The Hindu : National : "Robust phase in world economic scenario"

Online edition of India's National Newspaper
Wednesday, Feb 28, 2007
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National

National

"Robust phase in world economic scenario"

Special Correspondent

NEW DELHI: Despite a few worrying trends, the world economic environment continues to be supportive of trade and output, according to the Economic Survey.

Describing the continued expansion in world output for a record fourth year in a row as a ``new phase,'' which has been marked by robust and broad-based growth in emerging market economies, especially China and India, the Survey says this has helped India in being recognised as an important player. This robust phase has been helped by stable growth in world trade volume, reasonable stability in world trade prices and net capital flows to emerging market economies.

Adverse implications

At the same time, it strikes a note of caution: ``While the key world economic indicators point to a virtuous phase of global economic activity that provides a conducive environment for deepening the process of development, some downside risks remain.''

These include the large current account deficit of the U.S. and matching surpluses by other countries that has led to apprehensions of disruptive sudden changes in cross-country rates with associated adverse implications for the world economy. Other adverse factors that could impact continued growth are the stalled Doha Round of negotiations under the Worlds Trade Organisation and high oil prices. Though a warm winter has contributed to a decline in oil prices, ``considerable uncertainty'' remains about their volatility. Some concerns have also been expressed about the sustainability of this phase of high growth momentum, particularly in China and India, without overheating and building up of inflationary pressures.

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