A United Nations report says 2003 is unlikely to be a good year for the world economy, with consumer confidence staying low and energy prices probably getting higher. The report, World Economic Situation and Prospects 2003, forecasts economic growth of only 2.3 percent.
The U.N. report says the United States remains the leading engine for world economic growth. But, it says, the U.S. economy has lost a lot of its momentum, in large part due to big corporate scandals and worsening debt. These factors, it says, have dampened the business climate and consumer confidence, dragging down the pace of global economic growth.
Carlos Fortin, deputy secretary general of the U.N. Conference on Trade and Development, says Western Europe is suffering from many of the same factors that are depressing the U.S. economy. But he says Europe may be even worse off, because little is being done to improve the economic situation. "But the trouble is that there is less an effort there to produce, to provide monetary stimulus, and, therefore, there is weak domestic demand," he said. "And, clearly, the recent case that has flared up...is the case of Germany, who is now, I think, prematurely being dubbed the sick man of Europe. But, there are problems there, obviously. "
The U.N. report also discusses the effect a war on Iraq would have on the world economy. Mr. Fortin says, if there is a war, there is no doubt that shorter is better, as far as the world economy is concerned. "A long conflict, everyone agrees, is bad from the economic point," said Carlos Fortin. "However, the near uncertainties arising from any military action would prolong, or even aggravate the deterioration in confidence. The disruptions in the supply of oil could persist for some time, sustaining pressures on the price of oil [because ] the financial costs of a military operation will crowd out business investment. "
The report finds that, while Japan's economy remains weak, China's is doing well, and that has helped stimulate an economic recovery in South and East Asia.
It also says the former communist countries in eastern and central Europe continue to do relatively well.
But in Latin America, the report says, economic prospects remain uncertain.
The United Nations economists note that Africa has made progress in alleviating its debt burden and that its political and social situation has improved. However, they say, famine and lower commodity prices are continuing to hamper economic growth in Africa.