Global economy needs boost: UN
Ap, Geneva
Japan and Germany are failing to stimulate the world economy, leaving the United States with the difficult burden of generating enough demand for goods and services to sustain growth around the world, a U.N. report said Thursday.But Washington's steep trade deficit means that a downturn in the U.S. economy would cause "serious repercussions" for rich and poor countries dependent upon the engine of American economic growth, the U.N. Conference on Trade and Development warned in its flagship report. "It's a big credit to the U.S. economy that it has been providing the growth impetus while some parts of the world have not been participating, like Europe," said Supachai Panitchpakdi, the former World Trade Organization chief now heading the U.N. agency. Supachai said, however, the time has come to issue a "warning signal" because Americans cannot continue buying so many foreign goods forever. According to the U.N. body, the U.S. had a current account deficit of 6 percent of GDP last year. "There needs to be a reduction in the trade deficit of the United States, that's for sure," Supachai said, adding that Japan and Germany, as two of the world's biggest economic powers, need to help shoulder the load. He said poorer countries, who have made important gains in the last few years thanks to high export growth, will suffer if demand in other countries doesn't rise. Holger Flassbeck, a senior official at the agency, said another country would need to take over the role as "the global engine of growth" in the next two years as Americans reach their spending limits. The United States' largest trade deficit is with China, which enjoyed an overall surplus that surged to $160 billion or 7 percent of its GDP in 2005. Japan and Germany, meanwhile, had surpluses of about 4 percent of GDP, a combined $355.2 billion according to the report. But the report said China's rapid growth has benefited raw material exporters in Africa and Latin America, while the healthy trade surpluses for Japan and Germany, two of the world's most developed countries, have not contributed to export growth in poorer countries. Robert Wade, a professor at the London School of Economics, agreed with the 237-page report's analysis. He said China has been unfairly singled out as the only culprit. "It is Germany and Japan that are building up (trade) surpluses, and therefore they have a responsibility," he told The Associated Press.
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