Millions still live in poverty

As trade delegates begin gathering in Cancun, Mexico, for a crucial meeting aimed at liberalising trade barriers, the World Bank has stressed concessions by rich countries are vital for tackling world poverty.

The international development bank says rich countries agreeing to cut agricultural and manufacturing tariffs would generate $350bn in additional income for poor countries by 2015.

Rich countries would gain $170bn if reciprocal tariff cuts were made by the poor countries.

The resulting increase in world economic growth would lift millions above the World Bank's poverty line of $2 per day.

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Current World Bank projections suggest 2.3 billion people will still live below that poverty line in 2015, the majority in South Asia.

That compares to 2.8 billion in 1999.

The Bank is also projecting 800 million will still be living below the absolute poverty line of $1 per day, mostly in Sub-Saharan Africa, compared to 1.1 billion in 1999.

Both regions have suffered from relatively weak trade growth in recent decades, and, in the case of Africa, excessive dependence on primary products like cotton and copper.

Agricultural deal?

The World Bank suggests a reasonable deal would lead to a cut in agricultural tariffs by rich countries to 10% and manufacturing tariffs to 5%, while developing countries would make tariff cuts to 15% and 10% respectively.

It says that inequities in the world trading system drag down export growth by developing countries.

Can anyone argue (the world trading) system is living up to its development potential for the poor? Richard Newfarmer, World Bank

"Exporters from developing countries generally have to pay more to get into foreign markets than exporters from rich countries.

"Can anyone argue this system is living up to its development potential for the poor?," said the World Bank's Richard Newfarmer, one of the report's authors.

The report also says middle-income developing countries would be the biggest winners from agricultural liberalisation.

They could also benefit by accepting increased foreign competition in sectors such as banking and telecommunications.

Global growth to recover

The World Bank is projecting a modest recovery in the world economy next year.

But it warns "persistent structural problems" in the rich countries - such as the over-valued dollar, or weak banking systems in Europe and Japan, could stop growth in its tracks.

WORLD ECONOMIC PROSPECTS OECD 2003: 1.5% 2004 2.5% E Asia 2003: 6.1% 2004: 6.7% S Asia 2003: 5.4% 2004: 5.4% Africa 2003: 2.8% 2004: 3.5% Latin America 2003: 1.8% 2004: 3.7% All developing countries 2003: 4.0% 2004: 4.9% % yearly growth in GDP source: Global Economic Prospects 2004

The World Bank says the rich countries of the OECD will grow by only 1.5% in 2003, before recovering to 2.5% in 2004 and 2.4% in 2005. Growth is weakest in the eurozone which will grow by only 0.7% in 2003.

If they do, growth in poor countries might increase from 4.0% to 4.9%.

Growth in Sub-Saharan Africa will stay weak, only recovering from 2.8% to 3.5%, barely enough to keep up with population growth.

But East Asia will power ahead, with growth rising from 6.1% to 6.7%.

And South Asia, led by a resurgent Indian economy, will average 5.4% over the period.

After three years of economic crisis and recession, Latin America is also expected to return to growth next year.