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Global trade to hit $27 trillion in 2030: World Bank

Global trade in goods and services could rise more than threefold to $27 trillion in 2030 with developing countries playing a central role, the World Bank predicted. In its latest report on global economic prospects, the World Bank said growth in developing countries will reach a near record seven per cent this year. In 2007 and 2008, growth will probably slow, but still likely exceed six per cent, more than twice the rate in high-income countries, which is expected to be 2.6 per cent.The report's 'central scenario' predicts that the global economy could expand from $35 trillion in 2005 ... read more

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Global trade in goods and services could rise more than threefold to $27 trillion in 2030 with developing countries playing a central role, the World Bank predicted.

In its latest report on global economic prospects, the World Bank said growth in developing countries will reach a near record seven per cent this year. In 2007 and 2008, growth will probably slow, but still likely exceed six per cent, more than twice the rate in high-income countries, which is expected to be 2.6 per cent.The report's 'central scenario' predicts that the global economy could expand from $35 trillion in 2005 to $72 trillion in 2030. "While this outcome represents only a slight acceleration of global growth compared to the past 25 years, it is driven more than ever before by strong performance in developing countries," said Richard Newfarmer, the report's lead author and Economic Advisor in the Trade Department. "While exact numbers will undoubtedly turn out to be different, the underlying trends are relatively impervious to all but the most severe or disruptive shocks."The report titled "Global Economic Prospects 2007: Managing the Next Wave of Globalisation," said the ao f trade in the world economy will rise from one-quarter at present to more than one-third.

"Roughly half of the increase is likely to come from developing countries. Developing countries that only two decades ago provided 14 per cent of manufactured imports of rich countries, today supply 40 per cent, and by 2030 are likely to supply over 65 per cent. At the same time, import demand from developing countries is emerging as a locomotive of the global economy," the report said.Uri Dadush, Director of the World Bank's Development Prospects Group and International Trade Department, said continuing integration of markets will make jobs around the world more subject to competitive pressures.

"As trade expands and technologies rapidly diffuse to developing countries, unskilled workers around the world -- as well as some lower-skilled white collar workers -- will face increasing competition across borders," he explained "Rather than trying to preserve existing jobs, governments need to support dislocated workers and provide them with new opportunities. Improving education and labour market flexibility is a key part of the long-run solution."

Stressing that removing barriers to trade is vital as it can create new opportunities for poor countries and poor people, Dadush said revitalising the Doha round of world trade negotiations and concluding an agreement that benefits the poor is urgent. According to the report, globalisation could spur faster growth in average incomes in the next 25 years than during 1980-2005, with developing countries playing a central role. "However, unless managed carefully, it could be accompanied by growing income inequality and potentially severe environmental pressures.

"Sustained and broad-based growth in developing countries would significantly affect global poverty. The number of people living on less than $1 a day could be cut in half, from 1.1 billion now to 550 million in 2030. However, some regions, notably Africa, are at risk of being left behind.

Moreover, income inequality could widen within many countries, compounding current concerns over inequality between countries," said Francois Bourguignon, World Bank Chief Economist and Senior Vice President, Development Economics.

He said globalisation is likely to bring benefits to many. "By 2030, 1.2 billion people in developing countries--15 per cent of the world population--will belong to the "global middle class," up from 400 million today. This group will have a purchasing power of between $4,000 and $17,000 per capita, and will enjoy access to international travel, purchase automobiles and other advanced consumer durables, attain international levels of education, and play a major role in shaping policies and institutions in their own countries and the world economy.

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