A newly-released U.N. report concludes that the world economy is gaining momentum after two years of stagnation. The report predicts worldwide growth of 3.5 percent this year, compared to less thantwo percent over the past two years.
While the United States remains the world's primary economic engine, other countries are making increasing contributions to what U.N. economists see as a broad global recovery.
In a strongly upbeat report, the world body's economic unit says the recovery is being driven mainly by low U.S. interest rates.
In unveiling the report, U.N. Undersecretary-General for Economic and Social Affairs Jose Antonio Ocampo said another surprisingly powerful force has been the rapid rise of China as a trade hub.
"China is in fact becoming very rapidly a more important center for trade for a series of economies in Asia," he said. "This is particularly so for the Republic of Korea, and for Japan. In the case of Japan many analysts have actually come to the conclusion that this is the first time the Japanese recovery is based on China. So China is actually becoming the locomotive of Japan in a very significant change with respect to the past."
Mr. Ocampo, a former Colombian minister of finance, said he sees the economic troubles of Latin American countries diminishing, and even a slight improvement in Africa's short-term prospects. In contrast, he pointed to Western Europe as a source of the weakness that is only now beginning to subside.
He also noted that the creation of new jobs continues to be a problem in most countries.
The U.N. report points to the large external debt of the United States and a few other countries as an overriding weakness in the world economy. But Mr. Ocampo said, at least in the short term, he is not concerned about huge U.S. budget and trade deficits.
"The position we take is that in short term, the policy stimulus by all the industrial market economies is essential for the strength of the recovery of the world economy," he said. "In that regard, it seems the policy stimulus by the U.S. is an essential part of that process, but in medium term there is a need to correct the U.S. imbalances, which depend heavily on the capacity, rather the willingness of rest of world to finance the huge U.S. deficit currently."
The U.N. report cautions, however, that while global trade is likely to increase by seven percent this year, the high level of economic growth seen during the 1990s is not likely to be repeated. It warns that any rapid depreciation of the dollar and an abrupt reversal of the U.S. trade deficit would probably kill the recovery, and send the world's economy into another slowdown.