World economy grew at weaker pace in 2012
The world economy grew at a significantly weaker pace in 2012 and is not likely to pick up enough in the next two years to recover jobs lost during the global financial crisis, the United Nations says.
The UN's report on the World Economic Situation and Prospects 2013 said that with existing policies and growth trends it may take at least another five years for Europe and the United States to make up for the job losses caused by the 2008-2009 recession.
According to the report, world economic growth is expected to reach just 2.2 per cent in 2012 - a drop from the 2.5 per cent predicted in June - and is forecast to remain "well below potential" at 2.4 per cent in 2013 and 3.2 per cent in 2014.
"Weaknesses in the major developed economies are at the root of continued global economic woes," the report said on Tuesday.
Rob Vos, the UN's team leader for the report, warned 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 per cent," he said.
The report said the US economy "weakened notably" during 2012 and growth prospects for 2013 and 2014 remain sluggish. The "already anaemic pace of 2.1 per cent in 2012" is forecast to drop to 1.7 per cent in 2013, and then rise to 2.7 per cent in 2014.
Several European economies and the euro zone as a whole are already in recession, and unemployment in the euro zone increased to a record high of almost 12 per cent this year, the report said.
The UN said output in Germany, Europe's largest economy, has slowed significantly while France's economy is stagnating.
According to the UN, 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 including 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 per cent in 2012 to 4.8 per cent in 2013.