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Global Economy Affected by Slow US Growth - 2002-06-26


A new United Nations survey concludes that recovery of the global economy will be slow following the rapid downturn last year, and it will be uneven.

U.N. economists say signs of recovery indicate that the world economy remains resilient. But they warn that recovery will not be as fast or as widespread as the downturn itself.

The U.N. survey shows developing countries recovering only gradually from last year's rapid decline. Projected growth for 2003 is expected to be just over three percent, well below the growth rate of the past decade.

Economic growth in Africa is expected to continue hovering around three percent this year, barely above the population growth in the region.

U.N. economists say the rebound will be slow, mostly because the United States, the world's largest economy, is expected to have only a modest recovery this year.

The global trading system is also under pressure. World trade fell dramatically last year from a growth of 12 percent in 2000 to minus one percent in 2001. It was the first decline in nearly two decades.

Economist Ian Kinniburgh says a sharp fall off in U.S. imports is hurting growth prospects in developing regions, including in the economies in transition in Eastern Europe.

"The critical thing here is the United States, as we say, has been acting as an engine of growth, they have been importing vast amounts from the rest of the world, and this has provided support until last year when it collapsed," he said. "Now the hope in the recovery is that the United States will again act as an engine and import more."

U.N. experts do not expect international trade to return to vigorous growth this year, predicting an increase of just over two percent. Meanwhile, the world economy in 2002 is expected to grow less than two percent.

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