News / Economy

    UN Issues Dire Warning About World Economy

    Economist Heiner Flassbeck speaks during a Swiss Social Democrats party meeting in Aarau, Switzerland, October 2008. (file photo)
    Economist Heiner Flassbeck speaks during a Swiss Social Democrats party meeting in Aarau, Switzerland, October 2008. (file photo)
    Lisa Schlein

    The U.N. Conference on Trade and Development says the outlook for the world economy is very bleak. UNCTAD warns Europe is facing a full-fledged recession next year, and the best the United States and Japan can look forward to is a period of stagnation.

    The U.N. Conference on Trade and Development is urging nations to move away from austerity measures toward policies aimed at stimulating growth. UNCTAD Director on Globalization and Development Strategies Heiner Flassbeck said that unfortunately, all governments in the world have decided to do just the opposite.

    He said political leaders are choosing restrictive fiscal policies over economic stimulus measures. He warned this decision is creating a situation in which everyone is in danger of falling into recession.

    “You see that there is everywhere a slowdown, at least, if not an outright fall of industrial production and things like that. So, there is no escape," said Flassbeck. "If the three big developed regions are not able to stimulate the economies, than we will fall all into a deep recession or at least a permanent stagnation… and deflation where you never get back on growth, on a growth path.”  

    Flassbeck notes Japan’s economy has been in a deflationary situation for 20 years. He said it has resulted in two lost decades.

    The UN economist said private consumption is the most important overall component of growth in Japan, the euro zone and the United States. He added there will be no revival if consumption cannot be revived in these areas.   

    He said there appears to be a political consensus that fiscal policy should stay on an austerity path. Some politicians, he said, erroneously argue that the only way to regain confidence is by cutting deficits.  

    “But, the fact of life is that we will not cut public deficits. It is only an attempt to cut public deficits. Governments are too big. They are just too big just to cut their expenditure and expect that their revenues will remain as they were before. They will not. They will fall. Revenues will fall and with falling revenues you will see that you cannot reduce a deficit. And, if you cannot reduce a deficit, you cannot regain confidence.  So, the whole idea is flawed from the very beginning,” said Flassbeck.

    UNCTAD economist Flassbeck said it will take a bit longer for the recession to hit developing countries. But, when it does, he said there will be severe consequences for the developing and least developed countries.

    He said nations apparently have not learned the lessons of the 1930s when recession was in full bloom. He said it is frightening to see that nations cannot agree upon a coordinated plan of action for stimulating world growth.



    You May Like

    US-Russia Tensions Complicate Syria War

    With a shared enemy and opposing allies, Russia and the US are working to avoid confrontation

    Video Re-opening Old Wounds in Beirut's Bullet-riddled Yellow House

    Built in neo-Ottoman style in 1920s, it is set to be re-opened in Sept. as ‘memory museum’ - bullet-riddled walls and bunkered positions overlooking city’s notorious ‘Green Line’ maintained for posterity

    Cambodian-Americans Lobby for Human Rights Resolution

    Resolution condemns all forms of political violence in Cambodia, urges Cambodian government to end human rights violations, calls for respect of press freedom

    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.
    Brexit Vote Plunges Global Markets Into Uncharted Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Uncharted Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9036
    JPY
    USD
    102.32
    GBP
    USD
    0.7297
    CAD
    USD
    1.3005
    INR
    USD
    68.004

    Rates may not be current.