World may see another economic crisis: Jayati Ghosh

NEW DELHI: The world may face another economic crisis as several nations, both developing and developed nations, still have imbalances, noted economist Jayati Ghosh said today.

"We have same imbalances in many nations that we had in 2008... There are signs that there are imbalances which have to be resolved in a right way, otherwise another economic crisis is coming for sure. We can manage it for a while but it is going to come," she said.

She was speaking at the release function of Trade and Development Report 2013 by the United Nations Conference on Trade and Development (UNCTAD).

Asked about the forecast for the crisis, she said, "I cannot predict the time but it could be six months, a year or three years."

The whole strategy adopted by many developed countries is reflective of the fact that they are not willing to take their imports at the same rate at which they were earlier.

"The US trade deficit is shrinking. They are exporting more than importing. This will have huge implications for the rest of the world as America is a big economy," said Ghosh, who is also a Professor in Jawaharlal Nehru University (JNU).

Besides, she said, more protectionist measures will take place as it is a typical feature of slowdown.

"Protectionism is going to increase and global trade will decelerate. It is going to get harder and harder to penetrate into a particular market. Global trade, therefore, will decelerate," she said.

It is reflective of the fact that multilateralism won't thrive and the WTO will be used only for settling the scores, she added.

In the case of India, to address these imbalances there is a need to boost domestic demand and reduce imports mainly gold and luxury goods which would help in reducing the country's Current Account Deficit (CAD).

Trade deficits have been fuelled by high imports of gold and crude oil, contributing to the widening CAD, which touched an all-time high of 4.8 per cent of GDP, or USD 88.2 billion, in 2012-13.