2004 Surveys on the Economic and Social Situation in the Regions

ECE: Economic Survey of Europe 2004 No. 1

Short-term economic outlook remains vulnerable to downside risks.

Economic activity in the ECE region in 2003 continued to be marked by pro- nounced differences among the major eco -nomies and sub- regions. In the United States, the cyclical recovery gained considerable momentum. The euro area remained the principal “weak spot” because of sluggish activity in France, Germany and Italy. Economic activity in eastern Europe strengthened in 2003, largely due to the robustness of domestic demand, and economic activity in the CIS region surged in 2003, led by rapid growth in Russia. The aggregate GDP in the CIS grew by 7.6 per cent, making it one of the fastest growing regions in the world.

The short-term outlook for the ECE region is for a strengthening of growth in 2004, with robust growth in North America, Eastern Europe and the CIS contrasting with relatively moderate growth expectations for the euro area. Policy makers are mainly concerned about the risks of a possible faltering of the recovery in the United States, in view of a weak labour market performance and the high current account deficit. In the euro area, a further depreciation of the dollar could choke off the nascent recovery by eroding export growth. In Central and Eastern Europe, the size of fiscal and external imbalances in several countries may require a tightening of economic policies. In the CIS, there might be a need in some countries to tighten economic polices in order to correct domestic and external financial imbalances.

 ESCAP: Economic and Social Survey of Asia and the Pacific 2004

Asia-Pacific Economies: Sustaining Growth and Tackling Poverty

The ESCAP developing countries experienced strong, broad- based growth in 2003 combined with low inflation. Those countries as a group are growing faster than the global economy as well as other groups of developing countries. Growth is becoming more autonomous, driven increasingly by forces within the region, such as intraregional trade and strong domestic demand, with China's economy playing a major role in the former. Growth in the ESCAP developed countries was above expectations as Japan's economy recovered strongly in 2003. Prospects for 2004 indicate a continuation of existing trends on the assumption that the region experiences no negative shocks and the unravelling of global imbalances does not generate major disruptions in the financial markets.

Despite the region's robust economic growth, the complexity and multidimensional nature of poverty,  make tackling it a very difficult task for many countries. That is where well-designed national strategies for poverty reduction supported by appropriate institutions and political will make a difference. An ESCAP study of 13 countries which have adopted the PRSP approach shows that it could well be an effective tool for poverty reduction, if it is aligned explicitly with the Millennium Development Goals. There should be better analysis of the root causes of poverty, fuller consideration of the downside risks of internal and external shocks and more integration with budgetary and parliamentary processes.

ECLAC: Latin America and the Caribbean in the World Economy

Growth in 2004 is expected to be fuelled by the region's improved performance in 2003, leaving behind the “lost” six-years.

The economies of Latin America and the Caribbean as a whole grew by 1.7% in 2003. This contrasts favourably with the 0.6% reduction in gross domestic product (GDP) registered in 2002. The recovery was not strong enough to make up for the stagnation of recent years, however, and per capita GDP is still 1.2% lower than in 1997. Gross capital forma- tion showed practically no growth in the year and its current level is 12.5% lower than five years ago. The upturn in economic activity generated a slight increase in the employment rate. Unemployment remained high  at 10.7% and poverty spread to encompass almost 44% of the population of the region. The more buoyant economic performance of Latin America and the Caribbean was associated with the international economic situation, which brightened with the recovery in the United States and Japan, and the growth of China.

Economic activity in 2004 is expected to climb to an average rate of 4% for the region, which is well above the average for the last five years. The region is estimated to have achieved a year-on-year growth rate of around 3% in the fourth quarter and its more robust performance in the second half of 2003 will pave the way for the expansion of its economy in 2004.

ECA: Economic Report on Africa 2004

Unlocking Africa's potential in the global economy

Despite insufficient progress towards fulfilling the Mil- lennium Dev-elopment Goals (MDGs), and the persistence of serious polit- ical, social and economic prob- lems in the continent, the overall message emanating from the Econoimc Report on Africa (ERA 2004) is an optimistic one. Contrary to popular impressions, in recent years Africa has been making progress since the lost decades of the 1980s and 90s. In 2003, Africa was the second fastest growing region in the developing world, behind Eastern and Southern Asia. Higher oil prices and production, rising commodity prices, increased foreign direct investments, good macroeconomic fundamentals backed up by good weather conditions underpinned this high growth. As a result real GDP grew at 3.6% in 2003 compared to 3.2% in 2002, with North Africa putting in a particularly strong performance (of 4.7%). West and Central Africa also exhibited respectable growth rates above 3.5%. East and Southern Africa, in contrast, registered paltry growth of 2.5%.

At the same time, ERA 2004 argues that a very serious improvement in infrastructure, trade facilitation and physical and human capital is required, if Africa is to improve its position in the international economy. The Report points to the need of Africa to make a concerted effort in reforming its own economies through a large scale diversification of its productive structure and the adoption of more proactive policies in order to promote the integration of the continent into the global economy. With these objectives in mind, this year’s Report contributes to the debate on how to strengthen areas such as energy policy, trade facilitation, and competitiveness.

ESCWA: Survey of Economic and Social Development in the ESCWA Region 2004

Long shadows of on-going conflicts on the prospect of the region's economies.

Despite the fact that GDP in the ESCWA region (excluding Iraq and the West Bank and Gaza Strip) grew by 5% in 2003 compared to a meagre 1.25% in the previous year, the year 2003 was also a year of war in the ESCWA region. The two on-going conflicts in the Occupied Palestinian Territories and Iraq cast long shadows on the prospects of the region's economies. Oil prices rose in 2003, along with oil revenues and economic growth in oil exporting countries, but revenues are continuously sapped by persistent tensions. At least in the official records, the region spends more than twice the global rate on defence, while small and fragmented markets distort capital formation and allow for consistent resource leakages out of the region's economies. The region now faces the highest global rate of new entrants into the labour market, the highest unemployment rate and, when calculated over the past two decades, the lowest global rate of per capita GDP growth. The transmigration of all round development into peace represents the modality upon which economic policy should be based.

 In this year's Survey, ESCWA adopts this line of reasoning: heightened risks discourage investment, lower growth and raise unemployment. Further, it postulates that the region's most defining deficit is the need of stability that promotes investment, helps utilize the savings for investment and leads to a process that fosters public accountability in public investment.