Economist Forecasts Trade Stabilizing

World trade could stabilize this year, and industrialized countries could begin to register growth, Nobel Prize-winning economist Paul Krugman said Monday at a meeting in Abu Dhabi, capital of the United Arab Emirates.

"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman said. "I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

Krugman said Japan's solution of export-led growth would not provide a way out of the current crisis because this recession is a global one. "In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground," he said. "We have averted utter catastrophe, but how do we get real recovery? We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all."

Contact Alan Field at afield@joc.com.