UNITED NATIONS: The world economy should start to make a weak recovery this year, but the United Nations (UN) said on Thursday (Friday in Manila) that Japan faces “risks” with its pump-priming spending and saw no end to Europe’s unemployment agony.
The UN revised downward its forecast for the world economy to 2.3-percent growth this year, followed by 3.1 percent in 2014. It had previously predicted a 2.4-percent rise in global gross domestic product (GDP) this year and 3.2 percent for next year.
The UN World Economic Situation and Prospects report said that a recovery would start in the second half of 2013 as the US economy improves.
But it said that “several key risks and uncertainties remain, and, if not mitigated, could derail global growth again.”
The latest forecast said that the US economy would grow by 1.9 percent this year and 2.6 percent in 2014. China would grow by 7.8 percent this year and fall to 7.7 percent next year, and Japan by 1.3 percent in 2013 and 1.6 percent in 2014.
The UN said that the economy in the European Union’s euro area would shrink by 0.4 percent this year and make a modest recovery to 1.1-percent growth next year. Africa was predicted to see 5-percent growth this year and 5.4 percent next year.
For every country and region, the growth prediction has been shaved back because of doubts about tactics being used for recovery.
“The main priority for policy makers worldwide should therefore be to support a robust and balanced global recovery, with a focus on promoting job creation,” said the report.
Japan and Europe’s risks
The UN said that Japan’s Prime Minister Shinzo Abe has embarked on a “bold” policy of huge asset purchases and massive monetary easing.
The measures “could help reverse the country’s economic weakness, but they also entail certain risks and uncertainties” as seen in the major fall in the yen in recent months.
The report predicted a short-term boost for Japan, but added that the measures may “create heightened medium-term uncertainties regarding the sustainability of public debt.”
“Western Europe remains mired in either recession or at best extremely low growth” held back by fiscal austerity, said the UN.