UN cuts world growth forecast, IMF to follow
US: The United Nations on Thursday slashed its forecast for world
growth to 2.6 percent in 2012 and warned the eurozone debt crisis could
further undermine the global performance.
“The world economy is teetering on the brink of another major
downturn,” the UN said in a warning that came as the International
Monetary Fund said it would also lower its global growth forecast.
After rising 4.0 percent in 2010, the UN predicted 2.6 percent world
growth in 2012 and 3.2 percent in 2013. UN economists had earlier said
there would be 3.6 percent growth next year.
“This forecast is conditioned however on containment of the eurozone
debt crisis and a halt to further moves toward stringent fiscal
austerity in developed countries,” said the UN World Economic Situation
and Prospects report.
It said 2012 will be a “make or break year” with the world proceeding
with slow economic recovery or falling back into recession.
Developing countries, led by China, Brazil and India, are predicted
to continue pulling the world economy forward with average growth of 5.4
percent in 2012 and 5.8 percent in 2013. But even this is down from 7.1
percent in 2010.
“From the second quarter of 2011, economic growth in most developing
countries and economies in transition started to slow notably,” said the
report which hit out at governments in Europe and North America.
The UN revised down its 2012 prediction for every major country and
region: it now foresees 1.3 percent growth in the United States, down
0.7 percent from its last forecast, 1.5 percent for Japan (down 1.3
percent), 0.5 percent for the 27 nation European Union (down 0.8
percent), 8.7 percent for China (down 0.2 percent), 7.7 percent for
India (down 0.5 percent) and 3.7 percent for South Africa (down 1.1
percent).
In Latin America, Brazil's 2012 growth was put at just 2.7 percent,
down 2.6 percent from the earlier forecast.
“Failure of policymakers, especially those in Europe and the United
States, to address the jobs crisis and prevent debt distress and
financial sector fragility from escalating, poses the most acute risk
for the global economy,” the forecast said.
“Because of collective inaction, the situation is likely to
deteriorate further,” Jomo Kwame Sundaram, UN assistant secretary
general for economic development, told a press conference to introduce
the report.
“Unfortunately the likelihood of the pessimistic scenario is
increasingly likely,” he added.
The sovereign debt crises in Europe is a “cause and an effect” of the
global slowdown while the United States is also suffering from
unemployment and “shaken consumer and business confidence,” said the
report.
As the European and US economies are so close “their problems could
easily feed into each other and spread to another global recession,” the
UN warned.
AFP |