News / Economy

    UN Grim on World Economic Prospects for 2012

    The United Nations headquarters in New York. (File Photo)
    The United Nations headquarters in New York. (File Photo)
    Margaret Besheer

    United Nations economists have sharply cut their projections for world growth and warned that 2012 will be key to whether the global economy makes a slow recovery or falls back into recession.

    In their report, World Economic Situation and Prospects 2012, U.N. economists forecast very low growth, warning that developed economies are on the brink of a downward spiral because of four factors: sovereign debt distress, fragile banking sectors, weak aggregate demand and policy paralysis.

    The U.N.’s director of development and policy analysis, Rob Vos, warns the world could be facing a new economic downturn.

    “We are at the brink of possible new recession," he said. "Though our baseline still assumes that the global economy may, as we call it in the report, 'muddle through' in the next two years, in the sense that maybe the sovereign debt crisis in Europe can be contained to some extent and also the problems in the U.S. economy will not worsen by much more. But that means that we are still in problems, in the sense that economic growth is very meager, it has slowed down already this year from the recovery we have seen in 2010.”

    The International Monetary Fund has recommended fiscal austerity measures to ease the global economic crisis, but the U.N. Assistant Chief for Economic Development, Jomo Kwame Sundaram, cautioned against this approach.

    “This turn toward fiscal austerity has exacerbated the downturn throughout the world," said Sundaram. "It is unlikely, of course, that a reversal will have an immediate effect all around, but there is a strong case to be made for further fiscal actions in the near term in order to create the conditions for stronger recovery.”

    Sundaram said without collective action on recovery the situation could deteriorate further, especially in Europe where the debt crisis is spreading.

    The U.N. recommends strengthening the European Financial Stabilization Fund, which helps troubled eurozone economies. The authors say if the fund could reduce borrowing costs that would lessen pressure on governments under financial stress.

    The report notes that there is much greater pressure on political leaders to make policy decisions based on how they will impact financial markets. Sundaram said this was not the case even 20 years ago.

    “It would be inconceivable at that time, let us say in the early 1990s, to think of the political leadership of the world sort of looking behind their shoulders and wondering what markets would say,” said Sundaram.

    A more complete report with regional breakdowns will be released in January, but the projections released Thursday include a peek at how some parts of the world are doing.

    The U.N. says the United States’ high unemployment rate and low wage growth are holding back demand. This combined with the prospect of prolonged depressed housing prices has raised the risk of a new wave of home foreclosures.

    In Asia, economists say growth in China and India is expected to remain “robust,” but GDP growth in China is expected to slow. A fact confirmed by China’s deputy finance minister Thursday when he announced the manufacturing sector had contracted.

    In Latin America, Brazil and Mexico are expected to suffer a more visible economic slowdown. While in Africa, the forecast is mixed, more due to political and climate factors than reaction to world markets.

    You May Like

    Republicans Struggle With Reality of Trump Nomination

    Despite calls for unity by presumptive presidential nominee, analysts see inevitable fragmentation of party ahead of November election and beyond

    Spanish Warrants Point to Russian Govt. Links to Organized Crime

    Links to several Russians, some of them reputedly close Putin associates, backed by ‘very strong evidence,’ Spanish judge says

    Video US Worried Political Chaos in Iraq Will Hurt IS Fight

    Iraq needs stable, central government to push back against Islamic State, US says, but others warn that Baghdad may not have unified front any time soon

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8691
    JPY
    USD
    106.57
    GBP
    USD
    0.6891
    CAD
    USD
    1.2750
    INR
    USD
    66.589

    Rates may not be current.