Structural reform needed to sustain global recovery : ICCB

FE Team | Published: May 08, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Despite some hiccups, global economy seems to have built up some steam but a sustained and durable recovery hinge on whether national governments demonstrate their commitment to substantive structural reforms, according to International Chamber of Commerce-Bangladesh (ICCB).
In the current issue of "ICCB News Bulletin", the global business organisation said the world gross product (WGP) is forecast to grow at a pace of 3.0 per cent and 3.3 per cent in 2014 and 2015, reports BSS.
"The euro zone has finally come out of a protracted recession with gross domestic product starting to grow again, the economy of the US continues to recover and a few large emerging economies, including China seem to have stopped a further slowdown," the ICCB said.
It said, inflation remains tame worldwide, global trade is showing improvement and a number of countries are making concerted efforts to improve employment conditions. The prospects for world trade are expected to improve driven by a modest increase in demand in Europe, further recovery in the USA and a return to more dynamic trade in East Asia, it added.
Growth of world exports is projected to be 4.6 per cent in 2014 and 5.1 per cent in 2015, the ICCB said, adding that trade in services appear to be recovering faster than merchandise trade and is expected to continue growing over the forecast period after a noticeable improvement in mid-2013.
It said, great uncertainties and risks for global economic growth and the financial stability are inextricably associated with the unconventional monetary policies, such as quantitative easing (QE), adopted in major advanced economies.
"Uncertainty and risk come into play particularly when the central banks of these countries start to change their stances on monetary policies," it observed.
The ICCB said, a bumpy exist from QE could lead to a series of disruptive events, such as a surge in long-term interest rates, not only in developed economies but also in developing countries, s sell-off in the global equity markets, a sharp decline of capital inflows to emerging economies and a spike in the risk for external financing in emerging economies.
"Those first-round shocks is in international financial markets could transmit quickly to the domestic real economic sectors of both developed and developing countries," it added.
In addition to macroeconomic policies, the ICCB said many countries, both developed and developing, have undertaken various institutional reforms, including reforms in social security, income distribution, financial sector, taxation, energy, transportation, education and healthcare.
"These reforms are crucial to the rebalancing of economic structure, removal of supply-side constrains, mobilization of resources for long-term investment, and improvement of macroeconomic management and financial regulations," the ICCB pointed out.