The world economy will grow at just 1.4 percent this year because of the impact of the terrorist attacks on the US on an already slowing economy, the UN said in a revised forecast Wednesday.
Only three months ago, the UN was forecasting global economic growth of 2.4 percent.
Even before the Sept. 11 attacks, that forecast was deemed too optimistic because the global economy was already slowing more rapidly than the UN anticipated, said Ian Kinniburgh, the top economic policy analyst in the UN Department of Economic and Social Affairs.
But the slowdown has been "aggravated and exacerbated" by the economic "shock waves" following the attacks on New York's World Trade Center and the Pentagon near Washington, he told a news conference.
"The shock is expected to reverberate through the world economy and global financial markets in the coming months," said the new UN report prepared by Kinniburgh's team.
In its admittedly "gloomy outlook," the UN said the global economy is now growing at its slowest pace in a decade, with a number of economies already contracting and some others on the verge of doing so.
The UN said it is now expecting "a dilatory and tepid recovery" in the middle of next year with global economic growth of just 2 percent next year.
At the same time, the volume of international trade is expected to register "virtually no growth" this year, the UN warned, but trade is forecast to increase by 4 to 5 percent next year.
Before Sept. 11, weakness in the US economy had spread to more and more countries, hitting those with substantial trade and production links with the US hardest, the report said.
Against this backdrop, it said the terrorist strikes caused about US$40 billion in physical destruction, seriously disrupted airlines, insurance corporations, travel agents and financial traders especially in the US, and hurt consumer and business confidence.
The UN forecast that US economic growth will decline in the third and fourth quarters this year, with overall growth of 1.4 percent this year likely to be the lowest for a decade. A mild recovery is expected next year, with growth forecast at 2 percent.
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