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UN Lowers Prediction of World Economic Growth Rate for 2003 - 2003-06-25

A new United Nations economic survey shows the world economy has yet to recover from the dramatic slowdown of 2001. U.N. officials are lowering the 2.75 percent growth rate they predicted for 2003 just six months ago to about 2.25 percent.

According to the annual U.N. World Economic and Social Survey, geopolitical concerns, namely the long debate over Iraq and the eventual war, undermined once promising signs of economic recovery in late 2002 and early 2003.

Rising unemployment and a persistent slowdown in trade and investment are also delaying world growth. As a result, the United Nations has lowered its hopes of making significant progress in reducing poverty.

Ian Kinniburgh of the U.N. department of economic and social affairs says the depreciated U.S. dollar is also taking a toll on world economic recovery.

"For some time we have been saying that the United States is the engine of this growth in two senses: that we expect it to be the first out of the block, so to speak, for the recovery to start here before the other developed countries and also to possibly accelerate somewhat more than the other countries," he said. "So the United States is very much in the lead both in timing and in magnitude."

Still, Mr. Kinniburgh says there are signs that the world economy is improving and he forecasts a recovery in the second half of the year with the United States leading the developed nations.

The U.N. report finds that economies in transition, particularly in Eastern Europe and Russia, have shown some resiliency in weathering the global turndown.

Developing nations, however, grew at a slower rate than anticipated with the exceptions of China and India, which are making inroads in fighting poverty. Africa continued to struggle, but Mr. Kinniburgh says one of the unusual features of the new survey is greater growth in the south than in the north.

"The good news is that the sub-Saharan African region, as I say, it is unusual, did better in fact than North Africa. North Africa was, of course, affected by the geopolitical uncertainties and related problems. But it is encouraging that more than 20 countries in sub-Saharan Africa grew above the regional average of three percent last year," he said. "Sub-Saharan Africa shows some promising signs but as we come to see in Africa recently it has also been upset by an escalation of violence in a number of countries."

Sluggish growth in trade and the delayed resolution of the financial crisis in Argentina dragged down much of Latin America's economy, although there are hints of recovery. The report suggests that few developing nations will return to satisfactory rates of growth before the end of 2004.