With summit season comes international report season. Unctad is particularly prolific at this time of year, spouting forth in its weighty Trade and Development Report and World Investment Report and other documents.

Offset by a smattering of good news, this year’s offerings contain the usual raft of dire warnings and policy prescriptions.


Though Unctad acknowledges the global economic picture at the moment is “rather rosy” (even Africa, the world’s economic laggard, posted 4.5% growth last year), it goes on to say that “some dark clouds are looming” in the form of serious risks to the global economy caused by growing current-account imbalances (see news, page 8).

But the report warns against seeking a correction through massive exchange rate appreciation in China and other Asian countries, which it says would lead to an inevitable deflationary spiral. For China, it would make it more difficult, the report says, to bridge the divide between the poor regions and wealthy cities.

Yet, while China has played its cards close to its chest in terms of its long-term intentions for further currency revaluation, it is unlikely that China’s leaders would conceive of a sudden, large-scale adjustment (see Erika Morphy’s article, page 46). A gradual approach is more probable.

Also probable is that Western countries, led by the US, will continue to call for more and faster adjustment while knowing full well that the Chinese government can no more afford economically to rush this process than Western politicians can afford politically to stop shouting about it.