Developing countries turn to South-South trade

Sun Feb 8, 2009 2:57am EST
By Jonathan Lynn - Analysis
GENEVA (Reuters) - Developing countries hoping to compensate for slumping demand in rich countries and falling commodity prices are looking at ways to bolster one of the most dynamic parts of their economies -- South-South trade.
In its latest economic forecast last month, the International Monetary Fund said developing countries would grow by 3.3 percent this year, while advanced economies would shrink by 2 percent, with the world economy as a whole stagnating.
The U.N. Conference on Trade and Development (UNCTAD) forecasts exports from developing countries, many of whose economic strategies are predicated on strong export growth, could fall by 9.2 percent in 2009. South-South trade is likely to be the only bright spot.
UNCTAD Secretary-General Supachai Panitchpakdi said the financial crisis had shaken the economic foundations of the North and was threatening to shatter the growth and development aspirations of the South.
"The timing, therefore, is right to explore how greater South-South cooperation can help developing countries to cope with the crisis," Supachai, a former head of the World Trade Organization (WTO) and deputy Thai prime minister, told an UNCTAD meeting on South-South trade last week.