The world economy faces a threat from the global market imbalances that caused the 2008-09 crisis and slashing government spending can only heighten the problem, a senior United Nations economic official said on Wednesday. Supachai Panitchpakdi, head of the UNCTAD trade and development agency, told member countries the imbalances - in food, energy, housing and financial markets - had been left untouched by moves to end the recession. “They remain a toxic threat to stable and inclusive growth and the sustainability of the recovery,” declared Supachai, a former head of the World Trade Organization (WTO). And in a warning to countries like Britain and Germany, he said driving hard to cut government spending through deficit reduction and tighter monetary policy could have “disastrous consequences for recovery and precipitate a double-dip.” Supachai, an ex-deputy prime minister of Thailand, was speaking a day after Unctad issued a report saying major economies should maintain fiscal stimulus policies or face slumps in employment and growth. Like the report, and a statement from the fiscally-strict International Monetary Fund (IMF) on Monday, he said governments should be focusing on boosting jobs and not pandering to financial market demand for deficit cutting.
