Economic Imbalances May Hit Global Growth

The Organization for Economic Cooperation and Development (OECD) secretary general Angel Gurria said July 21 that global economic balances were casting a shadow over an otherwise benign outlook for the world economy. Countries needed to play by the same rules or else imbalances such as the large U.S. trade deficit and rigid Chinese monetary policy could "unwind in an abrupt type of behavior," he said.

"We are normally used to economies balancing out by devaluation (or) revaluation" of their currencies, he said. "This is the normal way if everyone is playing the same rules. But one very large player is not playing by the same rules," he said, apparently referring to China.

Another concern is high oil prices, Gurria said, forecasting a doubling of energy consumption over the next 40 years. At the same time, however, alterative energy sources and more efficient. technologies meant that the world was using less oil per dollar of gross domestic product, he noted.

Gurria, on his first trip to Japan since becoming head of on June 1, also called for greater cooperation to conclude stalled talks on a global free trade pact.

Copyright Agence France-Presse, 2006

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