UN predicts zero world growth in 2009
UNCTAD said it has downgraded its forecast for this year after a worse-than-expected economic performance during the fourth quarter of 2008.business Updated: Jan 15, 2009 23:41 IST
The world economy is heading for zero growth in 2009 as a deepening recession in rich countries slows the sale of consumer goods and raw materials from developing nations, the United Nations has said.
The global body's trade and development office, UNCTAD, said it has downgraded its forecast for this year after a worse-than-expected economic performance during the fourth quarter of 2008.
"For the world as a whole the outcome could be zero or even slightly below zero (growth)," said Heiner Flassbeck, a senior official at the Geneva-based office.
"This is not an overly pessimistic view on the world economy," he added.
The US economy could shrink by as much as 1.9 per cent, while Euro-zone economies will contract by up to 1.5 per cent, according to a 160-page report prepared by UNCTAD.
Japan is expected to see negative growth of between 0.3 and 0.6 per cent, while Mexico appears likely to tip into the red zone as well, with a contraction of 1.2 per cent being the worst-case scenario.
Major developing countries also will suffer, with China's growth predicted to slow to 7 per cent and India's to around 6 per cent. The world's poorest economies will grow by less than 5 per cent.
"What we see is the unwinding of a number of speculative waves," Flassbeck said, noting that the US subprime mortgage crisis wasn't the only reason for the current economic downturn.
The UN is particularly concerned about Eastern European countries such as Poland and Hungary, where consumers are saddled with huge foreign currency loans.