Unless the industrialised world acts to increase imports from developing nations, the Asian financial crisis will be followed by others just as costly and destructive, a United Nations report warns today.

The annual trade and development report of the UN Conference on Trade and Development (Unctad) says protectionism in rich countries has hindered the exports of poor ones and forced them to rely excessively on footloose, short-term capital to finance growing trade deficits.

Over-dependence on volatile hot money was the cause of the Asian crisis and its spillover into Russia and Latin America - yet nothing of substance had been done to avoid the same thing happening again, Mr Rubens Ricupero, Unctad secretary-general, said yesterday.

Unctad argues that trade liberalisation over the past two decades has increased the trade deficits associated with growth. Developing countries grew 2 percentage points more slowly in the 1990s than in the 1970s, but trade deficits were 3 per cent higher.

While successive trade rounds and pressure from the international financial institutions have obliged developing countries to reduce their import barriers, they have been unable to earn enough through exports to pay for the extra imports, Unctad says.

Its economists attribute this to slower growth in the industralised world, declining commodity prices and protectionism in rich countries.