friday warned against a hasty withdrawal of the fiscal stimulus due to the ongoing fragile economic recovery.
In the Trade and Development Report 2010 released in the southwestern Chinese city of Chongqing, the UN agency said a hasty stimulus exit could hamper the economic recovery and even trigger another recession, as the foundation of the recovery is not yet solid.
Also, the world economies should continue to follow expansionary fiscal policies to prevent deflation and employment situations from further worsening, the report said.
The agency projected a 3.5-percent annual growth for the global economy this year. It, however, warned that global economic growth could again slow in 2011 if root causes of the global financial crisis, such as loose regulation over the financial system and global imbalances, still existed.
It also called on the G20 to better coordinate risk management and system reform in the post-crisis period to prevent another imbalance of the global economy.
The report urged raising salaries on rising productivity to boost domestic demand, rather than relying excessively on exports, to assure a sustainable economic growth.
Supachai Panitchpadki, UNCTAD Secretary-General, said developing nations should focus more on creating jobs as a faltering recovery could cost temporary jobs and push many people back into poverty.
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