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

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the US are seeing gas prices dip below $3 a gallon More

Afghan Women's Soccer Team Building for the Future

A four-team female league was recently set up in Kabul; It will help identify players for the national team More

Video Koreas on Edge Amid Live-fire Drills

Pyongyang threatens nuclear test as joint US, S. Korean exercises show forces’ capabilities 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.
New Skateboard Defies Gravityi
X
November 21, 2014 5:07 AM
A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Mexico Protests Escalate Over Disappearances

Protests in Mexico over 43 students missing since September continue to escalate, reflecting growing anger among Mexicans about a political system they view as corrupt, and increasingly tainted by the drug trade. Mounting outrage over the disappearances is now focused on the government of President Enrique Pena Nieto, accused of not doing enough to end insecurity in the country. More from VOA's Victoria Macchi.
Video

Video US Senate Votes Down Controversial Oil Pipeline - For Now

The U.S. Senate has rejected construction of a controversial pipeline to transport Canadian oil to American refineries. The $5 billion project still could be approved next year, but it faces a possible veto by President Barack Obama. As VOA’s Michael Bowman reports, the pipeline has exposed deep divisions in Congress about America’s energy future.
Video

Video Can Minsk Cease-fire Agreement Hold?

Growing tensions between government troops and separatists in eastern Ukraine further threaten a cease-fire agreement reached two months ago in the Belarusian capital of Minsk. Critics of U.S. policy in Ukraine say it is time the Obama administration gives up on that much-violated cease-fire and moves toward a new deal with Russia. VOA's Scott Stearns has more.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.
Video

Video Ferguson Church Grapples with Race Relations

Many white residents of Ferguson, Missouri, say they chose to live there because of the American Midwest community's diversity. So, they were shocked when a white police officer killed an unarmed black teenager in August – and shaken by the resulting protests and violence. Some local churches are leading conversations on how to go forward. VOA’s Ayesha Tanzeem reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8050
JPY
USD
117.90
GBP
USD
0.6376
CAD
USD
1.1259
INR
USD
61.655

Rates may not be current.