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

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Role in Fighting IS Carries Domestic Risks

There are Western concerns Islamic State militants soon may unleash offensive in kingdom that could create upheaval - though nation has solid intel, grip on banking system More

Asian-Americans Enter Public Office in Record Numbers

A steady deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

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.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.