Even in times when the geopolitical and economic landscape is reasonably stable, forecasters have learnt to hedge their predictions about economic events in the not-too-distant future. But today is not such a time. We are looking at the world economy through a glass darkly, arguably one too dark to contemplate sensible projections based on reasoned and professional debate and judgement.

What we do know is that hopes that the European Union and Japanese economies could keep the global economy on track even as the United States slowed have been dashed. Instead there has been a growing unease about the persistence of sluggish growth and the lingering threat of deflationary forces. While economic activity in the United States continues to be hampered by the financial excesses of the high-tech boom, including excess capacity, excessive corporate and household debt and accounting scandals, elsewhere in the industrial world, macroeconomic policy action has not brought about a reversal of current sluggish trends.

This plight has been complicated by trade imbalances and currency misalignments that have become endemic features of the global landscape. Under such conditions, economic policy will have to depart from conventional wisdom and innovate. With corporate and household balance sheets still fragile almost everywhere, any weakening signs of their confidence can quickly raise the spectre of a global recession.

Not surprisingly, under such conditions trade and financial flows have already pulled back, damaging immediate prospects in those developing countries that have come to rely on such flows to bolster growth in the 1990s. It is hardly surprising, then, to find economic projections being downgraded even prior to the start of the military conflict in the Middle East.

But quite apart from current uncertainties, economic security has eluded many developing countries in the present era of globalisation: a growing reliance on exports, especially the exports of primary commodities, has all too often come up against price volatility and trade barriers, private capital flows have brought vulnerability to speculative behaviour of international capital, and for those poorest countries still reliant on aid flows, donor fungibility has compounded falling levels of assistance. Along with weak budget positions and generally high levels of indebtedness, policy makers across much of the developing world can hardly take action to ensure the minimum well-being of their populations. Such an erosion of control over economic destinies at a time when many are beginning to build or strengthen democratic institutions can itself be a further source of anxiety and instability.

The challenge of finding a multilateral response to the problems of economic want and insecurity will understandably be on the minds of many of us in the coming months, when the reconstruction of Iraq looms large on the international agenda. This represents a daunting challenge to the international community at large, but one that should not detract from the equally pressing challenge of overcoming the impact of current events on the poorest communities and countries amongst us.

It is consequently incumbent on us to act together to make sure that there is a multilateral response to the worsening economic situation. This will require the cooperation of all member States, as well as the coordination of economic policies across major industrial countries. The Bretton Woods institutions, as specialized agencies within the UN system, are uniquely placed to organize and implement measures to provide minimum global safety nets and security, and to help poor countries weather the current difficulties in the world economy. The discussion of representation and governance of these bodies in order to strengthen the multilateral basis of decision-making is thus to be welcomed. But consideration of financial support must be joined by support from all areas of the global economy. This is why strengthening of multilateralism should be one of our overriding concerns at this time, not the least for ensuring the success of the Doha round in delivering on its promise to place the interests of developing countries at the centre of its agenda.

Finding ways to bolster economic multilateralism is even more of a priority at this moment with political nerves in such an edgy state. But making progress on this front will have to address, on the one hand, an erosion of trust and on the other the need for enlightened leadership. In large part, the deficit in trust has arisen because of the growing acceptance of mercantilist perspectives and positions despite the apparent embrace of liberal principles. However, there are some hopeful signs on which to build. Policy actions from a global perspective, of the kind we in UNCTAD have long been calling for, are back in favour to correct the deep imbalances that have been holding back growth prospects across the global economy. Voices have indeed been heard from many corners in favour of more proactive macroeconomic policies. Attention in this respect has been focused on European policy makers, with many voices, on both sides of the Atlantic, calling for a dose of an old-fashioned reflation to give an expansionary boost to the global economy. We would not hesitate to add our own voice to those calls.

The founders of the United Nations system hoped to ensure peace by guaranteeing both political and economic security everywhere and by ensuring equity in international relations. Indeed, the latter was, after years of economic chaos and the horrors of two world wars, precious enough to be considered a basic imperative and a sine qua non of sustained prosperity. It has lost none of its relevance in today's global economy, where negotiations and exchanges still take place between very unequal partners facing very different economic problems. Accordingly, the values of generosity and compromise must again be allowed to shape our common economic destiny and should indeed be advocated for the sake of ensuring sustainable world economic growth. And, just as we saw after the Second World War, the political will must come from those at the top of the economic ladder, who have the ability to and responsibility for contributing to shaping world economic progress that is viable, prosperous and even.

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