UNCTAD for WTO-style global body to oversee exchange rates

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FE Report
Developing countries are enjoying their brightest economic spell since the early 1970s, but must join forces to guard against shifts in the global economy and financial turmoil, according to the UN's trade and development agency.
The UN Conference on Trade and Development's (UNCTAD) annual report warned about the destabilising effect of speculative financial markets, and called for World Trade Organisation-style global arrangements to oversee exchange rates.
The report said that booming demand and high prices for commodities had helped to stimulate trade and growth in poorer nations, which are the primary suppliers of raw materials, without weighing down overall global growth.
Developing countries were likely to suffer the most if their currencies swung wildly as carry trades unwound, the report said.
GDP (Gross Domestic Product) per head in developing countries grew by almost 30 per cent between 2003 and 2007, three times as fast as in advanced nations, in what the report called a 'golden period' for the world economy.
Several poorer countries have even become net exporters of capital to wealthy nations such as the United States and Britain.
UNCTAD said that world economic output should rise 3.4 per cent in 2007, compared to 4 per cent last year.
It warned that a possible 'outright contraction' in US house prices could crunch consumer demand in the world's largest economy, hurting developing countries where exports to the US have fuelled recent fast growth, it said.
According to the report, China and India will again set the pace for growth in the developing world, with growth rates of 10.5 per cent and 8.5 per cent respectively in 2007. But the two countries and other emerging economies should continue to take preventive measures, such as increasing domestic demands, in case the US economy slips into a recession, thus affecting their exports, UNCTAD said in the report.
For the first time since 2001, both the EU, at 2.8 per cent, and Japan, 2.3 per cent, are predicted to have higher GDP growth than the US.
High commodity prices continue to boost growth in developing countries, which accounted for a 37 per cent share of global trade last year, the report said.
A decade ago their share of trade was 29 per cent. Economies in Africa are predicted to grow by 6 per cent, Latin America and the Caribbean by 4.7 per cent, and ex-Soviet bloc states still outside the European Union by 7 per cent.