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UN:  Global Economic Recovery Losing Steam - 2002-11-14

A U.N. report released Thursday says the global economy is recovering more slowly than previously predicted and will probably not begin to take off until the latter part of next year. But, the survey by the U.N.'s Economic Commission for Europe finds encouraging news in the countries of the former Soviet Union whose economies are growing faster than those of North America and Western Europe.

The report says the steam has gone out of the global economic recovery largely because the U.S. economy remains sluggish and this has had repercussions around the rest of the world.

The survey predicts growth in the United States will increase by 2.6 percent next year and that of Western Europe only by two percent.

A senior U.N. economist, Dieter Hesse, says a war on Iraq also would hurt the world economy.

"It will have a very detrimental effect on consumer and business confidence and the increased uncertainty associated with the war is bound to restrain economic activities in different countries," he said. "If you go back to the first Iraq war, you see also that the war has been a factor in the recession which occurred at that time."

But the report contains some good news. Though the global slowdown has been most strongly felt in Central Europe, mainly because of the weak performance of the Polish economy, the report says the Gross Domestic Product of the countries of the former Soviet Union has increased by more than four percent and the increase is even higher in the Baltic States, more than five percent.

The chief of the U.N.'s transition economies section, Rumen Dobrinsky says the Russian economy is doing well thanks to a rise in oil prices and structural and economic reforms undertaken in that country.

"I think the prospects for the Russian economy are fairly, good although it is not realistic to expect the extremely high rates of growth that were seen say two or three years ago when, for example, in the year 2000, the Russian economy grew by nine percent," he said. "The growth in Russia will continue at fairly high rates of the order of four percent and even more in the years that follow."

The report says all the countries of the former Soviet Union have overcome years of recession and are now enjoying a period of economic recovery.