Remain sober while being optimistic: Comment

The "Global Development Finance 2004" report released by the World Bank recently brought some good news to the developing countries: the proportion of the total external debt on the GDP in developing countries decreased from 44 percent in 1999 to 37 percent in 2003; and the proportion of the amount of payment for external debt on exports dropped from 19 percent in 1997 to 15 percent last year.

The"Global Development Finance" is a report of annual review done by the World Bank on the capital movement, global economy and finance tendency of developing countries. Mansour, senior economist of the World Bank, is one of the chief writers of this report. In the middle of June, at the symposium co-sponsored by the World Bank and National Development and Reform Commission, he remarked optimistically that the level of productive forces and credit rating is improving constantly. Mans Brook, another chief writer of the report stated, the "9.11" event and the Iraqi War inflicted heavy losses on such industries as global civil aviation and tourism; but fortunately, the world economy was now in slow recovery. He said, in the past year, there witnessed an obvious daily recovery of the world economy, which has greatly improved the external environment of the developing countries. The global economy growth rate rose from 1.8 percent in 2002 to 2.6 percent in 2003, and is estimated to go up to 3.7 percent in 2004.

At present, the global capital flow to the developing countries is now undergoing a powerful periodic recovery. In 2003, in all other regions of the world except the Middle East and North Africa, there emerged an upturn in private capital flow after a low-level development in the past two years, and the flow of private capital into developing countries rose rapidly to 200 billion¡ªthe record high since 1998.

This report contains not only the inspiring information as mentioned above, but also reveals some unfavorable news to developing countries. In the past few years, in order to stimulate the recovery of economy, western countries have more often than not resorted to low interest rate policy, thus spurring to some extent an increased amount of capital to flow into developing countries. However, for fear of inflation, the USA is recently considering raising the interest rate, which is no good news for developing countries. Another thing deserving our attention is that, the flow of foreign direct investment to developing countries decreased last year¡ªthe second year of the two consecutive years, with a total amount of 135 billion, 23 percent lower than that of 2001. Although the securities investment capital flow to developing countries skyrocketed from 5 billion in 2002 to 14 billion in 2003, this is still a very small amount as compared to capital flows from other sources. This means the western capital is still taking a circumspect attitude towards the newly booming economic market. Moreover, the debt problem still remains a lasso on the neck of developing countries, and cannot be thoroughly settled.

In addition, another group of numerals concerning the developing countries in the report also constitutes a worry for the people: at present, there are still 1.1 billion people in the world that cannot get safe drinking water, 2.4 billion people do not have sufficient sanitary facilities and 1.4 billion people have no electricity. It shows that the infrastructure construction remains still a long-term and arduous task for developing countries to deal with. Nevertheless, this is a challenge for the developing countries to turn the huge demand for infrastructure construction into feasible investment opportunities, so as to attract the international capital market to increase the investment in this field.

It must be noticed that, the imbalance of economic development between developed countries and developing countries has not been changed radically, and the developing countries are still confronted with enormous risks. For example, the recent high oil price will exert great impacts on the economy of developing countries. Therefore, we can be optimistic for future, but we must remain sober-minded as always.

By People's Daily Online