World economic outlook gloomy, UN report says

PUBLISHED : Tuesday, 15 October, 2013, 11:54am
UPDATED : Tuesday, 15 October, 2013, 11:56am


The world economy is still in disarray five years after the financial crash, a new UN economic report said.

The UN Conference on Trade and Development issued a gloomy assessment of a stagnant global economy.

“The global economy is still struggling to return to a strong and sustained growth path,” Unctad reported on Monday.

World output grew 2.2 per cent last year and is forecast to grow at a similar rate this year, it said.

Developed countries are expected to show the poorest performance, with about 1 per cent increase in gross domestic product. Developing economies are likely to grow by almost 5 per cent, and and transition economies by 3 per cent.

“Prior to the Great Recession, exports from developing and transition economies grew rapidly owing to buoyant consumer demand in the developed countries, mainly the United States. This seemed to justify the adoption of an export-oriented growth model,” a formula bound to crash, the report said.

“But the expansion of the world economy, though favourable for many developing countries, was built on unsustainable global demand and financing patterns. Thus, reverting to precrisis growth strategies cannot be an option,” Unctad said.

Even after five years of crisis, the report said, “The dominance of finance over real economic activities persists, and may even have increased further. Yet financial reforms at the national level have been timid at best, advancing very slowly, if at all.”

Unctad said: “The momentum in pushing for reform has all but disappeared from the international agenda. Consequently, the outlook for the world economy and for the global environment for development continues to be highly uncertain.”