The world economy grew at a significantly weaker pace this year and is not likely to pick up enough in the next two years to recover jobs lost during the global financial crisis, the UN said on Tuesday.
The UN’s report on the 2013 World Economic Situation and Prospects said that with existing policies and growth trends, it may take at least another five years for Europe and the US to make up for the job losses caused by the 2008 to 2009 recession.
According to the report, world economic growth is expected to reach just 2.2 percent this year — a drop from the 2.5 percent predicted in June — and is forecast to remain “well below potential” at 2.4 percent next year and 3.2 percent in 2014.
“Weaknesses in the major developed economies are at the root of continued global economic woes,” the report said.
Rob Vos, the UN’s team leader for the report, added that “a worsening of the euro area crisis, the ‘fiscal cliff’ in the United States and a hard landing in China could cause a new global recession.”
“Each of these risks could cause global output losses of between 1 and 3 percent,” he said.
The report said the US economy “weakened notably” this year and growth prospects for next year and 2014 remain sluggish.
The “already anemic pace of 2.1 percent in 2012” is forecast to drop to 1.7 percent next year and then rise to 2.7 percent in 2014, it said
Several European economies and the eurozone as a whole are already in recession, and unemployment in the eurozone increased to a record-high of almost 12 percent this year, the report said.
The UN said output in Germany, Europe’s largest economy, has slowed significantly, while France’s economy is stagnating. It said that the economic woes in Europe, the US and Japan, where deflationary conditions continue to prevail, are spilling over to developing countries, which are seeing weaker demand for their exports and heightened volatility in commodity prices and the flow of capital.
The largest developing economies, including China, India and Brazil, are also facing home-grown problems such as weakening investment, excess production and structural bottlenecks, the report said.
Africa remains a bright spot, despite numerous challenges including conflicts, with the UN forecasting only a slight drop in economic growth from 5 percent this year to 4.8 percent next year.