UN economic chief warns of slowing global economy, increased risk in 2006

Rising oil prices and trade imbalances are combining with natural disasters and geopolitical instability to slow the global economy, a senior United Nations official has told a General Assembly committee.

Growth will decelerate in 2006 to 3 per cent, impacting the ability of developing countries to reach the global anti-poverty targets known collectively as the Millennium Development Goals (MDGs), Under-Secretary-General for Economic and Social Affairs José Antonio Ocampo told the Economic and Financial Committee on Monday. And the reluctance by some world players to adjust trade and financial imbalances could further add to uncertainty and risk in the world outlook, he added.

"At the same time, the broad international economic environment does show some auspicious signs," Mr. Ocampo said, citing robust growth in international trade as well as trade surpluses for some developing countries.

He predicted "a major breakthrough" if development commitments are fully met, particularly for sub-Saharan Africa, where aid is expected to double from $25 billion in 2004 to $50 billion by 2010.

But other indicators point to a destabilization of the world economy, including the unravelling of housing prices in developed economies, a significant rise in long term interest rates, and the reduction in the risk appetite of financial markets, he said.